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Here’s what you need to know today.

1. SingPost signed a partnership with Airbus Helicopters for drone delivery.

One year after a similar MOU was signed between Airbus Helicopters and the Civil Aviation Authority of Singapore, SingPost signed a partnership with the manufacture for drone delivery trials.

The project is called ‘Skyways’ and aimed at developing aerial drone delivery system for an urban environment like Singapore.

As the project’s logistics partner, SingPost will contribute its expertise in software and delivery system, as well as postal and ecommerce logistics.

The development is claimed to be at an advanced stage and they’re expecting the initial trial around National University of Singapore (NUS) by early 2018, followed by the deliverance of goods from a parcel station on the Singapore to ships.

Read the rest of the story here.

2. Procter & Gamble invests $100 million in a digital innovation center in Singapore.

In partnership with the Singapore Economic Development Board, US-based Procter & Gamble announced that it would invest $100 million over the next five years in digital innovation center in Singapore.

The center is the first outside of the US and will develop digital solutions for their APAC operations, spanning supply chain management, analytics, and ecommerce.

The company would also expand its partnerships with small and medium enterprises (SMEs) and startups, among other goals. The US consumer goods giant will train 40 employees in the first year to take on digital-related roles.

“We will continue to partner the industry and education institutions to equip our people with the skillsets that are needed to succeed in the digital economy,” commented S Irawan, Singapore’s Minister for Trade and Industry.

Read the rest of the story here.

3. Tencent will invest $200 million in used goods marketplace Zhuan Zhuan.

The Chinese tech giant has signed an agreement to invest $200 million in cash and additional business resources for a minority equity ownership in Zhuan Zhuan.

Zhuan Zhuan is a C2C mobile app enabling transaction of second-hand goods that operates under 58.com Inc, China’s largest online marketplace.

Under the agreement, a new entity called Zhuan Zhuan Entities will be created, into which 58.com will inject the app, along with its used goods related listings. 58.com will continue its direct traffic and other business support to the Zhuan Zhuan Entities.

The transaction is currently expected to close in the second quarter of 2017.

Tencent’s competitor, Alibaba Group has also recently launched a platform for second hand products, Xian Yu, where the company facilitating  sales of about 200,000 used goods daily.

Read the rest of the story here.

Amazon’s rapid expansion into private label brands

Earlier today, TechCrunch published an article titled “Amazon to Expand Private-Label Offerings—From Food to Diapers” detailing Amazon’s successful push into private label brands covering lucrative categories ranging from batteries, mom & baby to even perishable food items. The concept of retailers selling their own private label brands has been around for ages, mainly adopted by grocery chains with the goal to increase margins for often low-profit consumer packaged goods (CPG) categories. It’s not so much players like Amazon are doing this but how and why they’re doing this that should ring some alarm bells with brands.

The ultimate bait and switch

Global ecommerce giants like Amazon and, increasingly, local Southeast Asian players like Lazada and MatahariMall are offering perks to entice brands to open stores and sell through their platforms. This strategy resembles Ladies Night at clubs, where women are offered free drinks to indirectly lure men, who, more often than not, end up with a headache, alone and having burnt a hole in their pocket at the end of the night.

With aggressive promotions and subsidies from their hosts, brands often see quick short-term gains in online sales. The extreme example here is 11.11, a man-made online shopping festival during which retailers compete in the Discount Olympics. Obviously, brands benefit from spikes in sales but little do they know that they’re actually selling their souls in the long-term. It’s like crack, it makes you feel great for a while but sooner or later it’s hollowing out your body.

With the massive amounts of data generated on a day-to-day basis, these ecommerce platforms can easily identify consumer trends, such as best selling products and categories beyond what brands are able to see themselves. This data is then leveraged by retailers to develop and introduce their own private label brands to compete with the brands they partnered with in the first place.

Once launched, these platforms could favor their own white-label brands by giving them more visibility through favorable product placements as well as top rankings on internal search result pages.

The bigger picture

Players like Amazon and Alibaba’s Tmall aren’t really traditional ecommerce retailers. Their main objective is to use competitive pricing, often subsidized, on retail products to acquire more and more users, which they then monetize through other means such as Amazon Prime subscription fees for Amazon and onsite advertising and Alipay transaction fees for Tmall.

Amazon’s new CPG brands like Happy Belly and Mama Bear are only available to Prime members in a move to incentivize joining its $99-a-year unlimited shipping program that’s fueling Amazon’s retail growth behind the scenes.

In a post-Alibaba acquisition world, ecommerce power-players like Lazada could potentially increase awareness of their own private label brands through better placements on their marketplace, eventually forcing other brands to pay more for advertising to rank higher and get traffic.

With private labels, Amazon and the likes of Lazada also have more “room” to play in terms of pricing, allowing them to maintain sustainable low prices, keep driving more users and spinning the flywheel.

Strategies for brands

Brands like P&G, Unilever and Nestle should look at ecommerce marketplaces as a relatively easy way to test selling online but in the long-term, brands are arguably better off selling direct-to-consumer where they have full control of the brand image, customer experience and, most importantly, user data.

A case in point is Coach. The luxury brand was one of the first brands to set up shop on Tmall in China but recently closed down its official flagship store, leaving the brand with only a brand.com and WeChat presence. Many luxury brands have expressed concerns about the mass-market image of some of the bigger marketplaces.

Brands don’t have to pick between marketplace and brand.com only. Some brands like L’Oreal have adopted a multi-channel approach where their marketplace presence generates sales for their more mass and lower price point items whereas their brand.com site sustains long-tail and higher average order value sales.

At the end of the day, marketplaces are a great way for brands to jump into ecommerce. However, brands should be aware of the pros and cons and especially long-term implications of such a decision.

BY SHEJI HO

Here are some key headlines to wrap up the day.

1. P&G Under Pressure to Make a Deal as Eco Friendly Products Surge

Procter & Gamble Co., which is losing market share to eco-friendly products, is under mounting pressure to either fend off the competitors or buy one of them. Unilever, P&G’s top competitor, raised the stakes last month when it agreed to acquire Seventh Generation, a Vermont-based company that makes sustainable cleaning products. The company had previously acquired Dollar Shave Club — another startup targeting America’s bathroom cabinets. Read the rest of the story here.

 

2. Body Shop launches AliPay to cash in on Golden Week tourists

The L’Oréal-owned brand’s new service will allow thousands of Chinese shoppers to pay for their shopping via China’s biggest digital transaction service, using the Scan Alipay App. Read the rest of the story here.

 

3. Business giants eye Singapore as springboard into South-east Asian ecommerce market

The potential for growth, government assistance and Singapore as an entry point into South-east Asia make the Republic attractive, experts say. Read the rest of the story here.