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The fourth quarter is always the busiest season for retailers and brands across the world, Southeast Asia is no exception. The wave of mega sales typically observed offline during Black Friday in December have moved online thanks to prolific marketplaces like Amazon, Alibaba and Lazada. These campaigns now occur consecutively on 9.9, 11.11, and 12.12 (September 9th, November 11th, and December 12th) and cause headaches for brands new to ecommerce.

Businesses must plan ahead well in advance with multiple partners to hit their annual online revenue targets as up to 40% of GMV can be generated in the last three months of the year.

To help brands make the best of the shopping season, these are 10 strategies based on experience working with e-marketplaces, talking to ecommerce enablers, and data from some of the biggest brands across Southeast Asia.

While this guide is most applicable to enhancing performance during the upcoming “mega online sales campaigns” held by players like Lazada and Shopee in Southeast Asia, brands can increase chances to maximize sales and minimize costly mistakes with the findings.

Let’s dive right in.

1. Promotions & Merchandising

Getting this part right may sound trivial but it’s the main ingredient for a successful sales campaign. If the product offering clashes with offline deals and/or pricing is weak, no matter how much is spent on marketing, there will unlikely be high sales volumes

This is akin to achieving product-market fit prior to scaling your business.

So how should brands approach this? Well, what are brands trying to get out of these mega sales – revenues or general visibility/awareness?

In the case of the former, brands need to secure prime real estate on a marketplace such as the homepage or category page, which are typically allocated based on attractive discounts, online traffic and cash vouchers.

In order to drive revenue, exclusive “doorbuster” deals are especially important when top competitors – official and grey market sellers alike – selling similar or identical items are dropping prices.

Mass market brands are free to offer discounts, whereas premium market brands cannot use discounting as a viable strategy (channel conflict) and should look at adding value via bundling and exclusive GWP (Gift With Purchase). These tactics work well without having to tarnish the brand in the long-term.

In the case of visibility/awareness, more budget should be allocated to advertising and promotions to drive traffic to an upgraded shop-in-shop design to make a good first impression on new shoppers.

Brands can also utilize data tools to evaluate their positive in a competitive landscape (examples include BrandIQ) and benchmark competitor SKUs, promos and pricing ahead of the online sales festival.

ecommerce holiday strategies

BrandIQ Marketplace Analytics & Digital Shelf Monitoring

Planning and approval of the pricing strategy for end year – final list of SKUs, pricing, bundles and GWPs – will take the longest time. The brand then needs to share this plan ahead of a ‘freezing period’ to let marketplaces like Lazada and Shopee evaluate and approve the campaigns. And relative to the e-marketplaces other seller applications, it will allocate site visibility.

2. Inventory & Stock

Once SKUs and pricing is set, brands need to ensure there is enough physical stock to meet the forecasted demand.

This requires scrubbing historical data, if available, and use proxy data points like offline channel sales if not.

With a forecast in place, products are ordered and inbounding slots at partner or brand fulfillment centers are reserved and dedicated to online sales. This should all be completed at minimum two weeks in advance.

Lastly, brands should set up automatic ‘out of stock’ triggers to receive emails and SMS whenever a product sells out. This can also be applied strategically to competitor SKUs too through tools like BrandIQ – this allows ecommerce store managers to respond with targeted pricing promotions whenever a key competitor SKU runs out.

ecommerce holiday strategies

Price change triggers in BrandIQ

3. Traffic Acquisition

A common dilemma faced by brands during sales season is whether or not to double down on marketing spend.

CPCs (cost-per-clicks) are typically higher during a period when other brands are prioritizing and spending aggressively on marketing. The idea behind this is returns tend to be higher too because of higher conversion rates resulting from more competitive SKUs, pricing and bundles.

If a brand can afford it, it’s recommended to increase spending during the sales season. In addition, a “warm-up” or teaser campaign prior to the big launch is also recommended and actually required by marketplaces like Lazada.

