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Appearance matters — which is why there are more people purchasing beauty items each year in Thailand. The country’s Cosmetics and Personal Care market is expected to grow 7.7% annually, and with the changing lifestyle that the country’s increasing internet penetration brings, more Thai consumers are turning to online to purchase beauty products.

Why do Thai consumers buy beauty products from online stores

Data from ecommerceIQ Beauty Survey Thailand 2018 shows price is an important factor as 25% of the total 1,874 respondents answered discounts as the top reason to shop beauty products online. Free delivery (24%) followed closely as the second reason.

Figure 1: Reasons why Thai consumers prefer buying beauty products online; ecommerceIQ Beauty Survey Thailand 2018

As the rule of thumb in developing markets like Southeast Asia, including Thailand, consumers tend to be price sensitive.

The Bank of Thailand (BOT) reports that the average salary in the country is approximately 13,789 baht, in line with our report where 35% of our respondents’ monthly income is less than THB 18,000. As such, it’s no surprise why most Thais prefer things that are either free or low-priced, especially for items that aren’t daily necessities.

Figure 2: Average wage categorized by occupation (in baht) in Q2 2018; Bank of Thailand

In addition to price and free delivery, having a wider product selection (19%) is another reason for consumers to purchase beauty products online, most likely due to the lack of offline footprint outside the Metro area. And unlike brick-and-mortar stores, consumers can view and compare a wide array of brands offering similar products in one sitting, allowing them to purchase the cheapest item available in the market in no time.

What beauty items are purchased online?

In general, Thais mostly shop online for skin care products (31%) and color cosmetics (31%), possibly due to high product availability and exclusivity online. Understandably, color cosmetics are mostly purchased by female, while males and third-gender individuals mainly purchase men’s grooming products online.

Figure 3: The category of beauty products purchased by Thai online consumer, depending on gender; ecommerceIQ Beauty Survey Thailand 2018

There are a couple of reasons why color cosmetics are popular among Thai online shoppers. First, there’s sufficient product information for color cosmetics available on the internet, whether it’s from beauty bloggers and vloggers, or product reviews from the consumers.

Figure 4: Search results for make-up tutorial videos on YouTube; YouTube

36% of our respondents say the lack of touch and trial is their main reason why they don’t buy beauty products online. Therefore, the availability of comprehensive product information online might help them overcome the need for having to try it out beforehand.

Figure 5: Top 5 reasons why Thai consumers don’t buy beauty products online; ecommerceIQ Beauty Survey Thailand 2018

Another reason is because color cosmetics are usually priced on a much lower range than other beauty product categories. For price-sensitive societies like Thais, they’re more likely to only shop on affordable products like color cosmetics. This is also supported by our survey findings where over 50% of Thais only spend less than 1,500 baht for beauty products.

Figure 6: The average order value Thais are willing to spend on beauty products in both online and offline channels; ecommerceIQ Beauty Survey Thailand 2018

Where do most Thai shoppers buy their beauty products?

For online purchases, most Thais choose to shop on Lazada (30%) and Shopee (27%), the two biggest ecommerce platforms in Southeast Asia. In line with the top reasons to shop this category online, the two websites are chosen for the many discounts they offer (34%) and because consumers find it convenient to shop on these platforms (35%) as they’re already familiar with the sites.


Figure 7: The online channels Thai online consumers usually buy beauty products from; ecommerceIQ Beauty Survey Thailand 2018

Figure 8: A price promotion banner on the homepage of Lazada Thailand

What does this mean for beauty brands in Thailand?

Generally, Thai consumers aren’t loyal towards a specific brand and are willing to try out other brands. Over 57% of consumers cited looking for variations as the main reason they are open to trying other brands — giving brands the opportunity to always grab more market share.

Figure 9: Factors that drive Thai consumers to change personal care brands; ecommerceIQ Beauty Survey Thailand 2018

And with most Thais using online platforms such as social media and brands’ websites as the place to learn about new beauty trends and products, leveraging online channels have become more important than ever for brands to attract more consumers.

