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It is hardly a secret anymore – ecommerce in Southeast Asia is an enormous $238 billion opportunity that has been under the global radar in the recent years. It’s no longer about whether businesses should have an online presence, but instead how they can stay relevant to their audience in a quickly crowding space.

Indonesia Ecommerce Landscape

ECOMScape: Indonesia details the growing ecommerce ecosystem as of 2016. Source: eIQ

One market that has time and time again stood out is Indonesia thanks to more accessibility to mobile devices, affordable data plans and a youthful demographic propelling social channels and social commerce to the leading activity on the internet. It is a clear goldmine for brands, retailers and investors alike to unlock over 250 million unrealized online shoppers.

So how are they going to do this? Well, Indonesia is a mobile-first country and its citizens update their social networking apps twice more frequently than games and fives times more than music/video apps according to a study by Baidu.

In the next three years, Indonesia is expected to have over 92 million smartphone users, up 67% from 2015. This will push many startups to skip desktop entirely and focus on smartphone friendly ecommerce products. New apps have been the popular way to reach customers, but large spending for development, maintenance, and marketing have restricted companies from finding long-term success. And what happens when app downloads start to slow down as currently happening in the US?

wearesocial-indonesia-eiq

The rising global resistance to new apps

Almost 50% of smartphone users in the US did not install a new app last month while less than 25% of the ones who did returned to it after the first use. What’s even more shocking is a full 94% of revenue in the App Store comes from only 1% of all publishers, think Google and Facebook.  

Mobile isn’t dead but the opportunity is shrinking. So what does this mean for businesses scrambling to capture the attention of the world’s fourth largest population who prefers to use on average only 6.7 apps?

You don’t chase customers, you find them where they already are.

For the first time, messaging apps have surpassed social networks and that’s where chat commerce comes into the story.

Chatbot, chat commerce

Chat commerce isn’t the future, it is the present.

Chat commerce or conversational commerce is the intersection of messaging apps and shopping and is already a very familiar concept in the West. Businesses understand the importance of being readily available to their customers, especially as a poor customer service experience will drive 89% of them to a competitor.

According to Facebook, more than 50 million companies operate on its platform and send more than 1 billion business messages every month.

But having properly trained customer service reps to support hundreds to millions of personal conversations in parallel is difficult to scale for any business. Solution? Chatbot.

A chatbot is an AI (artificial intelligence) feature of a chat or messaging platform that simulates a human conversation with the user in order to provide them with the information or service they’re looking for.

Brands overseas like Taco Bell have partnered with Slack to allow customers to order and pay through the team communications platform.

Think about Siri who has been helping Apple users carry out tasks since 2011 or Amazon Echo, an at-home device by Amazon, which encompasses a chatbot named Alexa to read aloud weather reports, set alarms and more importantly, help customers order new products from Amazon.

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Screenshot from Amazon Echo commercial.

These are only a few of many examples. Facebook Messenger also opened its platform earlier this year for businesses to build chatbots through its Messenger Send/Receive API.

The API will support sending and receiving text and also images and interactive rich bubbles containing multiple calls-to-action.

chat-bot-benefits, southeast asia chatbot

A chatbot can clearly offer a business great benefits to get closer to customers in a medium they are already familiar with, so why has there been little activity in Southeast Asia?

Call all chatbots

Southeast Asia has largely mirrored the West and particularly China in development of its ecommerce maturity. Yet, current chatbot growth has been stuck at the ‘idea phase’ – a lot of chatter and buzz about its revolutionary importance but no product.

“The reason why companies in Southeast Asia haven’t created chatbots isn’t because they don’t think the opportunity is there, but they lack the resources and most fundamentally – AI talent to build it,” comments Lingga Madu, Sale Stock co-founder.

No company has released a true commercial-scale, transaction-enabled MVP, that is, until now.

Sale Stock case study: Facebook Messenger’s first chatbot in Southeast Asia

One lesser talked about company has already begun testing its chatbot with Facebook, Indonesia’s most popular social channel. Sale Stock, the mobile first shopping platform widely popular among Indonesia’s young females, has become SEA’s first company to launch a chatbot that can handle end-to-end transaction on Facebook’s Messenger Platform.

Meet Soraya AI, a relatable, cheery chatbot who handles 100% of queries coming to Sale Stock’s Facebook Page and the brainchild of Facebook, Google, Palantir, and NASA engineers recruited by Sale Stock around the world.
sale-stock-chat-2, southeast asia chatbot

Soraya uses machine learning to shuffle through queries and decide whether to answer it autonomously or give recommendations to an agent instead.

