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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.

Earlier this year, Amazon partnered with the Vietnam Ecommerce Association (VECOM) to provide ecommerce services for local online businesses under VECOM. They also held numerous workshops for sellers, the latest one being in Hanoi and Ho Chi Minh City, called Selling Globally on Amazon.

Similarly, Alibaba-backed AliExpress has been looking to sign up more Vietnamese sellers on its platform since July as it teams up with OSB Investment and Technology JSC to support international exports by Vietnamese small and medium-sized enterprises (SMEs).

Why Vietnam?

Vietnam is one of the biggest exporters in the world, ranked at number 28 out of 225 countries at $214 billion of export value in 2017. Based on 2016’s exports data, Vietnam’s main exports are machinery products, textile goods, and footwear and headwear products.

Figure 1: Vietnam’s amount of exports and its categories in 2016; OEC

Vietnam has become a manufacturing hub with one of the lowest minimum wages in the ASEAN region at $147 to $167 per month (Figure 2). Expanding infrastructure for new projects and a rapidly increasing working age group have promoted low-cost mass-production with many global companies establishing manufacturing bases in the country.

Global companies are benefitting from low production costs but local businesses also have access to ready-to-sell goods at competitive prices. In Vietnam, some 600,000 SMEs are searching for appropriate channels to expand their market share. Ecommerce offers this opportunity from the comfort of their homes.

Figure 2: Minimum wage in ASEAN for 2017; World Economic Forum, Philippines’ National Wage and Productivity Commission, The ASEAN Post

As in all other developing countries, ecommerce in Vietnam is mushrooming. Statista forecast annual growth at 16.8%, higher than Thailand (12.8%) and Indonesia (13%). However, the Vietnamese market is small and still in its infancy. Therefore, the international market offers economic opportunities for local retailers.

Vietnamese merchants are attracted to global e-marketplaces which access customers searching for a broader variety of products and enable international sales at low cost. Online merchandising boosts sales while mitigating the risks of the local economic downturn.

AliExpress executive Yang Ninh commented, “Vietnam, as one of the most diverse manufacturers in the world, is an important destination for Alibaba.”

Comparing between Amazon and AliExpress

To know which platform suits Vietnamese sellers, we compared the specifications of the two platforms in the table below.

Amazon

AliExpress

  • 2.435 billion monthly visits at an average of 6 minutes per visit
  • Most Amazon customers have a high annual income (above $30,000)
  • Visitors are mainly from the Americas, Australia, Western Europe, and South and East Asia (Figure 3)
  • Available in different languages with localized websites in the US, UK, and Japan
  • Monthly subscription fee of $39.99 for those selling over 40 items per month – professional plan or per-item fee of $0.99 for each item sold – individual plan
  • Referral fee of 3-45% of total sales price or a $1 applicable minimum referral fee, whichever is greater, depending on the product category
  • Shipments completed either by sellers using courier services from providers like UPS, DHL and local post or fulfillment by Amazon
  • 549 million monthly visits at an average of 8 minutes per visit
  • Most AliExpress customers have lower annual income (below $30,000)
  • Visitors are mainly from the Americas, Australia, Europe, Asia, and a few African countries (Figure 3)
  • Available in different languages such as French, Spanish, and Korean serving over 200 countries
  • Annual service fee of at least $1,436 (RMB 10,000) and 5-8% seller commission; amount depends on the product category
  • Annual service fees are eligible for 50% and 100% discount if sales reach a certain amount depending on the product category
  • Shipments completed either by sellers, AliExpress or other delivery companies

Figure 3: Where visitors of Amazon (top) and AliExpress (bottom) are located and their average income; Alexa

Whether Vietnamese sellers choose Amazon or AliExpress depends on the target market

Those selling high-end, expensive products may prefer to sell on Amazon because site visitors have higher purchasing power and the majority hail from developed countries. Those wishing to target consumers in the Americas may also prefer Amazon which has a stronger top-of-mind awareness in the region.

Conversely, AliExpress offers Vietnamese sellers a wider global customer base. AliExpress has a more extensive global presence (Figure 3), with site visitors to the platform spending on average 2 minutes longer than at Amazon.

However, the annual service fee at AliExpress is higher than Amazon. Sellers with limited funds or those just starting out might be better to opt for Amazon which also offers different pricing plans for individuals and professionals. Meanwhile, AliExpress discounts annual service fees for retailers if they manage to attain the required annual sales specified for particular categories. This offers value for those selling hundreds or thousands of items.