Figure 10: An example of a Thai beauty influencer on social media; Wonderpeach’s Instagram

Figure 11: Social media is the number one destination for Thai consumers to learn about the newest beauty trends; ecommerceIQ Beauty Survey Thailand 2018

However, having a presence online will do brands no good without knowing what consumers actually want. Our survey results indicated that the first thing Thai consumers consider when choosing beauty products is the function (25%), followed by price (22%) and product reviews (17%).

In this context, function means the type of product, for example anti-aging, whitening, or acne-treatment. In Thailand, for example, beauty products with whitening agent is the most popular because of the local beauty perception.

Figure 12: Snail White Body Wash in various ingredients and functions; Snail White Official Facebook

Figure 13: The key features Thais look for when buying beauty products; ecommerceIQ Beauty Survey Thailand 2018

At the end of the day, what matters the most for consumers are good products that bring good results, and product reviews have become an increasingly important part of their decision-making process as it comes from real consumers.

Brands can take advantage of platforms like ReviewIQ to help them connect with real reviewers to leave product reviews after purchase on their official store on e-marketplaces like Lazada.

Figure 14: Using ReviewIQ, Nivea has successfully increased the number of reviews from their consumers for their shop-in-shop on Lazada Thailand.

Over 30% of our Thai respondents are loyal to one brand when choosing products from the beauty category. This shows that as long your brand is offering the right products at the right price and quality, consumers will be less willing to use products from other brands.

The full report for Online Beauty Consumers in Thailand will be out in November 2018. Subscribe to our weekly newsletter and be the first to know.

Are you a beauty brand looking to expand online in Southeast Asia? Contact us at hello@ecommerceiq.asia for expert ecommerce advice on growing your brand.

Given the proximity of Southeast Asia’s markets, consumer behavior and preferences across the region are expected to be relatively similar but brands present in multiple markets can contest that there are several differences between the countries. It behooves brands to prioritize customer feedback.

As there is no perfect product, there are hundreds and thousands of good and bad reviews floating around the web and its important to not weigh them equally. To add value to customers and merchants, online platforms like Lazada mark quality reviews with a badge to verify the purchase of the item by the user.

Reviewer with a purchase history of the SKU is verified on Lazada and identified with a badge. Source: Lazada Indonesia.

Top: Fully recommended! I’ve been using hyper glossy for over four years, there’s nothing as comfortable as this one, even though I have tried using other eyeliner products from Maybelline or other brands, I’m still loyal to this one. Very waterproof, long lasting. By the way, the packaging is very safe, tidy with layered bubble wrap and fast delivery. I’m very satisfied with the service from Maybelline Indonesia.

Bottom: Satisfied. The eyeliner was delivered yesterday, 3-days delivery. Good waterproof eyeliner, people who said it [the product] is small probably never bought Maybelline eyeliner before. It’s small but it could last five months.

Data-analytics platform BrandIQ compares feedback habits of customers on Lazada Indonesia and Lazada Thailand for brands in the Beauty & Health category to understand which markets are more satisfied with the same products.

Beauty shoppers Indonesia Thailand

Customers on Lazada Indonesia leave more than three times the number of reciews on the platform than customers on Lazada Thailand.

Not only did BrandIQ find that Lazada Indonesia had more than three times the number of reviews on Lazada Thailand in the Beauty & Health category, there were also more verified reviews.

The number becomes even more interesting when factoring in total SKUs on Lazada Thailand is two times more than on Lazada Indonesia, 2,136,259 and 1,278,324 respectively (as per January 11).

Looking at the reviews for four beauty brands with presence on both Lazada Indonesia and Lazada Thailand — L’Oreal Paris, Maybelline, Garnier, and Nivea — showed that although Thais left less reviews, they reported more positive things about their purchase than Indonesians.

By filtering for positive keywords such as ‘good’, ‘fabulous’, ‘amazing’, and negative keywords like ‘bad’ and ‘terrible’, BrandIQ is able to determine the overall customer sentiment for a brand’s products on a marketplace.

