Posts

Here’s what you should know.

1. In China, Amazon’s ‘store of the future’ is already open

One Chinese startup, however, is steaming ahead with its own version – and has already opened a handful of staffless convenience stores where customers open the door and pay the bill with their phone.

This is a typical Bingobox store. Last month, the startup opened its first outlet in Shanghai after a few months of testing in its home city, Zhongshan.

Although small, the Bingobox store stocks hundreds of items – including a small selection of fresh foods.

The startup has already partnered with French supermarket giant Auchan – which is huge in China – to handle store inventory.

Read the rest of the story here.

 

2. Cross-border payment startup InstaRem eyes IPO in 2020 after closing $13M Series B

Cross-border payment startup InstaRem has raised $13 million in new financing as it looks to expand its business, which is rooted in Asia, into Europe and North America ahead of an eventual public listing as soon as 2020.

The Singapore-based startup said the raise was led by China’s GSR Ventures, an early investor in Didi among others.

InstaRem operates a cross-border payment service that is targeted at business users, including banks and retailers, although it does operate a consumer service. By working with banks and using wholesale rates, the firm is able to get good cross-border rates for its retail customers, too.

Read the rest of the story here.

 

3. Tencent’s online publishing arm files for IPO in Hong Kong

China Literature is akin to Amazon’s Kindle service, with 8.4 million pieces of content from more than five million writers. It counts 175.3 million monthly users across all services, of which more than 90 percent are on mobile.

The service is being spun out of Tencent, Asia’s highest valued tech firm, which currently owns a 65 percent share of the business. Tencent plans to sell part of its equity for the listing, but it seeking to retain at least 50 percent control as China Literature becomes a subsidiary.

Read the rest of the story here.

Retail has gone through a revolution. A glance at recent headlines indicate that many global brands in Q1 alone such as BCBG and Urban Outfitters have shown signs of trouble. The former filed for bankruptcy, citing changing consumer habits and increased competition from online players as key factors and Urban Outfitters stated that the ‘retail bubble has burst’. 

According to Bloomberg, shoppers’ visits to retail stores in the US are declining every year, leading industry veterans to wonder, “is anyone not seeing large foot traffic declines?”

Online retail, on the other hand, is thriving in the US. Retail sales through digital channels, including mobile sales, increased by a massive 23% in 2015.

One player enjoying this shift is Amazon. The company now accounts for 43% of all online retail sales in the States and has ventured aggressively into different verticals; from private label fashion brands to groceries. It also made entries into new markets, to the Middle East through the acquisition of Souq, a possible entry into Australia and a rumored entry into Southeast Asia.

A key aspect to its growing success is its omnichannel strategy – allowing shoppers to buy whenever, wherever. The company has been using offline to compliment its online platform, for example, with the launch of its offline bookstores in the US and its trial launch of Amazon Go, an offline grocery store that allows shoppers to scan items and pay through the Amazon Go app. 

Traditional retailers try their hand at omnichannel

The omnichannel strategy focuses on the idea that providing a ‘perfect’ shopping experience requires an integration of online and offline experiences. This is to encourage cross-channel shopping so that customers who shop only in stores will begin also buying online, and vice versa.

Although brick ad mortar players have an advantage here, pure-play brands and retailers are testing offline strategies to offer enhance their entire brand experience. Online brands such as NET-A-PORTER used this strategy back in 2012 by launching offline pop-up stores and eye wear brand Warby Parker launched its first offline store in 2013.

In Southeast Asia, more players are following suit. Thai online fast fashion label Pomelo has launched pop-shops in Bangkok and Central Group bolstered its online presence with acquisition of Zalora.

Retailers are counting on an omnichannel strategy to be their “killer app”. But is this true?

Harvard Business Review teamed up with an anonymous US retailer that operates hundreds of offline stores across the country to find out.

Out of the 46,000 study participants who made a purchase during the 14-month period from June 2015 to August 2016, only 7% were online-only shoppers and 20% were store-only shoppers. The remaining majority used multiple channels during their shopping journey – these are the omnichannel customers.

Omnichannel customer behavior

Findings showed that omnichannel customers loved using the retailer’s touchpoints in all sorts of combinations and places, such as purchasing offline and having the product delivered at home, or targeting in-store customers with personalized messages to their phones.

