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Gone were the days when millennials are the center of attention.

Projected to make up 40% of the global consumer base by 2020, Gen Z, those who were born between 1995 and 2010, is the new focus for brands around the world to market to. In Southeast Asia, this generation accounts for 277 million of the region’s 660 million population, with over 50% spending more than $30 a month on online shopping.

In his book, ‘The Gen Z Frequency: How Brands Tune In and Build Credibility’, Gregg L. Witt’s highlights the needs for brands to look beyond the confines of traditional segmentation and focus on cultivating relationships when targeting the consumers from this cohort as they are driven by sincerity and authenticity from brands and its marketing tactics.

What makes them tick?

Growing up with ready access to the Internet doesn’t make Gen Z be more inclined to do online shopping as the connectivity of it all also make them more impatient. They want what they want when they want it.

However, access to smartphones and the Internet do keep them well informed and they care more about the end-to-end brand experience, especially one that have close ties with their social values.

Being digital-natives, this generation is more attuned to technological development and constantly craving new experiences the technology can provide for their shopping journeys such as voice and visual search. The latter part is especially popular when paired with social media, another influential aspect in the life of Gen-Z. 33% of them said they’ve made a purchase after seeing the production social media.

Snap’s Eagle feature that sends users to Amazon’s app or site to buy the product they scan; TechCrunch

“Because they came of age with online shopping and branded social media campaigns, they have even higher expectations for digital shopping experiences,” – Forbes

Platforms like Facebook and Instagram are already capitalizing on their users. Facebook Marketplace already has 800 million users on its platform, making it one of the biggest competitors to existing marketplaces and increasingly important for brands to turn their social media fan page into a sales channel.

It’s about the experience

In Southeast Asia, it’s increasingly common to see ecommerce players and brands employ more creative tactics in the hope to engage their youngest audience.

Taking a page out of Alibaba’s book, Lazada went all out for their 7th birthday celebration, dubbed as the Lazada Super Party, with the performance from 2019 Grammy winner Dua Lipa and several local celebrities to create a “shoppertainment” experience for their shoppers across the six markets via live-streaming.

Gamification is also a popular strategy used by companies to engage consumers from this generation. From ecommerce players like Lazada, Shopee, and Qoo10, as well as ride-hailing app Go-Jek, they’re all employed in-app games to provide a more interactive way for their consumers to earn rebates and points to shop on the platforms.

The entertainment features e-marketplaces across the region introduced to enhance the in-app experience

Meanwhile, cosmetics brand L’Oreal partners with Watsons to introduce an in-app virtual make-up testing service on Watsons’ mobile application across Asia. The feature lets consumers create their own looks, capture it in photos and videos, then ordered the products they use to create the looks.

These experiences are only some of the examples of a unique selling proposition that can attract this generation and it’s important for brands to be more flexible in trying something new in order to appeal to the consumers. Every generation presents a different challenge for brands to stay relevant and with the authenticity the Gen-Z expects from brands, this generation may take you on the experience of a lifetime.

What does the FMCG giant Unilever have in common with grocery retailer The Kroger and a luxury watch brand Audemars Piguet?

The answer is Retail-as-a-Service (RaaS).

Unilever worked with JD.com to distribute goods to both online and physical stores in China, while Audemars Piguet launched its pop-up store on WeChat. In the US, food store The Kroger partnered with Microsoft to increase the level of personalization and productivity in their stores.

The term ‘RaaS’ has clamoring over the headlines over the years, but what exactly is Retail-as-a-Service?

What Is Retail-as-a-Service and Why Is It Becoming a Trend?

An analyst from Kantar Retail, Stephen Mader, defines the Retail-as-a-Service model as when “retailers build open platforms and toolkits that enable brands and third-party sellers to connect with shoppers directly through a physical store”.

Having an abundance of data in hands, these retailers bundle up services, customer data, technology, and its expertise to offer brands a service.

The emergence of ecommerce has reduced the in-store retail visits by billions in the US and part of the reason is because the experience offered by a traditional physical store is no longer enough for the savvy consumers. Besides shopping for products, consumers are slowly and surely seeking an experience when they’re out visiting the store.

“Nearly 3,800 stores are expected to close their doors by year’s end, and the brands that do survive will have done so by creating engrossing experiences.”

In order for the brands to maximize the potential of offline stores effectively, they need to provide engaging experiences to keep the consumers hooked. For example, Sephora combined activities that are completely unrelated to making a purchase into its app, while Samsung’s pop-up store was set up to allows consumers test its technology and experience rather than to focus on sale.

