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Online marketplaces offer brands high incentives as it gives them access to millions of customers. However, high volumes of traffic come with a price as they are often attracted to items sold by unauthorized sellers, often referred as grey sellers.

And without official authenticity checks being implemented, grey sellers are at liberty to put whatever the price they want to appeal to Southeast Asians high aptitude to look online for low prices.

To understand how grey sellers impact authorized sellers and the brand’s official stores on marketplaces, data analytics platform BrandIQ draws comparisons between the top three sellers for Samsung on Lazada Thailand.

This data shows that Samsung only controls less than 2% of total SKUs direct or through authorized third party sellers.From a numbers game of SKUs, grey sellers dominate the distribution of Samsung products on marketplace with a total of 51,925 SKUs or 98.1% of all Samsung products available on Lazada Thailand.

On Lazada Thailand, Samsung has several official stores; Samsung Official Store (managed by Lazada), Samsung Official Shop (managed by Samsung), Samsung Official eStore – Consumer Electronics, Samsung Official eStore – Mobile; as well as authorized sellers.

Multiple stores leave Samsung unable to create a unified brand experience confusing consumers as to which channel is more reliable given there is overlap on the product offering. Each channel also offers a different policy on payment and delivery.

How about price differences?

Taking a look at the price points for several products, BrandIQ data shows that grey sellers actually offer lower prices on average compared to the official Samsung channels. They can vary between 4% to as high as 63%.

Price comparison between Samsung official stores versus grey sellers on Lazada TH

From the consumer point of view, experiences from grey sellers offer a varying standard of service unsurprisingly but looking at ratings from three Samsung smartphone products show the official store still has the more favorable opinion from consumers compared to unofficial sellers.

Review comparison between official store vs. grey seller

However, it still remains a lose-lose situation for Samsung because consumers with a negative experience from grey sellers impact the Samsung brand and if they have a better experience with grey sellers, they will continue purchasing from them, causing Samsung to lose market share.

What does this mean for brands?

It becomes important for Samsung to create a unified brand experience in order to gain more market share on marketplaces like Lazada, especially with the numerous grey sellers flooding the site with their products.

Provided that marketplaces also suffer from counterfeit issues and grey market sellers, popular brands can work with Lazada and Shopee to boost its presence on the website through front page banners and onsite ad placements offered through Shopee’s new feature Shopee My Ads.

Consumers don’t want to think twice, and usually don’t even care, about differentiating between channels as long as they get the right product at the right price.


HOW IS YOUR BRAND PERFORMING ON SOUTHEAST ASIA’S TOP MARKETPLACES?

Emerging markets continue to drive the global sales of smartphones as its citizens discover the internet for the first time.

Southeast Asia’s smartphone shipments grew by 6.5% last year, recording nearly 28 million devices. Its largest market, Indonesia, is projected to be the four largest market for smartphones by 2020, reaching almost $10 billion in sales.

One of the global household names eyeing the region is Apple.

The company has been attempting to grab market share from dominant Chinese brands selling at much cheaper prices such as Oppo and Huawei in the sector. Apple’s global sales took a slight drop in Q2 2017 and 400,000 less iPhones were sold compared to the same period last year.

Apple market share Indonesia

Apple and Samsung struggle to grab market share against Chinese brands. Source: Frontera

Apple recently opened its first official store, a “Town Square”, in Singapore last May.

Apple market share Indonesia

Singapore’s first official Apple Town Square. Source: 9to5mac

This followed a commitment to invest more than $44 million in R&D in Indonesia after the company couldn’t release the iPhone 6s and 7 in the country for failing to meet the requirement of having at least 30% local components.

Indonesia not breaking the bank

Recent data from International Data Corporation (IDC) shows only 1% of 7.9 million smartphones shipped in Indonesia during Q2 2017 cost more than $600 or fell into the “ultra high-end” category.

Apple market share Indonesia

Devices from the “low-end” category costing $100 – $200 are still the most popular among Indonesians as they prefer a more affordable option.

In nascent markets like Indonesia, Chinese and local players like Huawei, Oppo, and Advan will continue to occupy the top five smartphone brands in the country.

And given Apple’s newest price tags – the iPhone X initial pricing exceeding $1,000 – its share will unlikely exceed more than 1% of Indonesia’s total shipment anytime soon, unlike the US market where Apple has 31.3% market share.

But it’s not all doom and gloom for Apple. Indonesia’s consumer smartphone affinity is heading towards the higher end as purchasing power increases.

Mid-range devices costing between $200 – $400 grew to 28% from 13% in the same period last year and with the lowered iPhone SE price to the “midrange” category, it’s not impossible to see more iPhones in the hands of Indonesians.