Shoppers were found to be avid users of in-store digital tools such as an interactive catalog, a price-checker, or a tablet. They were also leveraging their smartphones to compare prices between stores and to download discount coupons but it’s important to note that,

Among customers who lived close to a store, no type of coupon made a significant difference to shopping or profits – HBR

The more channels customers use, the more valuable they are

Omnichannel shoppers spent an average of 4% more on every shopping occasion in the store and 10% more online than single-channel customers. With every additional channel they used, the shoppers spent more money in the store.

Customers who used more than four channels, spent 9% more in the store compared to those who only used one channel.

Omnichannel shoppers were also more loyal. Within six months after an omnichannel shopping experience, these customers logged 23% more repeat shopping trips to the retailer’s stores.

Findings suggest that deliberate searching beforehand led customers to 13% greater in-store purchases. This disputes arguments about the popularity of impulse buying and showrooming, which refers to how traditional shoppers conduct their research in the store and then buy online.

This particular retailer sees the rise of webrooming, consumers that go online to browse products before going offline to buy the products in-store.

Whether the richer, multi-touch point shopping experiences of omnichannel led shoppers to spend, return, and advocate more remains an open question – no causation can be determined – but the case for omnichannel retail is positive.

In a developing market like Southeast Asia, department store culture is huge but ecommerce is only beginning to emerge – less than 4% of total sales. Whichever player is able to reach omnichannel success first looks to capture a large share of the region’s $150 billion retail opportunity.

Traditional retailers with physical stores will do better not only by leveraging the power of the online world, but by synchronizing the physical and the digital worlds to provide shoppers with a multi-channel experience that online pure plays simply cannot match. – HBR

Findings in this article were taken from “A study of 46,000 shoppers shows that omnichannel retailing works”, published on Harvard Business Review.

With pure play online brands around the world adopting offline channels, which retail strategy is really the way to go? Is an online-to-offline (O2O) approach feasible for your brand? David Jou, founder & CEO of Pomelo, one of Southeast Asia’s best performing ecommerce fashion brands, shares his views on today’s definition of a “retail experience” and what it means for his company.


A few months back, I had a very memorable meeting with a prominent Indian investor. He was the number one ranked student among all Institutes of Technology in India back in his days as a student, sold his first company for a hefty sum to Amazon and now heads up one the leading venture capital firms in India. His perspective is particularly interesting because India over the last decade has experienced one of the steepest adoption curves for ecommerce globally.

I was given a bit of time to pick his brain at his office.

“Ask him your hardest questions, because he’s an absolute genius.”

I sat down, launched into a quick introduction of myself and Pomelo and got him up to speed about my margins, growth, the brand, our competitive advantage, the team, our factory etc. etc. I looked over and asked,

“Does that all sound good?”

“Yes, that all makes sense.”

“So, you think this all makes sense?”

“Yes I think you’re absolutely spot on and you’ve figured something out.”

So there it was, we were on the same page and the discussion could continue.

With the groundwork in place, I decided to ask him a question Pomelo had been considering over the past few months.

“Should Pomelo spend its capital on creating an offline retail footprint or on marketing its mobile app?”

I had asked this particular question to many before and heard variations of “forget offline, you’re online! Why would you want to deal with a non-scalable, hassle-filled business model that’s crowded and competitive. You’re exactly where you want to be. Double down!”

Without hesitation and much gusto he answered,

“Go offline.”

Astonished, I asked, “why?”

“Even 5–10 years from now, best case scenario, only 10–15% of retail spending in your markets will be online. 85% of spending will still be offline.”

So there it is. For the coming years, offline will remain an important part of the 360 retail experience. Think of Warby Parker, Amazon, Bonobos in the US who have all opened offline stores. Now how can online players really take advantage of clicks to bricks?

1. Provide concrete incentives to visit your offline location

Spend time with your team to figure out the ‘why’ behind your offline project. Why would your target customer come to this particular location and what benefits do they get from coming to it? Opening a flagship store for the sake of it isn’t a good enough reason, answer these questions first:

  • Is it to showcase your physical product because it shows better in the real world?
  • Is it to alleviate a particular barrier to purchase that exists in your category?
  • Is it to provide a space where you can build a community?

If your “why” is to drive more sales or a generic “to increase awareness”, it will be hard to determine if you’re set up for success or failure. Imagine the location you’re contemplating is really a physical billboard to drive customer acquisition and that the metrics you track should be on that basis.

