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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

Ranked as the 11th largest cosmetics company in terms of sales worldwide, South Korea’s Amorepacific booked $4.8 billion in sales for 2016, all accumulated from 25 brands under its umbrella, including Sulwhasoo, Laneige, Innisfree, and Etude.

The company is known for its low to mid-range prices but high-quality products targeted towards the masses, especially young females.

By establishing Korea’s first cosmetics research lab in 1954, less than a decade after being founded in 1945, the company pioneered popular skincare trends such as boosting essences, sleeping masks, cushion foundations, and two-tone lip bars.

Forbes placed Amorepacific at No. 16 on its 2016 list of the world’s most innovative companies, and No. 7 in all of Asia.

Riding the ‘Hallyu Wave’ or South Korea’s pop culture phenomenon, the company has been largely credited to enhancing the Asian-ification multi-step beauty regime around the world.

Amorepacific Southeast Asia expansion
Amorepacific Southeast Asia expansion

The expansion of Korean Wave or “Hallyu” influenced the rise of Korean cosmetics brands. Source: Korean Joongang Daily.

THE CHALLENGE

The company reported a drop in its net profit by nearly 60% in Q2 2017 as geo-political tension between South Korea and China worsened due to the implementation of the THAAD anti-missile system earlier this year.

China was the company’s biggest overseas market, accounting for approximately 20% of total sales.

The tensions impacted a 22.5% drop in domestic sales and nearly 40%less Chinese tourists traveled to the country after travel agencies stopped selling packages to South Korea as insisted by the Chinese government.

With its two top markets performing poorly, Amorepacific had to look to other markets in order to grow and lessen its dependability on China.

THE STRATEGY

While the long-term focus was on typically homogenous markets in East Asia, the company’s ambition to tap into the global market was accompanied by a commitment to creating attractive products for new markets.

“Our growth strategy remains firmly focused on creating innovative, singular brands, and products that appeal to consumers in target markets, and we will continue to work towards becoming a great company delivering new beauty values to customers around the world,” said Amorepacific Chairman & CEO Suh Kyung Bae.

Amorepacific globalization plans seemed to start with Southeast Asia, as the company began dedicating more resources to efforts in the region.

Amorepacific Southeast Asia expansion

Amorepacific presence in Southeast Asia. Source: Pulse News.

 

“The market (ASEAN) is particularly important in that it is a gateway to India and the Middle East because ASEAN consists of multiple ethnic groups, including Indian, and is closely related to those markets,” said Na Jung Kyun, Head of Amorepacific ASEAN Regional Headquarters.

To penetrate the market, Amorepacific reformulated its products to compensate for the region’s humidity, darker skin tones, and the needs of Muslim women (“Muslimah”).

Examples include a lighter washable makeup that can be easily removed and applied for Muslimah that conducts daily prayers, which require a light washing of the face.

The company also developed darker shades of foundation for Laneige and Innisfree specifically sold in the region and aptly named “ASEAN Cushion Shades”.

In addition to localizing its product lines, the company also opened its first research and innovation lab earlier this year in Singapore. The aim is to develop highly tailored products for the ASEAN market and address regulatory issues.

Malaysia, in particular, has caught the cosmetic giant’s fancy as it invested 110 billion won ($95.7 million) to build its third overseas factory in the Nusajaya area – completion scheduled for 2020 – and opened an Etude flagship store in Kuala Lumpur early this month.

Amorepacific Southeast Asia expansion

Etude’s large range of lipstick in its flagship store.

“I believe among ASEAN member countries, the Malaysian market has the highest growth potential. In fact, it has been our goal to open a flagship store in Kuala Lumpur, and introduce the new core values of Etude House to a wider range of customers,” said Etude House CEO Geum Joo Kwon.

Not only has the company focused on traditional brick and mortar stores, Amorepacific has also taken its brands online with Innisfree launching an official brand.com web store, to offer its products worldwide.

Laneige has also opened an official store on popular Southeast Asian marketplace Lazada Indonesia and Thailand.