Vietnam has many local ecommerce players, providing sellers with alternative options for domestically growth. However, reliance on these e-marketplaces alone is not sufficient for Vietnamese sellers to tap international customers.  Listing on either or both of the AliExpress or Amazon platforms offers the most realistic opportunity to maximize sales.

Earlier this month, Shopee launched Shopee for Men in the Philippines, an in-app store offering male-oriented products in various categories, ranging from Electronics and Sports to Fashion and Personal Care.

Figure 1: Landing page for Shopee for Men in the Philippines; Shopee Philippines

Similar to the strategy adopted for the main platform, Shopee for Men offers big discounts to attract the male audience. By leveraging its partnership with brands for ShopeeMall, the platform curates the selected products of numerous leading brands favored by the male population such as Asus, Xiaomi, Bosch, and Spalding. The platform also offered limited sales of the newly released iPhone XS during its promotional period.  

Why did Shopee launch its Men platform in the Philippines?

The Philippines is the third market where Shopee launched its dedicated platform for Men, after the previous launch in Indonesia and Thailand, and it’s not without reason.

The country has a slightly higher male population (53.8 million) than female (52.8 million), and the Filipino male population is forecast to rise over the years steadily. Moreover, most of the Philippines’ population belong the younger generations of millennials and gen-Z. These generations are more likely to be digital-savvy, have higher purchasing power, and more willingness to spend money. In short, the driver of ecommerce growth in the Philippines.

Figure 2: There are more male than female in the Philippines; PopulationPyramid.net

A report from Paypal and Ipsos already forecasts the country’s online spending to increase by 32% in 2018 to $2.2 billion (PHP 121. 9 billion) from $1.7 billion (PHP 92.5 billion) in 2017.

However, online shoppers in the Philippines are still predominantly female, presenting a mostly untapped male audience with stronger purchase power, as found in our latest e-marketplace survey.

Figure 3: Male online shoppers in the Philippines are more likely to spend more per online purchase; ecommerceIQ E-Marketplace Survey Philippines 2018

What do Filipino male consumers usually buy online?

OLX Data Hub found that Filipino male consumers like to shop online for items in categories like furniture, sports, health items, and surprisingly baby-related goods. Millennial men primarily are the driver of this growth.

Figure 4: The top three categories with the highest growth in 2016; OLX Data Hub

Shopee’s Head of Commercial Business Macy Castillo confirms this finding as they discovered men aged 25-30 years old mainly buy wellness, hobbies, and sporting goods. However, they also found that the top purchases among age groups differ.

The 20-24-year-olds group tends to buy more fashion items. This group also shops online more often than other age groups, despite their lower purchasing power since they’re either university students or first-time job seekers.

Meanwhile, skincare and baby & children products are more popular among the 31-35-year-olds group, of whom are more likely to have a family and already in the working force, giving them a higher purchasing ability to buy items that are more costly like wellness and children goods.

Figure 5: Most Filipino men marry at ages 25-29; Philippine Statistics Authority

What’s the most popular online platform for Filipino men?

Generally speaking, Lazada is the most popular B2C e-marketplace preferred by most Filipinos, followed by Shopee and Zalora in the second and third rank, respectively.

Figure 6: Number of visitors to Philippines’ B2C ecommerce platforms in October 2018; SimilarWeb, ecommerceIQ

Women make up for the majority of online shoppers in the Philippines, and it can be seen in these sites’ demographic as well. As such, there are more products available on the site for women than men online.

Figure 7: Lazada, Shopee, and Zalora’s visitors are mainly composed of Filipino women; Alexa

For example, a simple search of “men” in Lazada will give you around 4 million items whereas “women” will display almost triple the number (11.8 million) — showing the disparity in the number of goods available for different genders. A similar search on Shopee will also show the same result, depicting high opportunity for ecommerce companies to appeal to the Filipino male consumers.

Figure 8: Search results on Shopee for “Men” and “Women” on 15 October 2018; Shopee Philippines

According to the same Paypal report, the top two reasons to shop online for Filipino consumers are convenience (82%) and the availability of multiple platforms (52%). By presenting male consumers the same convenience to compare hundreds of similar items within minutes and providing more products for them, we can expect to see a rising influx of Filipino male consumers on these platforms in the coming years.

How can ecommerce websites attract more male shoppers?

Having a website or a dedicated landing page solely for male shoppers is a step in the right direction as it allows them to save time from having to comb through products mainly positioned for females and lets them start shopping immediately.

