Posts

Here’s what you should know today.

1. SoCash raises angel funding of $600K 

SoCash, the startup that allows you to withdraw cash from any merchant just like an ATM, announced today it has raised a new round of angel funding worth $600,000. The funding comes from unnamed “veteran bankers and technologists.”

The startup uses your bank’s mobile app to let you transfer an amount to the merchant’s bank account. Then you can pick up the amount in cash from the merchant. As for merchants, SoCash provides them with extra traffic in their stores and a new revenue source.

The funding will be used to grow SoCash’s sales team so it can get more banks in Southeast Asia on board.

In total, the startup has secured $925,000 in angel funding and is looking to raise its first institutional round.

Read the rest of the story here.

 

2. Ho Chi Minh City may tax online sales in April

Ho Chi Minh City’s tax department has said it will work with related departments to impose sales taxes on businesses running on Facebook and other online shopping sites.

Last month, the trade department proposed the city work with Facebook on measures to collect tax from businesses running on the site. The General Department of Taxation is now working on measures to tax the businesses operating on social media channels.

But it may be challenging because many online retailers use anonymous accounts for transactions, and the majority of transactions are cash based.

 

3. Amazon to shut down Diapers.com and other Quidsi sites

Amazon.com . is closing Diapers.com, Soap.com and other sites it purchased for about $545 million in 2011. The online retailer said it’s shutting Quidsi, the unit that ran the websites, because it couldn’t make a profit.

 the company’s renewed grocery push is an ideal time to consolidate brands
Quidsi specialized in certain categories, like baby products and household goods, while Amazon was trying to offer infinite inventory. But the draw of sites like Diapers.com has faded since Amazon became the go-to place for online shopping.
Read the rest of the story here.

 

4. Community Chatter: FMCG growth in Southeast Asia

Souce: Nielsen’s Twitter page

The two countries’ rapid FMCG growth could provide more opportunities in both online and offline retail. As spending power increases, shoppers can also begin to afford more luxury upgrades of everyday items.

Read eIQ’s insights on everyday premium products, here.

Shoppers around the world are making more room in their budgets for the finer things in life – not in the sense of designer handbags or diamonds but upgrades in everyday consumables.

31% of global respondents say they consider a product to be premium because it’s expensive — a warning to companies who push up prices without providing a very clear value proposition to support the change.

Nielsen‘s latest global report on “Premium Potential” takes a look at growth of different categories based on consumer input around the world and how well do premium products will perform. For example, almond milk versus regular milk.

Unsurprisingly, respondents in Southeast Asia, Latin America and Africa/Middle East are willing to spend more money on better electronics and clothing/shoes, 37% & 36% respectively.

30% of global respondents say they’ll consider paying more for dairy products or better meat or seafood.

More than a quarter of global respondents say they’ll consider spending a few more dollars for premium hair-care (27%), body-care (26%) and oral-care (26%) products.

The premium segment accounts for roughly 23% of sales in the personal category in Southeast Asia.

In Southeast Asia, premium products accounted for 55% of face moisturizer sales, 39% of face cleanser sales and 36% of toothpaste sales, 31% of shampoo sales.

Unilever has also responded to increased demands for personal care within its Southeast Asian markets by launching shop-in-shops on marketplaces in Indonesia and Thailand to heighten visibility.

Unilever on Shopee Indonesia

Vitamins were among the top five categories in the region, which should be encouraging to companies like Blackmores that have gone online to widen its customer reach with a shop-in-shop on Lazada.

 

Blackmores on Lazada Thailand

Although “premium products” seem to be more attractive, it’s still important to note that customers won’t give up their dollars so easily.

“Many are looking for everyday items that perform better or fulfill their emotional needs or social aspirations at a price that doesn’t break the bank,” said Liana Lubel, senior vice president, Nielsen Innovation Practice.

Source: Nielsen

It’s important for brands in Southeast Asia to understand that the growth of premium goods will open up opportunities for distribution and product variation within the scope of fast moving goods. These premium brands are able to bring new consumers into the category and reengage lapsed consumers.