Often the other way around – first developed then developing markets – the company is eyeing North America for further expansion.

“Our company is operating in the Korean market, the Chinese market, and the ASEAN market. The US market will be our fourth pillar for our business, so we are very much committed to developing the US market,” revealed Amorepacific Chairman and CEO Suh Kyung Bae.

Through Innisfree, the company made its official introduction to the US market earlier this month with a grand opening of its first store in NYC, where it currently offers 900 different items from skincare, makeup, and home scents.

It also expanded to 14 different shades in its cushion foundation to serve a wider range of skin colors.

Amorepacific Southeast Asia expansion

THE FUTURE

The company’s decision to place a bet in Southeast Asia has reaped fruitful results as it overtook competitor brand Estee Lauder and doubled its market share in Asia Pacific to 6% in 2016.

Amorepacific Southeast Asia expansion

It has lagged behind L’Oreal and Shiseido, two companies with the strong digital presence in Southeast Asia.

But the experience and knowledge it picked up in this region are expected to be helpful for its venture into other new markets.

“If we can achieve success in Southeast Asia with this much diversity, it can also be a very good experience for us to enter different countries with great diversity as well,” commented Na Jung Kyun, Head of Amorepacific ASEAN Regional Headquarters.

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.

Beauty is undeniably a big industry but within the sector, the hundreds of well-loved brands are owned by only seven global conglomerates. These household names range from Unilever, L’Oréal to Estée Lauder.

The 182 beauty companies contribute heavily to a beauty market worth $63 billion in the US alone and responsible for shaping consumer ideas about modern day beauty. The US and China alone will account for 54% of the premium beauty segment by 2021.

The chart, illustrated by Business Insider, shows how interconnected beauty brands really are and which houses are most prominent. Below are a few that stand out:

L’Oréal’s footprint

L’Oréal had the most brands on this list – a total of 39 beauty brands ranging from Maybelline to Kiehl’s.

It was estimated that L’Oréal made $27.6 billion in annual beauty sales in 2016. What factors attribute to its success? The company’s ecommerce sales rose by 33% year on year in 2016 and 30% of its media spend was on digital.

For the company, ecommerce isn’t only a peripheral revenue stream, but the new growth engine.

La Roche Posay, a skincare brand under L’Oréal, also has a marketplace presence in Thailand through a flagship shop-in-shop on Lazada.

La Roche Posay flagship store, Thailand

Beyond Thailand, Johnson & Johnson in the Philippines recently launched an official flagship store for its brands, Aveeno and Neutrogena, on Lazada to take advantage of the marketplace’s high traffic.

“Ecommerce isn’t the cherry on the cake, it becomes the new cake,” says Jean-Paul Agon, CEO of L’Oreal Group.

Selling online also helps L’Oreal cut costs,

“With traditional channels, there’s counters, samples and purity materials, when we do ecommerce, the cost is lower,” says Agon.

Unilever’s footprint

Unilever has 38 sub-brands under its management, and many are drugstore staples such as Vaseline and Sunsilk. The company reportedly made $22.3 billion from beauty sales last year.

The FMCG giant announced a partnership with Lazada earlier this year to collaborate on supply chain, fulfillment, data, marketing and social commerce. As Lazada saw a 181% growth surge in one year in its FMCG category, Unilever is looking to grab a large piece of the pie.

Unilever’s digital strategy in Southeast Asia reflects the company’s global ambitions,

“It’s important to change business models, to be inspired by startups, because the model of the past is not the model of the future,” says Keith Weed, CMO of Unilever Global.

Unilever Thailand unveiled a flagship store on Lazada earlier this year, selling ten of its most popular brands on the marketplace.

Unilever, Lazada Thailand

Johnson & Johnson’s footprint

Johnson & Johnson is responsible for nine beauty brands on the list – relatively small compared to the others but what it lacks in quantity, it’s well-known brands make up in popularity among users. Aveeno and Neutrogena are household staples for body and hair care.