Although in general men and women shoppers value the same characteristics from online shopping platforms, our survey found the subtle differences that e-marketplaces can use to take advantage of in attracting the male segment.

One of the most important values for male shoppers is site reputation, as they’re less likely to browse through multiple sites everytime they’re doing their shopping. By offering an overall good shopping experience and providing additional values such as same-day delivery, a better mobile app, and easy return policy, e-marketplace have higher chance to convert them to be loyal shoppers.

Figure 9: Comparison of the importance of ecommerce characteristics between men and women; ecommerceIQ E-Marketplace Survey Philippines 2018

Compared to women, men tend to shop less frequently online. But many of them are more willing to shop in full price retailers and spend more money per purchase, illustrating how men might not be as price-sensitive as female consumers.

Online platforms like Shopee need to offer more than just low price to get more men to want to shop online.

Figure 10: Online shopping frequency comparison between men and women; ecommerceIQ E-Marketplace Survey Philippines 2018

It’s early days for the male online shoppers in the Philippines, and the verdict isn’t out yet, but if the data says anything, there’s no doubting the potential of this segment. And if Shopee’s attempt proves to gain enough traction, we can expect more male-oriented online platforms in Southeast Asia in the future.

In this day and age, a mobile phone can do more than making a phone call; it records the time, takes pictures, orders meals and even measures your heart rate. Who needs a watch these days?

You may be surprised to learn that even though 81.4% of Thais own a mobile phone, many still wear wrist watches.

Mobile phone user penetration in Thailand; eMarketer.com

What do Thais Look for when Buying a Wrist Watch?

Out of the 877 Thai respondents, 94.9% wore a watch and more than half (56.0%) owned three watches or more. Data from the ecommerceIQ Wrist Watch Survey Thailand 2018 indicated that watches remain a necessary accessory among Thai consumers with demand still high despite a large number of smartphone users. Statista reported a total of 25.75 million smartphone users in Thailand but the days of the wristwatch are not yet over.

Apart from the obvious reasons to tell the time (62.5%), 13.5% also wore a wristwatch as an accessory. Male respondents especially mentioned that wearing watches was the easiest and classiest way to look good. Around 8.6% cited that wearing a watch reflected their status and style and helped to boost their confidence.

For this reason, design was naturally the most important factor that Thais considered when buying a wristwatch, followed by price and brand name. Brand name also reflected status and personal style. For example, Rolex is still highly regarded as a prestigious timepiece brand in Thailand. Wearing a Rolex advertises high income and social status.

Price, naturally, is another high-ranking factor. Watches are deemed as expensive accessories and not something to be bought on an impulse. Thais only buy new watches every few years (58.7%). Most respondents indicated that they were comfortable to spend around 1,000-30,000 baht on a wristwatch.

Factors that Thai respondents look for when buying a watch; ecommerceIQ Wrist Watch Survey Thailand 2018

The top three watch brands preferred by Thai respondents were Seiko (25.6%), Casio (21.6%), and Omega and Rolex (10.9%).  What do we learn from this ranking?

  • Seiko is a Japanese company that revolutionized the industry and is known for its long history of watchmaking. Prices range from 5,000 to 30,000 baht and the brand is popular among 20K-50K baht income earners.
  • Casio offers a diverse product assortment and brands including G-SHOCK and Baby G. Casio are known for their affordable but attractive designs.
  • Rolex and Omega are popular among consumers aged 40 and above. These two brands are preferred by the older generation, while youngsters opt for IWC or Tag Heuer as luxury timepieces.
  • Daniel Wellington, is a hipster brand that rose to popularity fast and won the hearts of the younger generation. Up to 75% of respondents aged 18-25 wore this brand. Tag Heuer is also popular amongst the 31-40 age group.

When asked about the media channels they used for news and information about timepieces, 48% of the respondents stated that they received news from social media with 33.7% using brand websites.

In Thailand, 74% of the population are active social media users, as reported by ETDA 2017. Thus, it does not come as a surprise that social media was the main channel respondents used for news concerning watches. Brand websites offer more genuine and trustworthy news about the brand itself.

Media channels that Thais use for news about wrist watches; ecommerceIQ Wrist Watch Survey Thailand 2018

Where do Thais Buy Wrist Watches?

Despite the heavy usage of the Internet to consume news, 76.7% of Thais still buy wrist watches from offline stores. The most popular offline channel used by 55.5% of the Thai respondents was Central Department Store because of the store’s credibility.