Brands also perform better when leveraging an existing customer email database or mobile phone list or building them using formats like Facebook Lead Ads well before the shopping season, when CPCs are still relatively low.

ecommerce holiday strategies

Facebook Lead Ads to build up email database ahead of the sales season

With this targeted database, brands can drive traffic during the sales campaign by sending emails or SMS to the list with promo codes to be used online during targeted dates.

While barter deals are more effective for brands to gain better on-site visibility, it’s also recommended to allocate budget to marketplace paid ads such as Lazada Sponsored Products and Shopee My Ads. These ad formats are still affordable compared to Facebook and Google ads and help acquire users when they’re already in a shopping mindset. They also help brands stand out on category pages as well as competitor product detail pages.

ecommerce holiday strategies

Shopee My Ads

But when multiple brands are fighting for the same site banner placements, exclusivity and doorbuster deals are prioritized by marketplaces over sponsored ads.

Beyond the typical Facebook and Google paid ads to drive traffic, brands can also look into non-conventional channels such as Quora Ads and Shopback. CPCs and CPAs (cost-per-acquisition) are often lower due to less competition.

4. Traffic Activation & Conversion

Driving traffic is not enough; they need to convert into sales. To do this, brands have several levers to pull.

First, upgrade to an official shop-in-shop format if not yet done already. Commission fees will increase but this format goes beyond just a badge as it improves product search ranks and peace of mind for shoppers worried about authentic goods.

Maybelline Official LazMall Shop-in-Shop on Lazada Thailand

High-conversion shop-in-shop layouts. Source: aCommerce Shop-in-Shop Design Gallery.

The typical customer journey on marketplaces goes from the shop-in-shop homepage → category pages → product detail pages (PDPs).

The product detail pages is where customers need to be incentivized to “add to cart”. PDP optimization requires descriptive and rich product titles, images, body content, etc.

ecommerce holiday strategies

NIVEA product detail page optimization

One important element of PDPs are customer ratings and reviews. Unfortunately, most reviews on marketplaces in Southeast Asia tend to be few and often, not very helpful. To acquire more high quality reviews, either connect the brand.com product reviews/ratings to the Lazada product page or if no brand.com exists, leverage tools such as ReviewIQ to generate more reviews for certain SKUs on Lazada and Shopee.

ecommerce holiday strategies

NIVEA customer reviews generated via ReviewIQ

Another driver for conversions is live chat offered by both Lazada and Shopee. This is a great opportunity to increase conversions, especially for more expensive or complex products that require product detail exchange between the buyer and the merchant.

With an estimated one-third of ecommerce transactions in Thailand happening through Instagram, Facebook and LINE, users have come to expect live chat in other B2C channels as well.

ecommerce holiday strategies

Lazada Thailand live chat

ecommerce holiday strategies

Shopee live chat

For brands selling directly to customers via their own brand.com sites, an abandoned cart email should be active to regain lost revenue as well as retargeting pixels to drop cookies for a retargeting campaign during and right after the mega sales period.

5. Customer Service

From a CS perspective, brands need to prepare their customer service team on best-selling product details, pricing and overall campaign. In addition, having a master FAQ document or wiki that’s circulated ahead of time will allow CS teams or a dedicated agent to operate more efficiently during the campaign period.

If allowed, brands may want to scale up CS staff with temporary labor accounting for the increase in demand during the sales period. This should be tied back to the demand forecast. Platforms like Helpster in Thailand and Indonesia offer brands an easy way to quickly ramp up temporary staff.

6. Monitoring

A large and often negative impact on a brand’s performance online is the abundance of grey market sellers that undercut product prices.

As marketplaces aren’t incentivized to remove grey sellers selling authentic products and will only delist pirated goods, brands can only focus on improving their own product selection, search rank and educating its consumers on its official online channels.