Frequently asked questions such as “do you offer cash on delivery?” or “do you sell high heels?” are replied to almost instantly. In development since 2015, she can already handle 22% of all queries autonomously.

The beauty of machine learning is that the more information she receives, the smarter she becomes and the more accurate her answers will be.

Soraya has already improved response time by 20 – 40 times and currently replies within 60 s. That has granted Sale Stock a response time badge on their official Facebook page.

sale-stock-fb, southeast asia chatbot

Soraya has also been fed large amounts of past Sale Stock customer queries to enhance her intelligence. This combined with recent purchasing behavior and browsing history allow her to recommend consumers personalized products.

Buying the product is even more simple. Soraya asks for confirmation of the item, correct size and color, all within Messenger, and requests address and payment method. If it is a returning shopper, all previous payment information is saved so purchase is simply a click of yes.

sale-stock-chatbot, southeast asia chatbot

“Soraya was created to meet the needs of our customers, many of whom are living outside major cities on limited social media data plans where chat is free but browsing is not. Some have never even been exposed to digital shopping carts but chatting is second nature,” – Jeffrey Yuwono, Sale Stock President.

Trust is also a major concern that holds many Indonesians back from trying ecommerce. By creating a personable chatbot on a familiar channel, brands hope customers will feel comfortable sharing their personal details.

sale-stock-chat, southeast asia chatbot

Chatting with Soraya on Facebook Messenger

Sale Stock chat bot, Indonesia

What’s next for Sale Stock?

The company is already working to create viable chatbots for WhatsApp, LINE, BBM and SMS as they are the most popular messaging platforms their shoppers use. Sale Stock strongly believes in the Lean Startup methodology, “getting it out there as soon as possible to collect real, user feedback”.

“We’re still in the very early stage of our product and ironing out the bugs and adding features iteratively,” comments Madu.

All inquiries going to Sale Stock are monitored, independent of the channel source, on one platform created in house to control flow and fix any arising bugs.

The team hopes to fine-tune its technology to quite possibly launch SaaS in the future.

“The success of chat commerce depends on how well the machine can distinguish the details: context, intention, the slang, mix of dialects, and even the use of emojis so the customer never feels like they are chatting with a bot. The platform has to be robust enough to handle these typos and fringe use cases,” says Madu.

The future of chatbots

There has always been a fear of AI replacing tasks typically performed by humans, but customer support is a tricky area since personalization is at the core.

“As brand loyalty and exceptional customer service become the main priority for brands, companies simply cannot afford for bots to completely handle customer service and risk creating a negative experience. With that said, the live customer service representative will always have a place with the overall customer experience,” says Mayur Anadkat, Vice President of Product Marketing at call center software provider Five9.

The moment has not yet been reached when machine learning enables 100% accurate and instant replies to customers no matter the language, mix of dialect, slang or emojis – but it is in the foreseeable future. AI is here to enhance, not replace.

Not only will the rise of chatbots improve the reputations of brands but it will be expected of businesses by the next generation of shoppers. As Uber product manager Chris Messina put it, bots present a new, unpolluted opportunity to build lasting relationships with people.

Ultimately, the lack of friction is what makes the shopping experience a pleasant one and what will drive the A players to the head of the game.

By: Cynthia Luo

India’s newest tech unicorn, messaging app Hike, announced that it has closed $175 million in funding increasing valuation to $1.4 billion, reports Tech Crunch.

The funding round was led by new investors, Chinese tech giant Tencent and manufacturing firm Foxconn. Tencent is the company that pioneered messaging with Chinese favorite, WeChat.

How does Hike work?

Born out of a joint venture between Bharti and SoftBank, Hike includes standard messaging app features, as well as free voice calling. The app emphasizes features such as privacy options to hide messages, and a function that allows users to send messages to non Hike users. The company heavily focuses its marketing on young people.

“Hike understands India, a highly diverse market with many nuances,” says Martin Lau, Tencent President.

Hike has stated that it has over 100 million registered users, 90% of whom are under 30 and send approximately 40 billion messages per month. 

Less like WhatsApp, more like Line

According to Hike’s founder, Kavin Bharti Mittal, every country has two messaging apps that do well, “there’s one that replaces SMS and one that does a lot more than that. Hike doesn’t even compete with WhatsApp, it is used very actively in addition to other apps.”

Hike has been focused on building differentiation from WhatsApp, which has largely retained a bare-basics approach to chat. It has left an option for a more integrated messaging app, in which Mittal has filled the gap with coupons and localized stickers within the app. Games attract over 100 million play sessions per month, and the news feature has 50 million plus users, and sees 1.5 billion stories viewed a month.