Read Nielsen’s original research on premium goods here.

Vietnam’s investment potential is attracting attention, especially in industries such as real estate and technology. In January this year alone, 9,000 new companies were registered.

Despite its authoritarian government, investors in Vietnam have the option of side-stepping the country’s state owned companies to focus on smaller, private businesses that are poised for growth. Low valuations and a rising foreign cash flow mean there is a lot of potential to drive economic progress forwards but many companies still have doubt.

A lot of marketers, retailers and manufacturers are not sure about what to think of ecommerce: is it another buzz word or the future of modern trade in Vietnam? – Kantar World Panel

The current online landscape and its future

Vietnam is home to a handful of ecommerce marketplaces, notably Tiki, Sendo and The Gioi di dong, where site visits are comparable to the likes of Lazada, the biggest e-player that currently claims 30% of Vietnam’s online retail market.

Source: ecommerceIQ Vietnam data

Vietnam has also seen its fair share of newcomers and exits in ecommerce but C2C and B2C models are the most popular in the country. Garena’s Shopee has been steadily gaining traction after almost two years in the country and the Shopee app has been downloaded two million times and processes 10,000 orders per day.

2017 will be a year of intense competition for Vietnam’s ecommerce players especially as traditional retailers pursue an online presence. An example would be Korean cosmetics giant, Lotte.vn, that has an online and offline presence in the country. In January alone, Lotte gained 1.7 million visits on its website. Another threat to online players would be retail chain Aeon Shop that opened its online store AeonEshop.

vietnam, aeonVietnamese consumers shop FMCG 

According to Kantar World Panel research, the internet and online commerce is becoming more accessible to shoppers in Vietnam thanks to mobile phone usage at 80% penetration in the country’s four key urban cities. These are the other findings:

  • 69% of Vietnam’s households have working women who welcome convenience
  • Nearly 6% of urban households have shopped online for (fast moving consumer goods) FMCG at least once in 2016 and when they do, spend 3-4 X more than they would on an average shopping trip to avoid carrying bulky products on their motorbikes
  • The value share of FMCG ecommerce is 0.2% in Vietnam meaning there are plenty of opportunities for consumer good players to serve the demand and rack up sizable market share

 

Help from the government 

The Vietnamese government is set on implementing measures to improve the business and investment landscape to boost economic growth in the country. These include supporting SMEs and in particular, Resolution 35, which aims to create one million private enterprises in 2020 from 515,000 at present, and increasing the private sector share of national GDP from 43% to 49%.

The country was classified a “lower-middle income” country in 2009 – causes of the middle-income trap can include a lack of basic and advanced infrastructure, adequate financing, skilled human capital and innovative enterprise.

“Vietnam’s vision is to reach the upper-middle income category and be well on its way to a high-income economy by 2035” – Daryn Govender, opinion article on Interest.co.nz

 

Roadblocks to Vietnam’s growth

Analysts have said that many companies in Vietnam are looking to increase exports this year, hoping to leverage upcoming free trade agreements going into effect this year.

According to the Ministry of Trade and Industry, Vietnam will have to implement all commitments under the ASEAN Free Trade Agreement with China and other ASEAN member countries, the ASEAN Economic Community (AEC), World Trade Organisation (WTO) to create highly favorable conditions for the country’s economic development.

There are other challenges from overseas and domestic markets that may hinder the growth potential of many Vietnamese enterprises, especially for exports.

Domestic challenges

  • Macroeconomic instability
  • Lack of adequate development infrastructure
  • Growth quality of the Vietnamese economy

Overseas challenges

  • President Donald Trump’s “protectionism” rhetoric could potentially stunt export growth for Vietnam
  • When official, the consequences of Brexit could also impact as Vietnam was emerging as one of the EU’s most active trading partners

The major economies’ shift from trade liberalisation to protectionism could very well change the structure of global commodity supply and demand and directly impact the global trade market. To analysts, this means that Vietnamese companies should focus on building in its domestic market to contribute to economic growth and development.

