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Seasoned entrepreneurs from multiple ecommerce companies at Echelon Thailand 2017 discussed how ecommerce in Southeast Asia has developed so far and where it is heading.

On the panel: Orami Group CEO Jeremy Fichet, Box24 CEO & founder Nithipont Bond Thaiyanurak, honestbee Thailand country manager Bounthay Khammanyvong and Pomelo co-founder & CFO Casey Liang revealed some of the trends that they expect will influence the region’s ecommerce businesses in the next few years.

Here are the key takeaways:

1. Customers are getting more demanding and sophisticated

The tide is slowly turning from a few years ago when customers were more accepting if their order was late or inaccurate as ecommerce was so new.

“As we’ve honed our skills and elements of ecommerce, customers are now freaking out if anything is slightly off or wrong. Customers are becoming more and more demanding,” says Bounthay.

Customers are also getting more sophisticated with technology as other channels such as social media has improved product discovery. Companies can choose to ship to anywhere in the world to reach a global market.

“People are finding our products a lot faster and they’re willing to purchase from anywhere in the world,” says Casey.

2. Ecommerce players are gaining strength

The line between online and offline players has been blurred in the past few years as brick-and-mortar retailers are exploring digital channels and pure ecommerce players are looking to build an offline presence.

“Pure online players have more flexibility to expand their growth offline through different partnerships. If we look at the top 10 retailers in the US, Amazon is likely #2 or #3. In China, #1 and #2 will be Alibaba and JD.com,” says Jeremy.

“I’m pretty sure that in Southeast Asia, half the top 10 retailers will be ecommerce pure players in 5-10 years,” he continues.

3. Reaching for an optimal omni-channel mix

Pomelo’s Casey noted that a channel strategy comes down to selling a product and the shopping experience customers go through to reach that point. Sometimes, online doesn’t always work.

“Purchasing media is pretty much online, purchasing travel also makes sense online but when you look at physical products like fashion that is very tangible, people want to try it on and feel it.”

“There are benefits being online that you don’t get shopping offline. If you want to find a silver dress with pleats, you can go to the mall and spend hours looking around for it or you can lay in bed and easily find exactly what you’re looking for on your phone. Obviously, when you want to try it on and see how it fits, then offline comes in. We [Pomelo] are still trying to figure out what is the optimal hybrid strategy, ” says Casey.

The company recently opened its first pop shop to allow its customers to ‘experience’ its fashion pieces offline in Singapore.

4. Convenience ecommerce – the next big thing?

“I believe convenience ecommerce will be the next big wave. What we see in the market is businesses asking how can we add value to people’s lives? And one of the key things how to do it is by helping them save time – helping them focus on the important things like family, rather than running errands,” says Bounthay.

Read more #EchelonTH2017 coverage by eIQ with Dr. Alex Lin from SGInnovate here.

Here’s what you should know.

1. Singapore’s Honestbee to launch food delivery

This move comes just a few months after it launched an on-demand laundry service. The upcoming launch of meal deliveries, announced via Facebook, puts Honestbee in a hyper-competitive space in Singapore filled with established players like UberEats and Deliveroo.

Because it serves as a layer between services and consumers, the startup will need to build up a huge volume of deliveries to make up for its thin margins. Food deliveries may pair well with groceries, because in Singapore restaurants are often located near supermarkets in the same shopping malls.

Read the rest of the story here.

 

2. Alibaba’s Mr. Fresh provides direct access to China’s online market

What is Tmall Fresh? Tmall Fresh is the organisation’s new portal for perishable products.

“Tmall Fresh has been launched to meet the growing demand for fresh produce. It is becoming the online sales channel for perishables in China. Products include seafood, meat, dairy and, increasingly, fresh fruits,” says He Chunlei, CEO of Tmall Fresh.

What is Mr. Fresh? To assist rookie foreign fresh produce exporters in overcoming difficulties that come with market entry, Mr. Fresh was introduced alongside Tmall Fresh.

Mr. Fresh is designed to meet both the needs of the supplier and the consumer. Fruit varieties that are currently sold are New Zealand kiwifruit, Thai durian, Chilean cherries and Vietnamese mangoes. The company’s goal is to help foreign companies enter the B2C market in China by providing them with a complete solution package.