One keyword that appears most often on Lazada Thailand is ‘สีสวย’ or ‘nice color’, appearing in 12.47% out of all the Beauty and Health category reviews.

While on Lazada Indonesia, keywords like ‘tidak sesuai’ or ‘doesn’t fit’ showed up the most in reviews with negative sentiment in the same category.

Beauty shoppers Indonesia Thailand

Reviews from Maybelline customers in Lazada Thailand and Indonesia with the most popular keywords for each sentiments respectively.

Top: Nice color. The color is long lasting, nice color, and it’s 50% off! Super awesome.

Bottom: Two stars. Good product, only the color doesn’t look like the picture.

What does this mean for brands?

Although all customer feedback is important for brands, the ability to distinguish verified reviewers – those who have purchased – over random or spam users will give companies a more credible overview of how well received their products are in different markets.

Using Maybelline reviews as an example, Indonesians tend to leave more product reviews and appear less satisfied than their Thai counterparts, making it beneficial for Maybelline to either modify their product selection and/or address the complaints.


HOW IS YOUR BRAND PERFORMING ON SOUTHEAST ASIA’S TOP MARKETPLACE?

Cosmetics and beauty products have always performed best online, especially given recent 11.11 performance.

To grab growing momentum online, more brands are releasing new product lines through ecommerce. Lip Lingerie is the latest range of liquid lipsticks from American cosmetics brand NYX.

Originally offering 12 shades of nude colors when it was released last year, the brand has since added an additional 12.

NYX Lip Lingerie Lazada

Lip Lingerie complete color variants on the landing page of NYX’s global website

On Lazada Thailand, where NYX sell its products through official shop-in-shop NYX Professional Makeup, search results from product keywords ‘NYX Lip Lingerie’ results in 683 SKUs, the majority made from unofficial sellers.

What would make the consumer choose one product over the other given they are the same?

Apart from customer ratings and seller reputation, price has always been a strong factor in purchasing decisions.

Using data platform BrandIQ, we compared the selling price (price after discount) for Lip Lingerie items from the top five sellers on Lazada Thailand, including NYX’s own SiS.

From the analysis, the listing price – the price before discount – ranges from 325 THB to 590 THB; the lowest selling item provided by NYX Professional Makeup store itself.

However, when it comes to the selling price, the cheapest is provided by a third-party seller Tohkrengpang Shop.

Among the top five sellers, Tohkrengpang Shop has the second highest listed price (530 THB), but with 53% discount that it offers, the selling price for NYX Lip Lingerie on the store fell to 250 THB.

NYX Lip Lingerie Lazada

Seller Tohkrengpang Shop offers the highest discount and the lowest price for NYX Lip Lingerie.

Discounts offered by the third-party sellers range from 11% – 53% of the listed price. NYX Professional Makeup is the only seller that doesn’t offer any discount for the product, elevating its price to the middle among the other top sellers.

Why does NYX not offer discounts? According to Small Business Chron, consumers tend to associate low price with low quality, particularly when the brand name is not familiar.

Low prices may drive sales for a limited time, but do not build customer loyalty.

Seems like NYX is playing the long term game.

NYX Lip Lingerie Lazada

NYX Official Store is the only one that doesn’t display a discount on the product.

Download the infographic here.


HOW IS YOUR BRAND PERFORMING IN SOUTHEAST ASIA’S TOP MARKETPLACE?

THE BACKGROUND

Established in 1995, Wardah is Indonesia’s first halal-cosmetics brand born from parent company Paragon Technology and Innovation (PTI). Halal refers to what is “permissible” or “lawful” in traditional Islamic law.

In a country where muslims make up more than 87% of the population, Wardah has gained popularity among young Indonesian women, especially by focusing on halal-compliant products.

The brand claimed to control approximately 30% of the market’s makeup segment and was identified as the only Indonesian cosmetics brand to record sales growth of more than 20% in 2015-2016.

Among Indonesians, Wardah is known as an affordable brand as the company’s 300 cosmetics products in makeup, skincare, and fragrance are within a price range of IDR 16,000 – IDR 667,000 ($1.20 – $50).