Like most department stores in Thailand, Central Department has a dedicated section for wristwatch sales. Apart from their reliable reputation, buying a wrist watch from Central Department Store is very easy and convenient. Up to 19% of the respondents looked for convenience and a holistic service, especially regarding after-sales service when buying a watch. Every Central Department Store has a ‘Watch & Clock Clinic’ that offers after-sales service for watches bought from the store.

Watch & Clock Clinic at Central Department Store, Pinklao Branch

Only 23.3% of the respondents bought wrist watches online. Lazada received the highest scores in terms of an online sales channel where Thais buy watches. The second preferred option would be the brand website, due to its credibility.

The online channels Thai respondents choose to buy watches from; ecommerceIQ Wrist Watch Survey Thailand 2018.

 

Similar to other product categories, the top reason cited for opting for online channels was because of convenience; ecommerce saves time and is hassle-free. On the other hand, some Thai respondents refrained from buying wrist watches online due to a perceived lack of credibility in the sellers and/or marketplaces. Offering a warranty and after-sales service are also factors that some online sellers fail to provide.

Reasons why Thai respondents bought wrist watches from online channels; ecommerceIQ Wrist Watch Survey Thailand 2018

It is also interesting to note how wrist watches are listed by Lazada and Shopee websites as each has a slight difference. From our observations, watches are only found in the ‘watch and glasses’ category on Shopee, while Lazada lists watches under: Electronic accessories, women’s fashion, and men’s fashion. This provides users with more exposure to the products and hence higher conversion to sales.

On the Lazada website, users are able to see watches listed on the e-marketplace more frequently and in more sections than at Shopee. Lazada, watches can be found under Electronics as wearables and accessories, which is also categorized into male, female and child timepieces.

Shopee, on the other hand, only offers watches under the watches and glasses category, and does not categorize watches for different demographics like Lazada.

How Can Watch Brands Take Advantage?

Watches are deemed as a luxury item by Thais. More often than not they are bought as an investment. Thais look for credibility and confidence from the seller, as well as a warranty proving that the timepiece bought is authentic.

It is not enough to list your products on a marketplace and engage in advertising campaigns. Rather, brands should focus on establishing confidence among consumers. One way to ensure this is to be listed as an official seller on LazMall or Shopee Mall, as well as including a clear statement about warranty and after-sales service conditions.

For luxury timepiece manufacturers, an e-marketplace may not be the ideal strategy as it may conflict with the brand’s positioning. Luxury brands should focus on providing beyond-expectation services and ascertaining that information is clearly visible on their websites.

As watches are still mainly sold offline, now is the right time for brands to give omnichannel a try. Take Burberry for example. They created the Burberry Retail Theatre that streams live runway shows into a number of their stores worldwide and through their other online channels. In the Retail Theatres, customers can browse live streaming collections on iPads and purchase items online immediately.

Burberry’s Runway to Reality campaign allowing consumers to order items from the runway in real-time

However, high-end or mid-range Thai timepiece brands should not ignore the power of social media. Daniel Wellington sets a great example through owning its own social media game. The company reduced spending on traditional advertising and turned instead to social media to reach potential consumers through use of the hashtag #DanielWellington. This also leverages user-generated content (UGC) to engage its customers and drive brand loyalty.

An Instagram post was created with #DanielWellington as #DWPickoftheDay and #DWPickoftheMonth

By taking your brand digital, you are embracing an endless supply of consumer data. As Shadi Halliwell, the creative and marketing director of Harvey Nichols stated,

“Data is a conversation; the more data you have on someone, the more conversation you can have.”  

Customer service goes beyond a smiley face and a friendly personality. In the world of ecommerce, where there is a lack of human touchpoints, customer service plays a vital role. When done well, it can help you increase your Average Order Value (AOV), boost your conversion rate, and create brand loyalty.

But gone are the days when customer service translated to 24-hour hotlines. In this day and age, customer service often comes in a form of live chat, recently popularized by all the hype around AI-driven chat bots.

In order to craft an effective customer care strategy, it is important to benchmark the level of customer service in the marketplace. To do that, ecommerceIQ conducted an experiment to test the responsiveness and effectiveness of brands offering live chat on Lazada Thailand.

Methodology

We randomly picked three brands from each category offered on LazMall, sampling a total of 27 brands across Lazada Thailand.

Each of the brands was asked the same single question – “How long does it take to deliver a product from your brand?” – during two time periods: during lunch time and after work. These are typically peaked online shopping hours, translating into peak load hours for live chat operations too.