In addition to raising concerns to the marketplace on removing counterfeit goods, brands can use BrandIQ to track grey market SKUs or other brands that impact its promotions, e.g. Mimi Poko vs. Mamy Poko:

ecommerce holiday strategies

Mimi Poko on Lazada Thailand

7. Packaging

Packaging seems mundane in comparison to the other sales levers but it’s a customer touch point to increase repurchase rates. In addition to an eye-pleasing design and quality of the packaging itself, promotions via flyers or vouchers to drive follow-up actions such as cross-sell and up-sell.

ecommerce holiday strategies

Pedigree box design

8. Fulfillment & Delivery

Customers value packages to be delivered in a quick and efficient manner.

ecommerce holiday strategies

Lazada customer chat with merchant complaining about expected delivery times.

For brands to succeed here in the last mile, we recommend the following:

  • Organize the warehouse set up at least one week ahead of time – reserved inbound, outbound slots – to ensure delivery to customers within SLA
  • Give the warehouse the estimated order volume factoring in marketing, promotions, and competition well ahead of time
  • Prepare enough packaging material such as carton boxes, bubble wrap, packing foam, etc. to meet forecasted demand
  • Align with 3PLs to ensure its capabilities to pick up and deliver packages given the high volume
  • Prepare an on-demand delivery resource in case of over-capacity, e.g. LINEMAN, Grab Delivery

9. Business Operations

Ecommerce is a cross-functional, team-based effort, especially during the mega sales period where tight-knit coordination is the difference between hitting record highs or dropping the ball:

  • Set up war room dedicated to a cross-functional team that manages all operations during the campaign period. Prepare food because it’s going to be long stretches of day and night and weekends as 9.9 and 11.11 both happen on Sunday
  • The team needs to proactively monitor active campaigns during the day to ensure everything is synced properly, e.g. stock, price, etc. and may even needs to reply quickly to customer chats if CS is overwhelmed
  • Marketing and store managers to check all campaign landing pages after launch. Last thing needed is money spent on driving traffic to 404 pages
  • Debrief / post-mortem for the next big sale (right around the corner)

10. Website Stability

To avoid mishaps such as Amazon’s very own Prime Day meltdown, these tips apply only if a brand is running its own brand.com site, not marketplace shop-in-shop:

  • 2-3 weeks prior to peak period, perform a load test (also known as a stress test) to determine the traffic limits of your existing infrastructure setup. This will arm you with the knowledge of server limits and determine benchmark for an upgrade
  • Upgrade server processing power and network bandwidth 24-48 hours ahead of campaign day to be able to handle the spike in traffic
  • Test promotions, for sanity and determine if any loopholes
  • Enforce a code freeze period (no deployments) to reduce the risk of introducing bugs from new features during or prior to peak period
  • Prior to, communicate to web support teams to be readily available and on standby for peak trading. Hope for the best, prepare for the worse

But regardless of the above, performance will be determined by the right online channel for your brand or product category. Based on ecommerceIQ research, Shopee is a preferred platform by consumers for female-oriented categories like fashion and mom and baby items, whereas Lazada is preferred for categories such as electronics and home appliances.

Sign up here to download a Holiday Flash Sale preparation report.

Brands without inhouse ecommerce capabilities tend to work with ecommerce enablers to optimize their online performance. Contact us for a free consulting session: hello@ecommerceIQ.asia

It’s amazing how this highly upvoted answer (Ron Rule’s answer to What stops Walmart from beating Amazon in online shopping?) is basically proving, without the author realizing it, why Disruption Theory works. The answer takes an exceedingly narrow view of the entire retail industry and labels the pursuit of leadership in an emerging market/channel (ecommerce), which is clearly where the world is heading over the next few decades, as mere “bragging rights”.

“Disruptive innovations tend to be produced by outsiders and entrepreneurs, rather than existing market-leading companies. The business environment of market leaders does not allow them to pursue disruptive innovations when they first arise, because they are not profitable enough at first and because their development can take scarce resources away from sustaining innovations (which are needed to compete against current competition).”