The company currently offers its products at 22,000 store locations in Indonesia and Malaysia and partnered with Symon AnMi to sell an assortment of products in Bangladesh.

In addition to offline stores, they’re also selling on marketplaces like Lazada and Sociolla while their brand.com serves as only a catalog and resource for company information.

THE CHALLENGE

In the years following Wardah’s inception, it remained small and local because its marketing strategy projected a brand exclusively catered to muslims and relied on a multi-level marketing (MLM) strategy to reach people in Pesantren, an Islamic boarding school.

“It’s really hard at first to sell halal cosmetics, people even accused me of selling religion,” said Nurhayati Subakat, Wardah’s Founder and Owner.

For so long, Wardah products could only be found at salon counters because it was unable to compete with both local and global cosmetics brands such as Sariayu Martha Tilaar, Mustika Ratu, and L’Oreal.

THE INNOVATION

To improve the company’s image, Wardah began to push more inclusive campaigns that included models without hijabs published across television ads and print media.

Its message was clear, Wardah halal-cosmetics are not only for muslims or hijab-wearing individuals. 

Halal Cosmestics Wardah

Wardah’s advertisement featuring famous Indonesian actresses from different generations

The company’s popularity was also given a boost after it became the official sponsor of Indonesian box-office movie “99 Cahaya di Langit Eropa” (99 Lights in European Sky). Since then, Wardah has regularly been spotted partnering with larger scale movie productions and fashion events by Indonesian designers.

One of these designers is Anniesa Hasibuan, the first Indonesian to present a New York Fashion Week collection that also incorporated hijabs.

Halal Cosmestics Wardah

Anniesa Hasibuan’s NYFW 2017 collection sponsored by Wardah

She also uses her runway to address current global issues by employing immigrant-only models for her shows. Hasibuan’s powerful representation of the ‘modern muslim woman’ is a strong message that Wardah wants to associate its brand with as it speaks to the company’s target demographic.

“I’m here bringing the beautiful voice of the Muslim women, the peace and the universal values that fashion can offer,” expressed Hasibuan.

THE STRATEGY

Following its endorsement of Hasibuan, the company is further positioning itself as a prestigious brand for active and worldly young women by working with famous female public figures to become their brand ambassadors.

halal cosmetics wardah

Wardah’s Brand Ambassadors

The brand’s strategy continues to bathe in the fashion and celebrity limelight. Rightly so as 68.4% people in Indonesia have made a purchase influenced by celebrity endorsements according to a survey by MarkPlus Insight.

“We know that before Wardah is considered as an old (brand), now Alhamdulillah we are becoming more modern,” admitted Subakat.

halal cosmetics wardah

Face & Body category scored 7.28 in the scale of 1 to 10 of how likely is celebrity endorsement affecting intention to purchase.

Understanding that fashion and cosmetics go hand in hand, the brand has organised its annual Wardah Fashion Awards competition since last year to scout young, aspiring designers and empower them to grow as fashion-preneurs.

“Progress in the fashion industry will help the cosmetics industry, especially here in Indonesia,” explained Rifina Affandi, Wardah Brand Manager.

The participants in the program are mentored in design innovation as well as business strategy before showcasing their creations in a fashion show where the models sport Wardah products.

The company was also the official makeup partner for Asia Islamic Fashion Week that was held in Kuala Lumpur last April.

“Our participation in this event is to strengthen our position in global market, as Asia is geared to be the center of the world’s Islamic fashion,” said Salman Subakat, Wardah Marketing Director.

All of their efforts and sponsorship dollars have not gone to waste. Starting as a virtually unknown brand a decade ago, Wardah has now recorded nearly 50% growth in annual revenue in 2016.

THE FUTURE

Though Wardah has made large strides in Indonesia, the company is not satisfied with only one market and is eyeing expansion to other countries.

“We want to extend our [domestic] success to the global market, especially in the Association of Southeast Asian Nations (ASEAN),” said Nurhayati Subakat.

Not surprising as the Halal cosmetics market is expected to reach $54 billion in 2022.

