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All aspects of ecommerce can be controlled by a brand, except for one area that is completely in the hands of the user – product reviews and ratings.

As competition grows on marketplace, where most online customers start their purchasing journey, this aspect has become a reliable filter to help other users decide, “to buy or not to buy.”

On most ecommerce sites, customers can sort products from highest to lowest average ratings, which means a high score gives brands more visibility and a competitive advantage over competitors. Better product rating, better purchase rate, makes sense right?

But five stars alone isn’t enough to convince customers to add to cart, it’s what the reviews are saying that drive checkouts, especially in Asia where an average of 22% customers — the highest globally — count online reviews as a decision making factor due to the strong effect of community.

By aggregating the major consensus of what customers are saying in their reviews, brands can leverage reviews to improve their performance online. How can this be done?

customers review Unilever

Data-analytics platform BrandIQ has collected reviews for four of Unilever’s brands – Dove, Rexona, Simple, Toni and Guy – on Lazada Philippines to showcase what companies can learn from this set of data and separating out the generic complaints (i.e. slow delivery, average product).

The average rating of each brand online gives a high level glance at which brand needs more monitoring and brand building. For example, Toni and Guy scores an average 3.81/5, which isn’t necessarily bad, but can be improved to rank higher in search.

42% of total reviews scrubbed were about the touch and feel of the products, but approximately 58% actually shed light on aspects other than product quality.

What were they saying?

To sort the data, reviews are split into five main categories: Product, General, Delivery, Packaging, and Customer Service.

customers review Unilever

From the data above, the keyword “delivery” is the second most quoted in reviews, but it doesn’t reveal whether sentiment is good or bad.

By splitting customer reviews into two sentiments: positive and negative, we identify the strengths and weaknesses of these categories. This allows companies to understand which area should be prioritised for improvement.

For Unilever brands on Lazada Philippines, despite the small numbers of reviews that talk about Package, the category racked up a strong positive sentiment compared to the other four categories (Service contributes only a small percentage of the total reviews). Extrapolation of this data can signal that the products ordered by customers is well taken care of during the last mile with the packaging the company used.

customers review Unilever

customers review Unilever

Review left by a Dove customer on Lazada PH that was found helpful by at least six other customers.

Customer reviews are a unique and vital aspect to ecommerce that offline retail rarely had to face before. Brands looking to crack the code on e-marketplaces will need to build an understanding for this new metric, and use it as a tool to their advantage.


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

Mobile penetration is often lauded as the driving factor for the growth of retail online, especially in China and Southeast Asia.

But according to Nielsen: What’s Next in Ecommerce 2017, more mobile phones doesn’t exactly mean more online demand for FMCG or groceries online.

The relationship between purchasing groceries online and smartphone penetration proves to be unpredictable and the reasons behind it are unique to each market.

grocery ecommerce growth

Grocery ecommerce penetration in Singapore is lower than France despite the higher smartphone penetration. Source: Nielsen

Take a look at the UK, the early entry of retailers like Tesco online in 1996 helped shape the country’s mass shopping behavior so now more than 20 years later, consumers are accustomed to buying groceries online.

Meanwhile in Singapore, going to the mall to shop for daily goods has become part of everyday life as malls are often situated near convenient and high-foot-traffic locations such as metro stations.

Shopping in a mall has also become a leisure activity and therefore still ‘a thing’ despite the online uproar and country’s high smartphone penetration. The same behavior can also be witnessed across Southeast Asia, which is why,

Retail space in the region keeps growing simultaneously with the growth of ecommerce, unlike in the West

grocery ecommerce growth

For grocery commerce, mobile & connectivity only accounts for 40% of its growth contribution.

What does it mean for FMCG companies?

Ecommerce may only contribute to roughly 10% of total retail sales worldwide but with the industry predicted to have 20% combined annual growth rate (CAGR) by 2020 to become a $4 trillion market, it is still higher than the expected CAGR of 4% for the FMCG category.

In four years, retail ecommerce size will rival the global FMCG market – Nielsen

Although compared to the fashion or electronics categories, the contribution of online to FMCG is still low, there is an undeniable shift in consumer habits that would be unwise for FMCG companies to ignore.

News of Danone’s partnership with Lazada only highlights the increasing number of FMCG companies, take Nestle and Unilever for example, realizing the importance of online channels as part of their growth strategy, especially in Southeast Asia.

A long touted argument about Southeast Asia’s lack of potential as a market for ecommerce has been its severe fragmentation. Indonesia, the region’s largest market may have a population of over 263 million individuals but majority of retail sales comes from the country’s capital, Jakarta (population: 10 million).