The trend also drives the growth of RaaS platform startups that provide an easy, cost-effective solution to brands wanting to launch physical stores.

In the US, a “Retail as-a-Service” startup b8ta has helped retailers such as Macy’s, Lowe’s, and 15 other consumer brands to set up pop-up stores and physical shops, incorporating technologies and cutting-edge gimmicks to traditional physical retailers.

Chicago-based Leap recently secured $3 million in funding to offer an end-to-end service — that ranges from staffing, experiential design, tech integration, and day-to-day operations — to help digital brands to launch a brick-and-mortar store.

Meanwhile, Fourpost is focusing on providing a ready-to-use retail space for digital native brands looking to open a physical store in the US, lowering the barrier of entry in terms of both capital and time. Each of these companies is tackling the problems that usually came with setting up an offline store and elevate the consumer experience.

“If you shop in one of our stores, you will feel different because we have gone to such a great length to remove the idea of your visit being about buying a product.” – Vibhu Norby, the co-founder and CEO of b8ta.

With over 70 locations, B8ta’s store allows brands to place their merchants and train shop assistants while gaining revenue from space rental and subscription fees from brands; Retail Dive

JD.com spurns the growth of RaaS in Asia

Chinese ecommerce giant JD.com is a big advocate of the strategy.

One of JD.com’s latest initiative to establish RaaS is the partnership with Chinese retailer Better Life. JD.com was also one of the first retailers to develop a mini ecommerce program on WeChat. To date, JD.com has developed and bundled up its marketing, logistics, financial services, and big data as a service and leverage these capabilities to help over 2,000 brands and its merchants.

JD.com also partnered with Google to develop next-generation retail infrastructure solutions by combining JD.com’s supply chain and logistics expertise and Google’s technology strengths.

All of these were the result of JD.com’s mission to go forward by scaling its technology in order to outsource its developments to third-party retailers around the world. Chen Zhang, Chief Technology Officer at JD.com says that making money is not their priority at this stage as he believes that:

“With Scalability, comes profit”

Taking the burgeoning amount of investment coming from China to the region into consideration, it’s only a matter of time for RaaS to kick off in Southeast Asia.

In Indonesia, JD.com has already started the concept on its unmanned store JD.ID X Mart. The store collected data that can be used to understand shopping behavior and optimize inventory, product displays, and other aspects of store management and marketing.

With JD.com’s joint-venture in Thailand, it’s fair to assume that the market will be the next destination for the innovation. And although Alibaba’s Lazada has been quiet on the front, looking at the fierce competition between the companies in the mainland, it seems like a matter of time until Alibaba does so.

Inside JD.ID X Mart in Indonesia. It is JD.com’s first unmanned store outside of China and it is a demonstration of JD.com’s mission to implement RaaS; Pandaily

With the ‘offline is the new online’ trend carried over to 2019, we can expect to see more traditional retailers offering their service and retail space to help online brands expanding their reach and getting more foot traffic in return.

A win-win strategy for the ever-changing landscape of retail.

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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ZALORA, in partnership with Globe Telecom, recently opened its second pop-up store which aims to ease Filipino shoppers into the convenience of online shopping.

Fast fashion continues to evolve and adapt to the shifting demands of consumers, and the partnership between ZALORA and Globe provides a new innovative experience for customers, who were given the opportunity to shop offline for an online marketplace.

Globe Postpaid customers are in for special perks with discounts at the ZALORA Pop Up Store. This discount offer can be availed as many times until Jan 31, 2017, providing half a year’s worth of discounts.

Deviating from the common cashier system, the ZALORA Pop-up Store lets visitors use the power of their mobile phones or through the provided gadgets.

ZALORA has rolled out its brick and mortar initiative in Singapore last year, as an attempt to bring the online experience offline, where customers can browse through racks and get a physical sense of the clothes usually sold online. The purchased products will then be delivered to the customers’ doorsteps.

ZALORA’s temporary retail concept is a good way to reach out to customers at different locations across the world at different periods of time, and allows the brand to inject fresh concepts to buyers who may be bored of simply clicking online to find clothes.

In a highly competitive market, retailers and online marketplaces have to constantly innovative the customer experience in order to maintain shoppers’ loyalty and interest. ZALORA’s offline and online collaboration aims to provide full service to customers, from offering physical products to try on, free wifi to browse collections online and hands-free shipping.

A version of this appeared in Orange Magazine on August 3. Read the full version here.