Read the rest of the story here

 

3. Indonesia Q4 GDP growth below 5% on cooled consumption

Indonesia’s gross domestic product grew 4.94% in the fourth quarter, the slowest pace since the opening three months of last year, as household consumption cooled and government spending contracted.

Indonesia faces uncertainty surrounding US policies under President Donald Trump and in one of its other main trading partners China.

Read the rest of the story here.

 

4. Amazon Echo advert targets Super Bowl audience for drone delivery in the US

The man is seen licking the Doritos’ orange cheese residue from his fingertips and returning them to the bowl for another helping. At this point, the woman says to a nearby Echo, “Alexa, reorder Doritos from Prime Air.” The Echo-Alexa system responds, “Ok, look for delivery soon.” At this point a drone comes into focus in the background.

Fine print at the end of the commercial warns viewers that drone delivery isn’t available in any US cities from Amazon Prime Air. Yet. A spokesperson for Amazon declined to answer questions about timing for the start of drone delivery in the US.

[embedyt] http://www.youtube.com/watch?v=eAtm26CYPYI[/embedyt]

Read the rest of the story here.

For online shoppers, 11.11 has become a shopping phenomenon. The biggest online sales event of the year in China is co-opted by ecommerce giant Alibaba, where discounts from participating sellers range from 25% – 70% off, and a record $5 billion of products were sold in under 90 minutes last year.  

The company, which owns online marketplaces Tmall and Taobao sold $14.3 billion worth of goods during the sales period last year, targeting 386 million annual active buyers – a number greater than the US’s general population.

According to Fortune, the campaign is quite accurately labelled “Black Friday on steroids”.

The combined earnings of Black Friday and Cyber Monday, North America’s famous sales period, amounted to $7.54 billion last year, and while impressive, only amounts to half of Alibaba’s earnings in the same sales period.

11.11 southeast asia

11.11 Cultural Backstory

Singles’ Day originated in Nanjing University in 1993 where groups of young single friends would get together and celebrate their unattached status by shopping. In 2009, Jack Ma, chairman of Alibaba Group, saw an untapped opportunity and created an online shopping event around young peoples’ behavior, framing it as a day of personal indulgence.

‘Singles’ day’ was made famous and monetized by Alibaba, turning the obscure day into an online shopping extravaganza on its online marketplaces and boosting business during China’s slack period between October’s Golden Week and Lunar New Year in January to February. It was also introduced around the time ecommerce exploded in China, leading to a 5,740% growth in Alibaba’s “Double 11” sales event between 2009 and 2013.

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The company has since trademarked the term in December 2012, meaning that it can take legal action against media outlets that accept advertising from competitors who specifically use this term.

11.11 sales also reach hundreds of millions of Chinese shoppers beyond large cities such as Beijing and Shanghai, who rely on Alibaba’s Taobao and Tmall because they are without big shopping malls in their towns.

The event’s offline marketing impact also contributes to 11.11 success thanks to appearances from global celebrities such as Daniel Craig and Kevin Spacey for the launch event, which has been the company’s way of turning the shopping extravaganza into a sort of event to be celebrated.

For the first time since the launch of 11.11 campaign, Alibaba Group has announced that this year’s campaign will last for 24 days instead of 24 hours. It will also mark the first introduction of Alibaba’s virtual reality technology, Buy+ , which promises to transport shoppers to retail stores overseas through a VR headset. This year will also see the expansion of 11.11 to Hong Kong and Taiwan.

Alibaba’s 11.11 success means it comes as no surprise that Southeast Asia has followed in the footsteps of China. Despite it not being a day to celebrate single-hood, large online marketplaces have each adopted their own customized versions of Alibaba’s 11.11 campaign such as Lazada and Moxy (now known as Orami).

11.11 southeast asia

Online players are under pressure to perform and participate during this period as bigger brands and retailers begin offering better sales and greater discounts thanks to deeper pockets and larger number of merchants.

In Southeast Asia, marketplaces are using their big 11.11 spin-offs as a litmus test of how well they’re performing against competitors in local markets.