(Source: Disruptive innovation – Wikipedia)

The real answer is, Amazon has already won in online shopping. It is not due to a lack of effort from competitors, which is probably too little too late.

ecommerceIQ

This quote, attributed to Jeff Bezos, sums up why:

Your margin is my opportunity.

Even with Walmart’s massive revenues and profits (compared to Amazon), it cannot compete with the juggernaut that is built by Bezos. Amazon is “not profitable” by choice. All the earnings are put back into the business, either into more capital investments or to sell loss-leading products that lock in customers or drive competitors out of business, vertical by vertical, and market by market.

The investments that Amazon has made over the first two and a half decades of its existence give it momentum such that it is tough if not impossible for any other company to catch up over the coming decades: the technology stack, the deeply integrated logistics/supply chain (they are now getting into competition with FedEx/UPS), the effective third-party seller marketplace, the customer loyalty (through Prime).

Every exponential curve runs below the linear curve in it’s infancy, that is until it suddenly crosses over, goes through the roof and hits the sky. Even though in absolute numbers Walmart is still bigger than Amazon, only one of the lines below is going up and to the right:

ecommerceIQ

On top of all this, in the last couple of years, Amazon is also getting into physical retail, with acquisition of Whole Foods and pilot of Amazon Go. Here’s a great analysis of this: Amazon’s New Customer (I highly recommend Stratechery for tech+strategy topics in general).

At this point it is more likely that Amazon will eventually beat Walmart at physical retail, than Walmart will beat Amazon at online shopping. If Walmart wants to survive till the end of this century and not go the way of Sears, Walmart must come up with a strategy that creates value in a digital, super-connected future where everyone is hooked on to the convenience and choice furnished by online shopping, but in a manner that converts their massive current investments in physical retail from liabilities to assets.

The last thing Walmart should do is to build an Amazon clone. As then, they are playing by Amazon’s rules. And nobody beats Amazon at their own game.

 

Read the original on Quora by Pararth Shah, Software Engineer at Google

Most parents will buy rattles and dolls for their children from a very young age up until the child hits his/her mid-teens – with just the types of toys purchased changing as the child grows older.

The potential of the global toys & games industry is heavily influenced by demographic trends such as the number of households and birth rate. There’s also a seasonal variation in the types of toys & games currently popular around the world; depending on blockbuster action flicks, emerging WWE stars, and fashion trends.

Thailand’s demographics in particular hint at a widening market for the toys & games industry. The natural birth rate in 2017 was about 240,000 – this refers to the number of births in a year subtracted from the number of deaths – representing a population growth rate of about 0.4%.

Population growth rates peaked in the 1970s at about 3% but aggressive public awareness campaigns by Thai authorities have brought this figure down substantially.

At the same time, annual household income more than doubled from $1,089 in 1999 to $3,276 in 2015. Thai families might not be growing as quickly as before but they definitely have more to spend.

Source: Ceicdata

Higher disposable income also means the sale of toys & games isn’t restricted to children only. Older consumers are forecasted to impact sales too, especially in categories like action figures and accessories.

According to Euromonitor, the value of Thailand’s toys & games industry was estimated to be worth US$376 million in terms of sales volume in 2015. The same report forecasts sales to increase to US$541 million by 2020, or by an average of 9% a year.

That’s a sizeable chunk that brands like Hasbro and Mattel should be eyeing carefully, especially as internet retail is predicted to grab a larger piece of the pie in the coming years, making it critical to double down on mobile/web acquisition channels.

Where do Thai consumers buy toys?

ecommerceIQ initiated a survey to understand online consumer purchase habits for toys & games in Thailand. There were over 300 participants spread across the country.

What was interesting to find was the availability of offline retail wasn’t a bottleneck to transacting online. Only 2.9% of respondents said they ignore online channels because of malls or shopping centers.

The largest inhibiting factor for online purchases is the prevalent lack of trust.

Thai people feel either the pictures online are either heavily photoshopped or they’re usually disappointed when receiving the product after purchasing.