The same can be said about Thailand and mega-city Bangkok, the Philippines and Manila, and Vietnam and Ho Chi Minh City.

But new research findings from Nielsen and AlphaBeta show that in ASEAN, ‘middleweights’ are also contributing heavily to revenues and are becoming ‘hotspots’ for retail growth.

The demand for items such as diapers, detergent, chocolate, facial moisturizer is actually witnessing faster growth in small or middleweight regions – places with populations under 5 million.

ecommerceIQ

Source: Nielsen, Rethinking ASEAN 2017

ecommerceIQ

Source: Nielsen, Rethinking ASEAN 2017

Many of the cities and provinces in the list have probably never appeared on the radar for FMCG brands and companies looking at ASEAN and there are plenty of reasons why:

  • Poor infrastructure
  • Lack of financial maturity
  • Limited broadband access  
  • Less spending power

But these were and are the same problems in China but ecommerce companies such as JD and Alibaba have created initiatives such as “Rural Strategy” to cover 485 countries and 25,000 villages across 29 provinces to build up ecommerce in rural areas.

Why so much focus on such small pockets?

Because once urban markets saturate, rural towns will naturally be next.

The Fung Business Intelligence Centre predicts that the transaction value of Alibaba’s rural ecommerce market will surpass that of local urban areas in the next 10-20 years and according to eMarketer, by 2019 China will add 139 million digital buyers coming from less urban areas as internet access expands.

Some companies in Southeast Asia such as online payments company Kudo are already looking outwards and finding success by connecting rural residents to modern day retail. No surprise that Grab acquired them up earlier this year to reach ‘millions of unbanked citizens and provide a solution in the market’.

While everyone is fighting for the ‘rising middle class’, maybe it’s time to take a harder look at areas where the populations are only becoming ‘middle class’. Only then can companies really untap Southeast Asia’s entire market potential.

Vietnam’s economic development has been the cause of a widening income gap between those working in developed, urban centers and others in rural locations. The country’s income distribution is predicted to be among the most unequal in Asia Pacific by 2030.

The highly polarized nature of Vietnam’s current market means a few things:

  1. Companies can either target one particular social class and specialize or
  2. Mid-range brands have the opportunity to consolidate both a premium and more affordable product line under one umbrella

An example of a company that does this successfully is Viet Tien Garment, an apparel and footwear maker that has different brands to serve different age and income levels. For example, it launched Vee Sendy for younger shoppers and TT-up for its mature customers.

The company is valued at $50.2 million and claimed 2.3% market share in 2016, which is considered positive in Vietnam’s fragmented market.

Serving individual social classes

Source: Euromonitor

Social class E, the lowest income class is expected to remain the most prevalent in the country until 2030, which is good news for FMCG companies as they represent a large market for basic necessities.

According to Nielsen, FMCG items are experiencing a growth surge in Vietnam, especially beyond Ho Chi Minh City and Hanoi.

In 2016, nearly 6% of Vietnamese urban households shopped for FMCG items online at least once and found themselves spending 3-4X more than they would on an average shopping trip offline.

Social class A, the highest income class is expected to be the second fastest growing segment until 2030.

Luxury automaker Mercedes Benz already counts Vietnam as one of its fastest growing markets in Asia and Chanel recently opened its first flagship store in Ho Chi Minh earlier this year – demonstrating a positive step in the direction of Vietnam’s growth.

As Vietnam and US trade grows 20% annually, analysts believe that increase in income will stimulate consumption of luxury labels, especially if they are portrayed as a status symbol.

“Why would I spend $300 on something that doesn’t relate to me, and has no voice?” says Ha Nguyen Thu An, Head of Social at Ogilvy. “Everyone gets Louis Vuitton because of their brand story.”

Apart from multi-brand marketplaces such as Lotte.vn and Robins.vn (previously Zalora), consumers do not have direct access to luxury items and instead, are only exposed to fast fashion pieces or mid-tier brands such as Nike and MANGO.

The future of Vietnam’s consumer landscape

Whether these companies choose an offline, online approach, or both, the country’s classes are both showing signs of economic growth and an appetite for goods they can show off.

In light of Mother’s Day on May 14th, marketing agency Mindshare (Thailand) released a study on mothers in Thailand and their everyday consumption habits, both offline and online. The survey focused solely on mothers who reside outside of Bangkok in second tier cities in hopes to help marketers better understand what mothers require for everyday products such as groceries and FMCG goods.