Results: How Do Brands’ Customer Service Perform on LazMall?

From our observations, 25.9 percent of the brands offer a real-time response through Lazada live chat. 22.2 percent replied within 30 minutes, 22.2 percent replied within the first hour, 11.1 percent replied within 6 hours and 24 hours, and 7.4% of the brands did not reply at all.

It is also noted that the categories that are the most responsive are Electronics & Mobile and Home & Lifestyle.

Since our sample covers after work, off-hours too, this allows us to identify brands that have configured auto-replies for their live chat. Only 37 percent of the brands tested had auto-replies enabled. Setting up auto-replies is easy and a no-brainer in this day and age when everything is on-demand and 24/7.

ecommerceIQ’s observations about the responsiveness of live chat on Lazada Thailand

From our observations, 25.9 percent of the brands offer a real-time response through Lazada live chat. 22.2 percent replied within 30 minutes, 22.2 percent replied within the first hour, 11.1 percent replied within 6 hours and 24 hours, and 7.4% of the brands did not reply at all.

It is also noted that the categories that are the most responsive are Electronics & Mobile and Home & Lifestyle.

Since our sample covers after work, off-hours too, this allows us to identify brands that have configured auto-replies for their live chat. Only 37 percent of the brands tested had auto-replies enabled. Setting up auto-replies is easy and a no-brainer in this day and age when everything is on-demand and 24/7.

Xiaomi’s automatic reply which indicates the working hours and apologizes for the slow response in both Thai and English.

Most brands do add some human touch to their chats, such as using stickers and offering detailed information. But that is not enough to make an impression and the current live chat offering from brands are far from using live chat at its maximum ability.

How can Brands Improve their Live Chat on E-Marketplaces?

With these findings, brands should start paying more attention to their customer care strategies. We spoke with the Ms. Ratchaneewan Vichaisorn, Head of Customer Service at aCommerce, an end-to-end brand ecommerce enabler in Southeast Asia. Here are her suggestions:

1. Equip your Customer Service / Chat Agents with Product Knowledge

As the agents operating your live chat are an extension of your company’s brand, it is important that they receive adequate training for your products. This is especially the case for Mobile & Electronics and Beauty categories as product knowledge are often the deciding factor for shoppers in Thailand.

According to Ms. Ratchaneewan Vichaisorn, Head of Customer Service at aCommerce, during non-campaign periods, 35% of the inquiries through live chat are about products, while the number of inquiries about products surged to 45% during campaign periods like 9.9. (See how to prepare for the annual online mega sales here.)

2. Leverage the Opportunity to Up-Sell and Cross-Sell

Based on their product knowledge, your agents should be able to provide recommendations of similar products or complementary products that consumers may be interested in.

Brands can also take this opportunity to inform consumers of upcoming promotions to keep them coming back to buy the next time too.

3. Collect Data and Monitor For Customer Feedback

Talking directly to your customers is a great way for brands to collect data and feedback from end users. This information can then be used to improve a brand’s products and services. Because live chats are automatically logged, the chat histories can be mined for patterns and insights.

4. Promote Your Brand

Your customer service agent should be encouraged to offer more information about the brand to improve the relationship between the brand and the consumer. Towards the end of the chat, inform the customer about the channels that they can follow your brand for content, updates, and promotions.

These are a few tips that your brand can adapt to improve your customer service. If you’re interested in a similar audit for your own brand or a consulting session to improve your live chat operations, please contact us via hello@ecommerceIQ.asia or fill out the form below:





 

 

Chinese ecommerce platform JD is lesser known amongst international audiences, but its mid-annual 618 shopping festival generated almost $25 billion in gross merchandise value this past June. The company has a 33% share of China’s B2C ecommerce market and generates more direct revenues than Alibaba. Google’s latest $550 million strategic investment in the company is the latest in a series of partnerships JD has orchestrated, as it seeks to challenge Alibaba and Amazon for ecommerce dominance in both China and the rest of the world.

JD’s Direct Retailing Model Gives it a Strong Competitive Advantage

JD’s business model is distinct from that of Alibaba’s in that it is a direct retailer – meaning that it purchases inventory wholesale and sells products directly to individual customers, rather than simply acting as an intermediary between buyers and sellers. Approximately 92% of its business comes from direct sales, whereas for Amazon this figure hovers around 50%.