Indonesia’s young population is increasingly making more money year on year. Women especially have seen an increase in the employed rate from 46% of the working age of women population to 52% in a decade. What does this mean for businesses looking at this market? A growing opportunity for health, fashion cosmetics companies.

It’s no surprise then that Indonesia is named as the fastest-growing market for beauty in Asia in terms of compound annual growth rate according to the latest report by Euromonitor International, Markets of the Future: ASEAN in 2020. Domestic sales of beauty products in Indonesia totaled IDR 11 trillion or $818 million in 2015 based on data from the Ministry of Industry.

The country’s growth for Beauty and Personal Care (BPC) market has successfully outperformed its more mature sisters – China and South Korea  – as seen below. Indonesia’s Government Regulation No. 14 Year 2015 has also named the high performing sector as a primary mover of the future economy.

indonesian beauty sociolla

Indonesia is at the top of past growth of Beauty and Personal Care (BPC) markets in Asian markets. Source: Euromonitor

As the largest market in Southeast Asia with a GDP of $888.5 billion and a population of 250 million, analysts predict Indonesia could rise up to the top five markets for cosmetics in 10 – 15 years. While women continue to be the dominant shopper of cosmetics, the male market segment is steadily increasing and richer, younger generations are becoming regular consumers.

A player who has been in the game since 2015 is Sociolla, Indonesia’s first beauty retailer that offers brands such as Marc Jacobs, Laneige and Shiseido to go head to head with Sephora Digital. Chrisanti Indiana, one of the co-founders and CMO of Sociolla, shares the company’s story with ecommerceIQ.

Local versus international brands

International beauty brands and imported goods accounted for 60-70% of total 2015 domestic sales in Indonesia, roughly $441 million. Brands from the US experienced a 3% boost in total imports due to an increase in demand from Indonesians, particularly in Jakarta and tier-2 cities.

Popular Indonesian players like Mustika Ratu, Sari Ayu Martha Tilaar and Wardah are facing fierce competition with international household names such as longstanding L’Oreal, Unilever, and Sephora, Kiehl’s that have entered the market through specialty stores.

Reputation and name-recognition continue to be the drivers for cosmetics purchase in Indonesia.

indonesian beauty sociolla

Source: agnesoryza.com

Sociolla understands its Indonesian audience has low levels of brand-loyalty and more than 30% are willing to try a new product next purchase. This means the company consciously works with a variety of brands overseas and local brands, especially the up and coming ones like Polka and Rollover Reaction to attract more shoppers.

While personal care products from giant brands such as P&G are available even at the local mom and pop stores across the country, imported and niche cosmetics brands are limited to the big cities. The lack of an offline footprint outside big cities in Indonesia is causing people to turn online to find their favorite brands.

Channeling beauty online

WeAreSocial estimated 132.7 million Indonesians are now online and 48% of them use the internet to find products and/or services. A recent survey conducted by ecommerceIQ found that 57% of Indonesians shoppers start their product search on an e-marketplace like Lazada.

With so many Indonesians browsing online, it would make sense for brands to have a bigger presence on the web. However, there aren’t many options for personal care products online as shown in ECOMScape: Indonesia, the country’s ecommerce landscape by ecommerceIQ.

“The digital sector began to take off at the beginning of 2015 so knew we wanted to focus on a vertical. It wasn’t hard to choose beauty as I’m a beauty enthusiast and we didn’t see any strong players in the sector at the time,” says Chrisanti.

Going online was a no-brainer for the founders but convincing local and global beauty brands – many of them already established companies – was one of the biggest hurdles.

indonesian beauty sociolla

Educating brands like Menard and Bioderma to utilize the internet as a sales channel became the company’s standard operandi. To date, there are 197 brands registered on Sociolla’s platform and the team continues to work closely with each one to optimize product assortment and seasonal campaigns.

“I would say one of Sociolla’s largest achievements is unlocking the potential of these brands online and gaining their trust to work exclusively with us,” Chrisanti comments.