The women surveyed reside in Naan, Choomporn and Buriram provinces in Thailand and come from low income households, earning approximately $300 – $1,400 per month. 65% of Thailand’s population resides in second tier cities, making them a large potential target group for marketers and brands.

The qualitative research looked at three groups:

  1. Mothers with infants from 0-3 years old
  2. Mothers with children from 3-6 years old
  3. Mothers with children 6-12 years old

And these were the results:

A rise of internet savvy mothers

  • Modern mothers are receptive to the internet and are willing to browse different websites to get advice on child rearing
  • Modern mothers often browse on Facebook and engage in online discussions about child rearing
  • Modern mothers are turning to ecommerce in second tier cities
  • Money and finances are at the heart of their purchasing decisions. Mothers in second tier cities often sacrifice their own needs to spend more on their children and treasure moments such as celebratory dinners outside the home
  • To access the internet, most mothers activate Wifi hotspot from their mobile phones, as this makes it easier to monitor internet usage and budget finances

The role of technology in everyday life

  • The internet is a new mother’s best friend, especially during the adjustment period where her life and schedule are changing. Brands can target mothers through Facebook groups, especially as there is a vast network of Thai mothers that are often exchanging tips and looking for a support system online.

Although they are open to purchasing online, mothers still believe in the importance of touching products before buying. For young mothers, reading the product label, smelling and even tasting products is not uncommon.

Communities play a key role in decision making

  • Mothers in second tier cities often look to other mothers in their community, not celebrities, as they are more relatable. This is another interesting marketing tactic for brands because targeting community mothers requires a lighter marketing budget than celebrity endorsements.
  • Brand loyalty can be achieved through seeing other mothers in the community use a particular product. This is especially true for mothers with young infants.

Brands use a steady flow of insightful, interactive content to strengthen the mother’s connection with the brand and build brand loyalty and trust.

A good example is Nestlé, that often publish family centric content on its multiple Facebook pages to connect with its primary consumer – mothers.

Source: Nestlé Baby Thailand Facebook page

Source: Nestlé Baby Thailand Facebook page

Discounts and promotions incentivize spending

  • Most mothers would choose quality over price for their children
  • Flyers, discount advertising and promotions are important in the decision process.

Ecommerce in second tier cities is still in its infancy, but its adoption is showing promise. Mothers often go online to find products that aren’t available in their province, or for when they want to ‘show off’ by having their child use something that other community mothers do not have.

Although ecommerce is not yet widely popular among mothers in second tier cities across Thailand, it is slowly becoming a part of everyday life. Thai mothers are reliant on social media channels such as Facebook and LINE to find products unavailable in their towns, and online shopping seems to be the next natural step.

Find more insights published on MarketingOops. Read the original version in Thai here.

 

Here’s what you need to know.

1. Lazada partners with Unilever to capture Southeast Asia’s online retail growth

Lazada, has joined hands with Unilever in hopes of grabbing a bigger slice of the region’s online retail market in fast-moving consumer goods.

Lazada’s FMCG product category grew by 181% in 2016 over 2015, making it the platform’s strongest growth category.

The two companies will work closely together on supply chain, fulfillment, data, marketing, social commerce and talent development to grow their business’ reach in the region.

The partnership will allow Unilever to test new products before deciding whether to send them offline, while also allowing the company to offer exclusive products to Lazada shoppers.

Read the rest of the story here.

 

2. Unilever acquires minority stake in direct-to-consumer skincare brand True Botanicals

The deal is Unilever Ventures’ first with a direct-to-consumer luxury skincare brand, and demonstrates the appeal of natural products and digital business models to beauty investors.

Olivier Garel, head of Unilever Ventures said:

From a business perspective, the direct distribution enables the company to invest much more than has been traditional in the product quality and the shopping experience

True Botanicals is available at Barneys New York and natural beauty retailer Follain, but the company doesn’t anticipate brick-and-mortar sales ever exceeding 20% of its turnover.

Read the rest of the story here.

 

3. WeChat expands in Europe in bid for global advertisers and payments partners

Owned by Tencent Holdings Ltd., WeChat is looking to launch an office in the U.K. and another European country, alongside its existing presence in Italy.

WeChat is now focusing more on business-to-business, encouraging Western brands to sell products on the WeChat platform.

In Europe, the focus is first on fashion and luxury goods, and will in time expand to travel and broader retail services. WeChat is hoping its expansion in Europe will convince more high-profile brands onto the platform, to also reach Chinese tourists visiting Europe.

Tencent could be trying to do what Alipay is doing, but there’s much more uncertainty in terms of when the business could take off, as it would need to overcome many regulatory hurdles.

Read the rest of the story here.