Top reasons why customers don’t shop online for toys in Thailand. Source: ecommerceIQ

But not all is lost. Survey respondents in the 18-24 & 25-34 age category were, on average, 43% likely to indulge in online purchases for toys and games. Those were the two youngest tiers surveyed and it is likely as they grow older they’ll carry these preferences with them.

If online channels optimize the overall buying experience, it’s plausible that the proclivity towards web shopping will increase when it comes time for them to buy toys for their children.

Another encouraging trend that forecasts enhanced ecommerce market share in the future is the amount that users spend online. People with higher basket sizes are more likely to shop online. The largest segment actually spends north of $100/order.

And what toys are people in Thailand purchasing exactly? The survey shows Nerf guns are wildly popular for online purchases along with board games like Monopoly and Transformers action figures.

The overall survey results are consistent with Euromonitor’s analysis of the toys & games industry in Thailand that says the popularity of internet shopping is expected to continue its trajectory of rapid growth, fueled by younger shoppers.

40.1% of this category were secured by web channels in 2015, as compared to 13% in 2010 (although this does include video games, which our survey results excluded).

Euromonitor also makes another prediction: traditional toys and games distributors are expected to expand their internet retailing options over the coming years as more users flock towards this medium.

How can toy brands take advantage?

It’s not enough to list your products on a marketplace and engage in paid campaigns every now and then. Users don’t trust online advertisements; they’re eager to purchase but the one thing holding them back is the nagging uncertainty that the product won’t match expectations.

Often they’ll visit an offline store to see the product up close and personal before purchasing. Little wonder why influencer marketing is becoming so important in a brands’ marketing mix.

Influencer marketing platform MuseFind says 92% of consumers trust an influencer more than an advertisement. And with adblockers flooding browsers, it’s likely that your target consumer simply won’t even view your advertisement, no matter how much money you pour into the campaign.

In Southeast Asia, brands can take a cue from China’s bold forays into live streaming. Quartz predicts this is now a U$5 billion industry with once ordinary citizens catapulted into superstardom simply by broadcasting their lives for the world to see. Such online influencers routinely recommend products they use and their audiences follow suit. Evocative marketing is becoming the new normal.

Other than live streaming, product reviews by YouTube stars is another channel that potential shoppers gravitate towards. An unboxing video can help lower the trust barrier significantly as users know what to expect inside the package.

Some juvenile YouTube stars have racked up millions of subscribers on their page with their videos routinely garnering 10 million+ views.

Children need to feel they’re on the same wavelength as their peers, so if it’s ‘cool’ to buy a new toy then they’ll pester their parents until they get their hands on it.

And what’s cool is what’s trending on the internet.

Apparel and tech gadgets are two things that are almost synonymous with online shopping. According to Statista, ecommerce sales in fashion and the electronics & media categories make up more than 50% of total online sales in Southeast Asia.

Statista estimates ecommerce sales in the electronics & media category will reach $5.26 billion this year across six Southeast Asian countries (find below), while the online fashion market will reach $4.464 billion.

websites where online shoppers buy fashion and mobile phones in SEA

Fashion online sales in the region are expected to double within the next five years and electronics & media are expected to increase 1.5 times. Where are customers going online to look for these products?

Google’s Consumer Barometer has some answers and based on the data, a couple of online channels in Southeast Asia stand out for buying clothing & footwear and mobile phones.

Where are shoppers buying clothing & footwear?

Consumers mostly buy apparel on general online marketplaces and e-shops that predominantly focus on selling fashion and footwear. Less people report buying on brand.com but until only recently did well known brands such as Adidas, Zara, Uniqlo, started to offer their products online in Southeast Asia.

Other popular online shopping destinations include social sites such as Instagram and Facebook and apps like Shopee and Carousell who are dominating C2C market sales in the region.

websites where online shoppers buy fashion and mobile phones in SEA

Where are shoppers buying mobile phones?

As for electronics, there is a larger variety of channels shoppers use to buy mobile phones. In Indonesia, classifieds sites and mobile phone brand stores are the most popular choice for shoppers.