The J&J brands can easily be found on the shelf of US drugstore chains such as Rite Aid, and as equally easily across the globe in a department store in Singapore or Bangkok. Offline footprint aside, consumers can also find a lot of these brands online – especially in China.

“Ecommerce is becoming a strategic imperative to winning baby,” says Christina Lu, VP Marketing for consumer personal care, Johnson & Johnson. In China, 15% of baby skincare sales come from ecommerce.

The group is also doubling down on an online strategy in Southeast Asia.

Aveeno flagship store, Lazada Philippines

Estée Lauder’s footprint

The company has reached $1 billion mark in yearly ecommerce sales, with online being Estée Lauder’s fastest growth channel.

“New experiences and innovative high quality products and services, which will encompass digital marketing, disruptive in-store merchandising, compelling creativity and omni-channel offerings is a priority for enhancing the customer engagement experience,” says Fabrizio Freda, CEO of Estée Lauder.

Brands under Estée Lauder, such as Bobbi Brown and MAC leverage from being global powerhouses, and solidify their presence in countries such as Thailand by launching brand.com.

Bobbi Brown Thailand

Why are these beauty brands so successful?

In 2016, global brands such as Unilever, Procter & Gamble and L’Oréal maintained a strong foothold in Thailand even as the market saw a rise in local beauty brands. According to Euromonitor, beauty brands have experienced a faster growth rate in 2016 because of aggressive digital marketing strategies via: 

  • Online content
  • Different purchasing incentives such as click-and-collect
  • Free delivery with online purchases.

What this research shows is the importance of a digital strategy – not many brands have the capability of breaking into markets without a long term online play.

Interested in reading more on beauty? Check out eIQ’s BeautyIQ Series, where we cover different aspects of building a successful beauty brand in a digital age.

The original infographic was published on Business Insider, access the article here.

Here are the key headlines you should know today.

1. Nike, Apple and Playboy amongst the most popular US brands during 11.11

“Alibaba is using this year’s Singles Day to showcase the number of international brands participating, everyone from Apple, Victoria’s Secret, Burberry, Gap, [and] Nike, acting as the gateway to China for these brands and fulfilling Chinese consumers’ insatiable demand for Western products,” said Danielle Bailey, head of Asia-Pacific research for L2 Inc.

Read the rest of the story here

 

2. Malaysia takes serious steps to obtain digital economy goals

“The e-commerce ecosystem will continue to evolve in the future with the maturity of services, and the consumption patterns of the citizens. Two key areas worthy of future attention are figuring out how to retain more revenues from e-commerce sector within Malaysia, as well as encouraging global e-commerce platforms to increase investment in the country,” said Vijay Sundararaman, IDC Malaysia Country Manager.

Read the rest of the story here

 

3. South Korean beauty startup, Althea, moves into Southeast Asia

One of Althea’s co-founders and CFO, Jae Kim, told CNBC the decision to move into the region was a “no-brainer” because of a pent-up demand for Korean beauty products that was being unmet by other companies.

Kim added various payment preferences added to the uniqueness of southeast Asia. When asked if Althea had plans to introduce its own line of South Korean beauty products, he said, “We are thinking about it but no concrete plans yet.”

Read the rest of the story here.

Customer support plays an integral role in delivering an enjoyable online shopping experience. Your online store could be optimized with tips from beautyIQ series, but a poor customer experience will drive 89% of consumers to go to a competitor. The last article of the beautyIQ series will provide guidance on how to best support your Southeast Asian customers online and keep them loyal to your brand.

The importance of customer service seems obvious in traditional brick-and-mortar shops – your salesmen on the floor represent your brand’s image and values through interactions with customers. This is especially true in Thailand and China where shoppers rate customer service as one of the most important factors driving their favorite retailer perception.

For ecommerce, customer care is more integral to the experience as shoppers lack the touch and feel of a product and convenience of a friendly salesperson ready to address any questions. Customer support is also important to containing the damage of a negative review spreading on social media, where more than 50% of consumers in Southeast Asia turn to read product reviews.