For those poised to enter Vietnam, does your business differentiate from what’s already available, more FMCG offerings perhaps? Are you able to benefit from government initiatives such as Resolution 35? For investors, are you willing to take a gamble on a still very much developing country such as Vietnam?

With all this in mind, we look forward to witnessing Vietnam’s growth.

Indonesia’s groceries market is plentiful but fragmented. While traditional supermarkets still reign, wet markets and independent grocery stores are gradually being replaced by modern retail chains and hypermarkets, a superstore that combines a supermarket with a department store or moving to ecommerce.

With a population of more than 258 million and an emerging middle class with surging purchasing power, hypermarkets, supermarkets and online players are working hard to capture the Indonesian potential.

How will they compete for the attention of shoppers? Data. Consumer insights are valuable to  retailers and marketers because it provides them a peek into the population’s purchase patterns and product preferences, which allows implementation of successful marketing strategies.

Startup from Indonesia Snapcart aims to do exactly this for their clients. The app offers shoppers cashback and rewards in return for photos of their offline shopping receipts. Data from the receipt is then collected by Snapcart, providing a window into the shopping behavior of Indonesians, Southeast Asia’s largest market.

Snapcart has shared exclusive data with ecommerceIQ to reveal what consumers are buying on a monthly basis at the country’s top five offline grocery stores: Alfamart, Carrefour, Hypermart, Indomaret and Super Indo.

By understanding offline retail trends, retailers can adjust sales campaigns or push out creative marketing strategies to make ecommerce more attractive to shoppers. What do we mean? Here’s how marketers can improve their online marketing tactics through Snapcart offline data:

Bundling

Bundling refers to the grouping of products to maximize sales and often an effective strategy used by marketers. By selling complementary products together, it incentivizes shoppers to make a larger purchase at one time to save money and time.

Fast food companies such as McDonald’s and Burger King have seen a significant rise in sales due to the introduction of combo deals. Approximately 35% of customer visits to these chains have been to purchase a ‘meal’. Starbucks also cashes in on the bundle deal, offering a customizable $8 ‘power lunch’ that combines a sandwich, popcorn, fruit bar and a bottle of water.

However, there’s a catch. If a retailer is looking to purely sell through bundling strategy, it may backfire. Researchers from Carnegie Mellon University found that:

Companies profited best when the bundle strategy was coupled with an option to buy each piece individually.

Looking at customer data from Alfamart, baby diapers, cookies, fresh milk and cooking oil rank in the top 10 categories consistently every month.  It would be simple for the retailer to bundle fresh milk and cookies together or formula milk and diapers together to boost the sale of both category items. (see fig.1)

(fig.1)

Bundling is also used to sell less popular products. For example, cooking oil was a best seller every month at Super Indo and could be paired with an underperforming frozen package food at a promotion, to nudge shoppers with their grocery choices.

Other data also shows that Indonesians love to snack. Online retailers could offer shoppers the option to customize a snack basket online and increase basket size.  

Subscription Model

At Carrefour, instant noodles outperform every other product category each month (see chart). If consumers are purchasing large amounts of instant noodles regularly, Carrefour could introduce a subscription model.

[show-rjqc id=”61″]

 

For example, online shoppers would be able to order a customized instant noodle box, with variations in both brands and flavors, to be delivered to their homes once a month. Global brands in Southeast Asia such as NESCAFE are already adopting a subscription model strategy for everyday necessities people buy regularly such as coffee. 

Another startup from the US called Love with Food is expanding globally with a subscription-based service that sends consumers a box of all-natural, organic, and gluten-free snacks. Everything in the box comes from smaller food brands that want to get their product in front of customers.

Supermarkets lacking an online presence can create a simple popshop that will allow shoppers to sign up to have instant noodles or diapers in bulk delivered monthly to their homes.