How Southeast Asia makes 11.11 their own

From hiring more manpower to ensuring that shoppers are well aware of the sales event, marketplaces push out social media strategies months before the actual sales event and calculate stock predictions to ensure the region’s largest sales event is a success. Here are how Southeast Asia’s biggest players successfully take advantage of the 11.11 buzz: 

Marketing blitz: Social personalization is key

As the largest ecommerce marketplace in the region, Lazada has adapted 11.11 by extending it with their very own 12.12 event on December 12th and coining it ‘The Online Revolution’, which started in 2012.

Lazada Thailand has seen a rise in their gross merchandise value (GMV), chalking up $40 million during 10th-12th of December 2015 and reflecting a gradual increase in participation from consumers.

Lazada Thailand saw a 300% increase in orders when compared to 2014.

“In Thailand, we notice that successful marketing channels are very social,” says Baptiste Le Gal, CMO at Lazada Thailand. “Customer relations management is the key channel to reach out to customers with personalized offers that match their interests.”

The consumer trend has shifted slightly in Thailand. Baptiste noted that electronic goods used to reign as the top selling category, but now more lifestyle centric segments such as health&beauty and home&living are moving faster on the platform.

Thailand’s high mobile adoption is also contributing to how consumers shop on Lazada.

“Mobile transactions accounted for 70% of the 400,000 items ordered during Lazada’s online festival last year,” commented Baptiste.

The mobile first market means that Lazada is focusing on the mobile aspects of its channels, and ensuring that Lazada’s mobile app is optimized for the best customer experience during the campaign period. The marketplace has also launched an advert, ‘make your dreams come true‘ in Singapore, gearing shoppers up for the big event.

Zalora, Rocket Internet’s fashion portal, also follows the Rocket formula by offering sales up to 80% off for both 11.11 and 12.12. Zalora Indonesia’s marketing strategy promotes online campaigns from October until the grand finale of 12.12, starting with Zalora Great Sale currently ongoing now, which shoppers can treat as a warm up to the main event.

“In 2015, overall sales for 12.12 increased by 30 times more than an average day, with participating brands seeing a drastic increase in sales even after the campaign was over,” says Priyanto Lim, Head of Marketplace at Zalora Indonesia.

11.11 southeast asia

But slapping big discounts on jeans and jackets isn’t enough. Zalora Indonesia also holds online competitions, provides extra giveaways and uses celebrity endorsements on social media as part of the big push to generate buzz around the sales event. Essentially, every customer facing channel is jam-packed with purchase incentives and triggers to drive sales.

It appears that speculations of brands feeling pressured to participate and make deliberate cost cuts to compete with other merchants don’t hinder the impact of the campaigns.

“Contrary to what articles suggest, brands are very willing to partner with us as they benefit from the extra traffic,” Priyanto adds.

Female centric marketplace Orami is focusing on curating original ‘Singles’ Day’ themed content and community to drive traffic to the site and engage shoppers rather than launch a big promotional campaign.

“To drive social media engagement, Orami will also use Facebook as a tool to create engagement with users through online games related to Singles Day,” says Shannon Kalayanamitr, co-founder and CMO of Orami.

Targeting a mobile centric region

Shopee, Garena’s mobile shopping platform, released its own version of the mega sale for the first time this year, coining it 9.9 on September 9th. Benefiting from a fast accelerating mobile market in the region, the platform targeted Thailand’s mobile first shoppers by progressively releasing specially marked down products throughout the day to keep shoppers anxiously clutching their mobile phones.

Shopee’s website even publishes a discount schedule ahead of time so shoppers can set up an alarm for the product they’re eyeing, creating a ‘ready-set-go’ mentality for shoppers to encourage competitiveness and in turn, more shopping.

11.11 southeast asia

Niche service providers jumping on the bandwagon

11.11 has also inspired online service providers in Southeast Asia to cash in on the online flurry.

Groceries on demand service provider, HappyFresh Indonesia, offered up to 30% off its most popular products in its marketing campaign last year.

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And a recent addition to the online grocery scene in Thailand, honestbee, is currently working with popular Thai supermarket chain Villa Market to tap into the ‘necessary goods’ sector that includes everyday items such as water, fresh food and meat. These items will all be a part of the delivery service’s big sale campaign.