JD stocks its own inventory in its vast proprietary network of nearly 500 warehouses across China, each of which is situated strategically close to consumers to ensure fast delivery. JD also employs an in-house delivery force of over 65,000 warehousing and delivery workers. During the 618 festival this year, JD was able to deliver 90% of its goods within two days.

This dedication to customer service requires a significant amount of capital to sustain, but JD has been able to stand out from its competitors.

JD claws its way up to a 33% market share in an industry where Alibaba was previously thought to be unbeatable.

Richard Liu, CEO of JD.com delivering goods during their ‘618’ Mid Year Sales Source: Internet

The Borderless Retail Alliance

To compete with Alibaba, JD has enlisted the help of numerous partners. In China, this includes internet giants Tencent and Baidu, in addition to its partnerships with the likes of vertical-focused ecommerce platforms Vipshop and Meili Inc. Tencent owns 18% of JD’s shares and partnered with JD to invest $864 million in China’s third largest ecommerce platform Vipshop this past December. JD made its claim to fame by selling electronics to a predominantly male user base, and such partnerships with Vipshop and Meili, both of which sell a combination of apparel and cosmetics, help the company appeal to a broader female base.

America’s largest retailer Wal-Mart owns 10% of JD’s shares and has been a strategic partner since 2016 when it first sold its ecommerce division Yihaodian to JD Google, despite having a limited presence in the China market, announced a $550 million investment in JD this past June. Both of these strategic partnerships will be key as JD prepares to expand its business overseas.

Google’s Data Will Help JD Catch Up Overseas

Ecommerce platforms such as JD spend an enormous amount of money on search ads every year, to ensure that their products show up in search results. As they grow bigger, however, internet users can go directly to ecommerce platforms to search for products, which presents a threat to Baidu’s and Google’s search ads business. Partnering with JD allows Google to hedge against this problem.

Google’s extensive ecommerce data can give JD better insights into the buying behavior of users, and JD will have a better idea of how to target users via Google’s broad ads network. This will be a significant asset as it attempts to catch up with local competitors in Southeast Asia, Europe, and the US.

Wal-Mart and JD Make the Perfect Couple

US retail giant Wal-Mart has been partners with JD since 2016 when it sold its online business Yihaodian to JD in exchange for a 5% equity stake worth $1.5 billion. That stake has since grown to 10%. In China, Wal-Mart leverages JD’s marketplace and users to sell directly to Chinese consumers online, complementing its offline business in the country. For JD, Wal-Mart is a key supplier for the JD Daojia platform, which is an on-demand delivery service that delivers groceries to customers within a one-hour time frame.

JD also sells its goods offline in Wal-Mart stores and uses them as distribution centers from which last-mile delivery can be carried out. Since JD is an online retailer without many offline retail stores, the addition of Wal-Mart’s physical locations across China is a considerable asset as it looks to expand its user base via omnichannel marketing strategies. JD is planning to expand to the US market by the end of this year, and the potential expansion of this partnership model means that JD may have a chance to catch up with Amazon, especially since the two can leverage economies of scale and source goods in bulk.

JD Dao Jia partnered with Wal-Mart on sales promotion Source: Internet

JD Goes Global

With an impressive set of partnerships under its belt, JD has the capability to challenge Alibaba and, potentially Amazon, on the global stage. JD has already set up international ecommerce site Joybuy in Spain this year and is looking to expand to Germany. JD has also launched local websites in Thailand and Indonesia under the JD brand. JD has publicly announced its intention to enter the US market by the end of 2018, with a beachhead office located in Los Angeles. The company plans to undercut its competitors and also help Chinese brands like Xiaomi expand to the US.

While it is still early stages, what is certain is that JD’s global expansion will be very interesting to watch going forward.

Written by Don Zhao, Co-founder and Executive Director of Azoya 

 

Events

Ecommerce Indonesia 2017 will be the first event in the region to bring together policy makers, BFSI experts, startup community, ICT technologists together to present you with the latest in:

 

Key Topics & Case Studies:

  • Upcoming ICT Projects and Policies
  • Startups : Driving the  digitization of Indonesia
  • Data Analytics To Cement Customer Loyalty
  • Building Trust in Online Payments
  • Personalizing IOT for mcommerce
  • Beefing Cyber-Security to increase confidence in online payments

 

Magento and aCommerce are hosting an intimate Digital Brand Masterclass in Singapore for a group of exclusive guests. The knowledge-sharing sessions will introduce performance marketing analytics, digital platforms and the latest trends in brand commerce from industry leaders to enable the growth of your business.