Amazon recently picked up a lot of attention following the launch of Amazon Go, an offline grocery store that boasts zero queues and no check-out. The major realization was that Amazon could reinvent the grocery store experience by getting rid of lines and cash and draw in more users online through a highly attractive offline experience.

“Grab & Go” at the Amazon Go store.

2. Scrap traditional retail conventions

The key to success is to provide a differentiated experience and scrap traditional retail conventions. Remember that you’re not in the business of building more efficient candles, you’re after the next light bulb. Figure out how to disrupt the traditional store format that reigns in your category.

One great example is New York based workwear website MM.LaFleur that has become famous through a product it calls the “Bento Box”, a mail-ordered shipment that comes with four to six ready-to-try wardrobe staples.

The company focuses on professional women’s wear for the office and have been extremely successful, with revenue growing 600% in 2015 and a projected $30 million in 2016.

David-Jou-Pomelo

The “Bento Box”

The brand’s approach to its offline experience directly mirrors the Bento Box philosophy. Stylists curate a selection of products based on a survey customers fill-out when they book their appointment online. A lot of players in traditional retail would say the cost of having a personal stylist on hand for an unpredictable amount of customers is highly inefficient and consequently won’t scale.

MM.LaFleur’s success would suggest otherwise; they’re launching a showroom in Washington DC this March, in addition to a showroom in New York and pop-ups scattered the country.

David-Jou-Pomelo

MM.LaFleur New York City location

3. Have a built-in digital marketing plan

One thing I would say is if you build it, they will not so simply flock. If your brand is considering an offline location, you have most likely built up a loyal following on social media, your email database and an efficient conversion funnel online. The trick here is to take the same approach with offline as you did online, and fully utilize it for your brick & mortar venture.

One of the best examples I’ve come across was by fashion label Marc Jacobs at the Marc Jacobs Daisy Pop-up Tweet Shop in 2014.  The three day pop-up store in lower Manhattan used tweets and Facebook posts as viable payment methods, where customers walked out with products after tweeting or posting a picture about the pop-up event.

The pop-up was a huge success and the brand received a ton of PR via social engagement to reinforce the fun playful character of the brand all at the same time. This concept was later replicated at a few additional Marc Jacobs locations, including London.

Marc Jacobs Pop-Up Tweet Shop window

David-Jou-Pomelo

Signage showing how the tweet shop works

From eIQ:

What’s next for Pomelo?

Multiple mall staples in the US, such as BCBG and JC Penny are struggling to keep stores open. Long-standing department stores Macy’s had to shut down multiple stores, while scrambling to launch ecommerce strategies to stay afloat. Ironically, purely digital brands are beginning to adopt offline strategies, most notably eyewear startup Warby Parker and Rent The Runway. If the death of pure play retail is indeed true, then what is stopping Pomelo from pursuing an offline store strategy to become a global fast fashion powerhouse?

BY DAVID JOU, FOUNDER & CEO OF POMELO

Read more about David Jou in eIQ’s SPARK 40

Here’s what you need to know.

1. On demand startup Lalamove gets $30M for expansion to 100 cities

Hong Kong based Lalamove announced it has secured $30 million from investors. Xianghe Capital, a relatively new firm, led the round, while Blackhole Capital and previous investors MindWorks Ventures and Crystal Stream contributed. Now active in 40 cities in mainland China, plus Hong Kong, Taipei, Singapore, Bangkok, and Manila, Lalamove wants to be in 100 cities by the end of the year.

Read the rest of the story here.

 

2. Amazon Go: Open for business to employees only 

Image credit: Taylor Anderson linkedin

There are five ways that Amazon will disrupt a typical American neighborhood before Amazon Go becomes readily available for the public. This includes the digitization of home services and voice enabled digital commerce.

In other news, Amazon Go may open in Seattle’s Capitol Hill neighborhood.

Read the rest of the story here.

 

3. Indonesia’s Tokopedia will explore more fintech services

In the past one year Tokopedia has been aggressively launching new features starting from payment channels to services such as mobile phone and home electricity credits purchase

Throughout 2017, Tokopedia still aims to present more new payments channels to ease transaction for every Indonesian. The company will also open access to more financial services such as loans, insurance, savings, and investment for users in different ends of the country.

Read the rest of the story here.