Special Sales

Both the supermarket and distributor have the ability to push out a sale. But a sales strategy isn’t only about lowering the price of a product, it should effectively increase sales.

Discounts

A discount strategy should be used sparingly, and is effective only when a retailer awards loyal customers or happens occasionally.

Adjust pricing to increase short term sales or to boost impending dead stock to increase inventory turnover. This also means that as a retailer, you have a chance at negotiating a good deal with your product supplier as you will have increase in stock order.

For some grocery stores, they tend to offer discounts just before closing time, so discounts usually begin around 7pm-8pm.

BOGOF

The ‘buy one get one free’ strategy is arguably one of the most effective psychological pricing strategies that is used with shoppers. Consumers are typically drawn to the word ‘free’, which makes them buy more than they initially wanted but a lot of doubt surrounds this model.

British supermarkets such as Sainsbury’s and Tesco have started to phase out BOGOF deals, following the release of a report highlighting how it misleads shoppers.

Retailers actually increase the price of the product customers think they’re getting a deal on. Instead of BOGOF, a ‘buy 5 get 2 free’ strategy seems to be more effective because the price isn’t deliberately pushed up as high for the sake of luring customers. For retailers that want to adopt this strategy, choose to promote everyday items such as shampoo or cleaning detergent.

The future of groceries

The data collected from Indonesian shoppers can enhance marketing campaigns both online and offline for retailers. As grocery retailing in Southeast Asia begins to move online, chains without a digital strategy such as Carrefour and Super Indo should consider transitioning to ecommerce.

There is still potential in the country for disruption as 69% of surveyed online shoppers are millennials, which means an upcoming generation of shoppers will be accustomed to using various online channels. Retailers should be ready to capture this audience by using offline customer behavior data they already possess to align their digital strategies and effectively enhance sales across channels.

BY anutra chatikavanij

Here’s what you need to know for today.

 

1.Vietnam’s NextTech Group aims to be Rocket Internet of Southeast Asia

NextTech Group for Technopreneurs, the Vietnamese company that has invested in Indonesia’s first cross-border shopping platform WeShop – aims to build the Rocket Internet of Southeast Asia. This expansion is mutually beneficial for both his company and the regional ecosystem. The venture building model helps early stage startups grow with the builder’s existing resources and networks.

Read the rest  of the story here

 

2.The coming wave of ecommerce for consumer goods

Ecommerce is now a big and growing share of many FMCG product categories across the world. In many cases, these brands no longer need research-and-development departments, factories, salespeople or retail outlets. The combination of OEM suppliers, digital marketing platforms and ecommerce has disrupted the traditional barriers to entry and is reinventing the path to purchase. Read on how FMCG brands in Southeast Asia can welcome the digitalization of their industry.

Read the rest of the story here

 

3. Big C Vietnam closes Cdiscount

Big C Vietnam says it will close its eCommerce site Cdiscount by the end of December.

The closure appears to be part of a policy change from Thailand’s Central Group after it bought the supermarket chain in April in a $1.14 billion deal. The company will soon change the chain’s name and it has other eCommerce brands and established sites it could expand into Vietnam.

Read the rest of the story here

Check out these ecommerce headlines before you start the work day.

1. Kaymu, Rocket Internet’s online marketplace, is shutting down in the Philippines, Myanmar, and Cambodia. 

Daraz operates as a “managed marketplace” similar to Lazada where sellers are curated and authentic products guaranteed. Read the rest of the story here.

 

2. Thailand’s Washbox 24 will attempt to fill the void left by recently ceased startup My Laundry

WashBox24 tackles the logistical pain point by implementing a hybrid locker and delivery system. Read the rest of the story here.

 

3. FMCG, fashion spur Lazada Indonesia growth

eCommerce group Lazada Indonesia says its current volume growth has accelerated to more than 150 per cent than at the same time last year. Key contributing categories are FMCG and fashion, which are both growing more than three times as much as last year. Also, about 80 per cent of the orders are via mobile devices. Read the rest of the story here