BLP Beauty is a local lipstick brand that sells exclusively online through an Instagram account and Sociolla platform. Through a series of marketing campaigns on Instagram, BLP was able to successfully sell more than 4,000 lipsticks in only two hours.  

indonesian beauty sociolla

Sociolla is also using content SEO to educate and attract people to visit the website using its ‘Beauty Journal’ blog. With more than 2,000 entries published on the blog since late 2014, Sociolla regularly writes about beauty tutorials, product reviews, and events.

The main site attracted more than 2.4 million visitors in March alone, leaving behind its closest competitor – Sephora Digital.

indonesia beauty Sociolla

Indonesia’s grey market

Brands were not the only ones they had to convince. Getting customers to shop on its platform was another hurdle they had to overcome.

“I think our fiercest competition is the grey market, especially popular sellers on Instagram because they can price items for very cheap while as an official partner, we adhere to brand guidelines to provide quality goods,” says Chrisanti.

In 2016, almost 70% of Indonesian internet users were using Instagram according to data from JakPat. It isn’t surprising that over 4 million posts show up in the search results for #kosmetik, the Indonesian word for cosmetics. Meanwhile, search results for #kosmetikmurah (cheap cosmetics) and #jualkosmetik (sell cosmetics) showed up with more than 3 million and 2 million posts, respectively.

indonesian beauty sociolla

Although prices may be cheaper, the biggest problem with these social sellers is the disappointing counterfeits and unlicensed products by the National Agency of Drugs and Food Control in Indonesia.

“Shopping online in the region has always been shrouded by trust issues. Through official partnerships with brands, we are assuring customers they can trust our products. Our relationship with the brands is our biggest advantage,” says Chrisanti.

BeautyLink is the company’s answer to a ‘regulated’ grey market. The marketplace is a space for certified third-party merchants to sell brands that aren’t being offered on Sociolla due to lack of local licenses, the number of minimum SKUs, etc. To ensure the authenticity and quality of the products, Sociolla does a careful check on all sellers during the initial agreement phase, monitors user feedback and regularly samples seller inventory.

Brands who want to manage their own online presence can also register on BeautyLink. The marketplace houses 480 brands, including The Body Shop, Jo Malone, and Clinique, which makes up over 8,000 SKUs.

Marketing channels beyond online

Aside from online marketing, the offline world plays a big part in its strategy. More than 50% of Sociolla buyers come from Java, followed by Sumatra (15%), and Sulawesi (5%).

To reach these markets, the company has hosted numerous activities such as Sociolla Soirée with the country’s top beauty bloggers/influencers, secret customer getaways, and organizing pop-up stores to try product samples.

indonesian beauty sociolla

Source: Behance

The company also participated in Femme Expo, the biggest Women Expo in East of Indonesia, by opening its own beauty section named ‘Sociolla Beauty Week’ and bringing portfolio brands from Jakarta to showcase products at the expo to 39,000 attendees.

A pretty bright future

The company recently raised an undisclosed Series B from Istyle, the Tokyo-based internet company with @Cosme, the largest cosmetics and beauty product community website in Japan, under its belt. In light of its second anniversary, Sociolla is using the money to improve Sociolla Box — a subscription model it launched last year as one of its marketing initiatives.

They currently have around 370 individuals registered for the service who will receive a monthly beauty package filled with 4-5 beauty products chosen by Sociolla. The ability for customers to customize the beauty box is in the works.

indonesian beauty sociolla

To further cement its standing as a beauty ecosystem and improve user experience, the founders have also built Sociovit, ecommerce for healthy lifestyle products such as vitamins, fitness supplements, wellness products, etc.

indonesian beauty sociolla

“Customer feedback is the company’s main inspiration for every new product we develop,” says Chrisanti.

The dedication to its users and emphasis on localization is propelling Sociolla well on its way to becoming the online beauty destination in Indonesia.

indonesian beauty sociolla

Sociolla founders. Left to right: Christopher Madiam, Chrisanti Indiana, and John Rasjid at Sociolla’s pop-store in Bandung

BY: RARA KINASIH