Providing excellent customer support can be the make or break of a company as demonstrated by Zappos.com, an online shoes, clothing and accessories store owned by Amazon. Just this July, the company set a new internal record with a customer-service call that lasted 10 hours and 43 minutes. It is stories like these that keep Zappos in the online shopping spotlight and customers coming back.

To be as accessible as possible for online shoppers, brands and merchants should ensure the following:

1. Make Customer Service Contacts Visible

45% of respondents to PwC retail study say reviews, comments and feedback found on social media influence their shopping behavior. This means it is extremely important to quickly diffuse a frustrated customer as they are more likely to turn to social media and post a negative comment regarding your brand.

Mitigate this situation by making your phone number or other contacts highly visible to increase trust in your online store and give browsers a ‘shopping safety net’.

Bobbi Brown’s online store in Thailand lists a live chat button at the top of its webstore and uses large icons for email, chat and phone communication at the bottom of the page, leaving no questions where customers should turn for answers.

customer support

customer support

 

Clinique also lists customer service contacts at the top of its webstore under ‘Help’, which is easy to see and comprehend.

customer support

2. Support Customers on Channels They Use

As internet users spend from 1.6 hours in Singapore to 3.7 hours in Philippines on social media every day, consumers in Southeast Asia show a stronger desire to communicate with brands through social media than consumers elsewhere in the world.

Facebook is the most popular social media network and a quick look at local pages of popular beauty brands show that customers don’t hesitate to express their positive and negative experience online. Developing a capability to respond to customer reviews online will help brands improve their relationship with customers.

In Thailand, global beauty brands state on their local brand.com webstores (Bobbi Brown, Kiehl’s, Estee Lauder, MAC Cosmetics, Clinique, L’Occitane and Laura Mercier) that they mostly provide customer support either by phone on weekdays from 9 AM to 6 PM or email.

Bobbi Brown is the only brand that offers a live chat on weekdays, while Laura Mercier has official account in LINE, one of the most popular chat apps in Southeast Asia. All brands mentioned engage with customers and their inquiries on social media channels like Facebook and Instagram, but the response time varies.

3. Train Customer Service Agents to Listen, Reply and Execute

“I want it all, I want it all, I want it all, and I want it now,” sings rockband Queen, and it sums up quite well the expectations of customers nowadays. Every third customer who has attempted to contact a brand for customer support through social media expected a response within 30 minutes. Research shows that customers even value a quick response over a more informative one.

To track your customer inquiries, use software like Zendesk, as used by Lazada, one of the biggest marketplaces in the region. Keeping track of customer inquiries is important to calculate customer response time and ensure customers who have turned for support have actually received it.

Having knowledgeable customer service agents who are familiar with product properties, brand policies and other issues will speed up time taken to reply to customers and positively impact the chance of a returning shopper. ecommerceIQ sent inquiries to the above mentioned global beauty brands and they all responded within 24 hours.

Customer complaints may not be the most pleasant thing to handle, but it is the best feedback a business can receive as it highlights holes in its business model. Internal data from aCommerce, service provider for ecommerce fulfillment in Southeast Asia, shows that concern about expiry date of skincare or cosmetics products are among the most common complaints in Thailand. Shoppers may ask for a refund or return the product if, for example, two years have passed since the manufacturing date.

It is the responsibility of customer service agents to communicate these problems to the right departments and ensure the same issues do not arise again.

Customer care is the key factor impacting consumer trust – not surprisingly a good customer experience will bring shoppers back for more, while bad support will drive them away. With the widespread usage of social networks in Southeast Asia and across the world, word of mouth has never traveled faster. 47% of digital consumers in Southeast Asia inevitably go online to share their experience, which will impact decisions of other potential customers for buying online.

With this article beautyIQ series finishes. We hope you found the tips useful in creating an enjoyable online shopping experience for your customers. You can read all articles on ecommerceIQ.  

For more insights about ecommerce trends in Southeast Asia, visit the report section on  ecommerceIQ.

 

BY AIJA KRUTAINE AND ANUTRA CHATIKAVANIJ

 

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