When groceries go on sale, shoppers tend to ‘stock up‘, especially when purchasing online as the selection is wider.

“We look at the purchase patterns of our customers to see what kinds of items are popular among shoppers. For example, customers in residential areas often order large volumes of mineral water and fresh fruit so we have to anticipate that these orders may spike during our 11.11 campaign,” said Piyawat Laiphithak, Marketing Manager at honestbee, Thailand.

honestbee is also playing directly on China’s ‘Singles Day’ gimmick as they plan to give away snacks such as gummy bears and popcorn for shoppers.

11.11 Logistics: What happens behind the scenes?

The phrase “it takes a village to raise a child” is fitting here, if we swap the child for a large scale online campaign. How do ecommerce companies ensure optimal functioning during this hectic time?

For ecommerce solutions provider aCommerce, the company plans approximately two months ahead to accommodate the spike in orders for clients that participate in the sales event.

“We increase our manpower by three times through temporary contracts and run 24-hour operations during spike times such as 11.11 to ensure customer demands are tended to,” says Phensiri Sathianvongnusar, COO at aCommerce Thailand.

The temporary staff are hired through an agency and receive 2-3 days of training for their specific tasks prior to the sales event.

During the spike period, aCommerce also uses its multi-shipping platform to tap into over 20 courier networks to ensure that deliveries are made on time, for the best rate and no order gets dropped, as time and speed are the most crucial things during the campaign period.

11.11 southeast asia

“Inventory planning is crucial to campaigns such as 11.11 and 12.12, so we use historical data from previous years’ events to determine what types of products tend to be popular during big sales and avoid stock shortage,” adds Phensiri.

For brands that are not participating in the 11.11 campaign, they are part of the express line which ensures that their products still remain a priority during the campaign period.

A league of our own

Using China’s 11.11 as a backdrop, Southeast Asia’s online marketplaces are carving out their own versions of the mega-sale but they cannot simply replicate Alibaba to find success.

Southeast Asia can potentially leapfrog China with the region’s explosive mobile growth and gaining middle-class. Big campaigns such as 11.11 can only grow in success every year as more consumers move online. Mobile first platforms such as Shopee are already moving fast and capturing the surging mobile market in Southeast Asia, mirroring the rise of mobile shopping in China, where 72% of purchases during last year’s 11.11 came from mobile.

The positive reception and the duration of the campaigns is a testament to the region’s growing appetite for ecommerce, perhaps an indication that we are positively inching away from China’s shadow.

By Anutra Chatikavanij

Another busy Tuesday? Don’t worry, below are the big ecommerce headlines you should know about.

1. Alipay strikes partnership with DTAC subsidiary Paysbuy 

Under the “Paysbuy Alipay Online-to-Offline (Alipay O2O)” service, merchants and businesses can accept online payments for the purchases of goods and services by Chinese customers in yuan. Over 10 million Chinese tourists are expected to travel to Thailand in 2016. Read the rest of the story here.

 

2. Santa Rita wine launches on Tmall

The Santa Rita online flagship store will offer key wines from their portfolio along with specific offers and promotions targeted China’s 688 million internet users. Read the rest of the story here.

 

3. Online grocery delivery startup Honest Bee launches on-demand laundry service in Singapore

The startup made the announcement at an event in Singapore. The mobile apps for iOS and Android have just been updated to add in a laundry section. Read the rest of the story here.

 

4. Coupang sales growth bolsters SoftBank’s bet on the Korean retailer

SoftBank, whose investment in Alibaba Group Holding Ltd. has zoomed past $70 billion, backed Coupang in June 2015 with $1 billion in financing that valued the Seoul-based company at $5 billion. Read the rest of the story here.

 

5. Alipay To Start Charging Fee For Transfers, Users Are Already Complaining

Users accuse Alibaba of ‘fattening the pig and then slaughtering it’. Read the rest of the story here.

 

6. How Orami is winning female shoppers in Southeast Asia

In an interview with Inc. Southeast Asia, co-founder Shannon Kalayanamitr says the company expanding its creative service to brands by offering them content partnerships, advertorials, guest posts, and celebrity reviews. Read the rest of the story here.