These added functions make Hike very similar to Asia’s favorite chat app, Line.

With Tencent’s involvement, Hike is likely to evolve into a ‘services’ app, reflecting Tencent owned WeChat’s numerous services which includes food delivery, ecommerce and much more.

According to Mittal, Hike is likely to introduce a payment solution within the next six to twelve months, among other new service offerings.

Hike is the only billion dollar social company in India, as of now.

 A version of this appeared in Tech Crunch on August 16. Read the full version here.

According to market research firm Gfk, mobile devices have become consumers’ primary gateway to the internet across Asia Pacific, reports Digital News Asia.

Accessing the internet via smartphone has become a daily activity for 83% of online users in the region, led by China (93%), followed by Thailand (89%), Indonesia (88%), Singapore (87%) and Vietnam (81%) – Gfk Report

In a report titled ‘ The Connected Asian Consumer’, Gfk ran a study in May this year with over 8,000 smartphone owners across eight Asia Pacific markets. The survey covered China, Japan, India, Australia, Singapore, Indonesia, Thailand and Vietnam.

A Reliance On Messaging Apps

Messaging apps are becoming remote controls for day-to-day living, used more than any app across most Asian countries.

Indonesia, India and Singapore are leaders in messaging apps use. Over 80% of users in these countries say they use it at least once a week.

A higher proportion of connected consumers actually text more than they talk on smartphone. Only in China where approximately 60% prefer to talk as much as they text. It’s no wonder popular messaging app, Line, is currently debuting on the New York Stock Exchange at $9.5 billion under LN. It is shaping up to be this year’s largest technology IPO.

Social Media Use

Social media was initially used as means for social networking. However that model has evolved into being utilized by brands and businesses to engage potential and loyal customers, social media is now a key tool in driving the business agenda.

86% of Indonesians and 81% of Thais use social media on a weekly basis.

Social media use for ecommerce is also gaining significant traction. Consumers in Singapore and Indonesia report fairly high usage of social media for ecommerce, with 37% and 35% of users doing so weekly.

In bigger mobile markets such as India and China, online shopping is on the way to disrupt offline retail. Mobile payment is another area likely to encourage growth of online shopping.

A significant percentage of connected consumers in India (72%) and Indonesia (60%) agree that using the phone to transact money is easier than sending cash, as online payment has become very secure.

This report confirms the consumer purchase journey is no longer linear, as consumers are shopping in various of ways. Brands need to be available at every touch point, integrating online and offline experiences in order to cater to the multi-channel consumer.

A  version of this appeared in Digital News Asia on July 14. Read the full version here.

Line announces price listing amid a poor IPO market

Source: techinasia.com

LINE, popular Japanese messaging app, is slated to come public in New York under the symbol “LN” on July 14 and in Tokyo the following day. Just over 40 IPOs have been priced in the US this year, down over 50% from last year making 2016 the slowest quarter for IPOs in the last 7 years, with most of the volatility caused by uncertainties regarding the Chinese economy, according to Yahoo Finance.

Line plans to offer 35 million shares at a price range of $26.50 to $31.50 per share. This would value the company at approximately $6.5 billion.

At most, the company could raise $1.3 billion, making it the biggest tech listing of this year so far. Initially, Line was planning to delay its price announcement due to the Brexit craze, but decided to price the company as planned. This could be the biggest tech IPO since 2014.

Line announces price listing amid a poor IPO market

Further worries regarding Brexit followed this month and after a quiet first quarter, the IPO market is going through a phase of normalization. Pricings in the market were held back by a public-private valuation disconnect in the tech sector, and poor trading of 2015 IPOs. The Brexit cloud and its effect on interest rates also contributed to the first quarter slump in the market.

In 2014, Line highlighted its potential valuation at $10 billion, much higher than its current $6.5 billion. The company has seen a deceleration in sales growth, which was up 40% to $1.1 billion in 2015, as it has focused on profitability (operating income swung positive in the 1Q16).

“Instead of trying to expand dramatically, they’ve focused on existing markets and reduced marketing spend, becoming profitable at the expense of growing users,” said Kathy Smith, Manager at Renaissance Capital.

Line currently has around 218 million monthly active users, and is the dominant messaging application in Thailand, Taiwan, Japan and Indonesia. Globally, it faces competition from China’s WeChat, which has 760 million monthly active users, and Facebook’s Whatsapp and messenger, which have a total of 2 billion active monthly users combined.

Line’s performance in July may be indicative of the remainder of 2016 IPOs.

A version of this article was published in Yahoo Finance on July 6. Read the full version here.