In Vietnam, shoppers favor online shops of mobile retailers and big box retailers, while in Thailand people shop on general e-retailers. websites where online shoppers buy fashion and mobile phones in SEA


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Here’s what you should know today.

1. Malaysia’s Cradle Fund starts direct equity investments with new $1.8m program

Malaysian government-owned Cradle Fund, a key influencer in the nation’s startup scene, has unveiled a new investment product which will make direct equity investments in early-stage startups.

DEQ800, the name of the new program, is a step away from Cradle’s role as co-investor and marks its continuous move from grants towards equity investing. Cradle has allocated a total of US$1.8 million for DEQ800, which will inject between US$67,000 and US$180,000 into tech startups

 Cradle has planned up to 10 direct equity and about three co-investment deals in 2017.
Read the rest of the story here.

 

2. RHL Ventures targets proven, successful startups that need funding

Founded by wealthy Southeast Asian offsprings of Malaysia and Singapore’s wealthiest families, RHL Ventures has backed two startups since its debut last year.

Which ones? One of them is Singapore based Perx, which has morphed from a retail rewards app to provide corporate clients with data and analysis on consumer behavior. Sidestep, an app (backed by Beyonce) that allows fans to buy concert memorabilia online is another.

RHL Ventures are proving access for US startups that want to enter Asia, but only think about China.

In Southeast Asia, RHL has positioned itself between early-stage venture capitalists and large institutional investors such as Temasek Holdings Pte. The firm said they want to fill a gap in the region for the subsequent rounds of funding – series B, C and D.

Read the rest of the story here.

 

3. Recommended Reading: Inside the unraveling of the Thrillist-JackThreads marriage of content and commerce

Back in 2010, Thrillist bought flash-sale site JackThreads for a skimpy $10 million, and Lerer gushed that it was a “win-win,” a “spectacular” company with “lots of potential.”

The idea was to give Thrillist a foothold into a new revenue stream by plugging the users of the going-out guide for guys into JackThreads’ private shopping community. A perfect blend between content and commerce.

Ultimately, Thrillist realized that the ecommerce business is a low-margin grind, and content and commerce were hard to mix organizationally

“It’s comically expensive to do it right. Everything gets destroyed by Amazon,” said Ted Gushue, ex-executive editor editor of Supercompressor, Thrillist’s ecommerce vertical.

Read the rest of the story here.

 

4. Community Chatter: NET-A-PORTER looks to the middle east 

Source: BusinessofFashion’s twitter page

China will surpass the US to become the world’s largest retail market with total sales of $4.886 trillion in 2016, compared with $4.823 trillion in the US, according to eMarketer‘s retail forecast.

China will also remain the world’s largest retail ecommerce market, with sales expected to top $899.09 billion this year, representing almost half of digital retail sales worldwide.

Asia's Ecocmmerce Spending To Hit 1 Trillion Dollars

Source: eMarketer

eMarketer expects that purchases made digitally in China will represent a globe-topping 18.4% of the country’s total retail sales this year. China will continue to see large gains in retail ecommerce over the next few years. Online shopping through mobile will account for over half of ecommerce sales, projected to reach 68% by 2020.

China’s booming ecommerce market can be attributed in part to the proliferation of the dominant domestic marketplaces such as Alibaba, Tmall and JD.com.

Rising income and increased internet access in rural areas also accounted as key factors in boosting ecommerce growth.

Asia-Pacific as a whole remains the world’s largest retail ecommerce market, with sales expected to top $1 trillion in 2016 and more than double to $2.725 trillion by 2020. Expanding middle classes, greater mobile and internet penetration, growing competition of ecommerce players and improving logistics and infrastructure will all help to fuel ecommerce growth in the region.

Burgeoning consumer economies in China, India and Indonesia will drive retail sales over the next four years as disposable incomes in those countries continue to rise.

A version of this appeared in eMarketer on August 18. Read the full version here