Here’s what you should know:

1. JD.com rumoured to acquire Tokopedia

Alibaba’s biggest rival JD.com is rumoured to have acquired majority stake in Tokopedia.

If the rumour is true, Tokopedia will be another Indonesian startup that reach unicorn status after Go-Jek and Traveloka – which has just received $350M investment from Expedia.

The rumour about Chinese ecommerce giants’ interests in one of Indonesia’s biggest ecommerce site has been surfacing for months. Last month, Alibaba is the one that reportedly in talks to invest $500 million in Tokopedia.

Read the full story here

2. Online marketplace Pinkoi launched in Thailand

Taiwan-headquartered online marketplace Pinkoi is officially launched in Thailand. Pinkoi is a cross-border curated marketplace for original design products.

Inspired by the weekend market, Pinkoi seeks out niche designers throughout Asia to appeals to specific demographics. Pinkoi support the designers through workshops covering various topics related to ecommerce.

The marketplace is focussed on China, Hong Kong, Japan, the US, and now Thailand. But it has presence in 88 countries with 1.6 million members.

Read the full story here.

3. Sinar Mas Land and Samsung to host Indonesia Next Apps 4.0

Sinar Mas Land and Samsung will collaborate to host Indonesia Next Apps 4.0, an app-creating competition across eight cities in Indonesia.

Sinar Mas Land is challenging participants to create apps that will be useful in the field of transportation, marketing, and community.

The eight cities where the competition will be held are: Jakarta, Medan, Bandung, Semarang, Yogyakarta, Surabaya, Malang and Makassar. A road show in these cities is expected to draw more participants.

Read the full story here

THE BACKGROUND

Chinese brand Huawei started as a producer of phone switches in 1987 before becoming the Information and Communications Technology (ICT) giant it is today.

The company builds products along the entire wireless communications chain: chipsets, network connectors, and handsets.

As Fortune puts it, “it’s as if General Motors had paved the Interstate Highway System, then started selling cars.”

Huawei recorded more than $42 billion in revenue for the first half of 2017 across its three main business units: Carrier, Enterprise, and Consumer Business.

Under its Consumer Business division, Huawei entered the smartphone market in 2010 and quickly rose to No. 1 in homeland China until Oppo took the title in 2016.

Nonetheless, the brand shipped 139 million smartphones in 2016 and controls 9.8% of global smartphone market share and around the world, the brand trails only behind Samsung and Apple as the No. 3 mobile phone vendor.

huawei premium strategy

Global market share by phone vendor, 2016. Source: IDC

THE CHALLENGE

Huawei’s rise to the top three was achieved in a very short time — less than five years – but the brand is struggling to catch up to its biggest rivals, especially in overseas markets.

Despite being a household name in China, the brand isn’t well known in Europe and the US.

A few issues have plagued the brand’s reputation: a general consensus that Chinese companies produce ‘cheap and copycat products, allegations of national cybersecurity breaching, and a investigation from the US government.

These issues have hampered the brand’s efforts to gain footing in the world’s biggest premium consumer market — the United States.

Huawei’s US sales totaled $1.3 billion last year, only a fraction of its worldwide sales of $32.4 billion.

In addition, the company has also faced difficulties winning emerging markets like India and Indonesia as most consumers favored devices below Huawei’s price tag where its budget phone handsets start from $170.

The company does not have the equivalent of Apple’s die hard fans nor Samsung’s superior phone features – they have “better value for money” as its differentiator.  

Without a customer niche, Huawei will find it difficult to boost sales and stay competitive. Although revenue growth was impressive in the first half of this year, it was the company’s slowest in four years.  

THE INNOVATION

In October 2014, Huawei launched a new brand of mobile phones that they called Honor and was sold direct to consumer through online channels to keep prices in the mid-range and targeted digital natives – young hipsters.

Huawei premium strategy

Huawei’s Honor flagship store in Germany

Launching a sub-brand is also a part the company’s efforts to emphasize the brand’s focus on quality.

The company also spent a large portion of its marketing budget on overseas promotion, including plastering major cities in Europe with advertisements.

Huawei premium strategy

Billboard of Huawei phone in Poland. Credit: Wade Shepard

To further familiarize Europeans with its brand, Huawei drew on the popularity of major sports clubs like Arsenal and AC Milan and reached the masses with several sponsorships.

Huawei premium strategy

The brand became the official sponsor of English football Arsenal to raise its brand awareness.

In 2016, Huawei struck a partnership with German-company Leica to develop a dual-lens camera system that resulted in the Huawei P9 smartphone, touting an innovative camera as one of its selling points. Apple rolled out the same feature shortly after.

Andreas Kaufman, Chairman of the Supervisory Board of Leica Camera, saw the potential to become the second leg of digital revolution in the photography space where smartphones were the new amateur camera.

Huawei was also chosen by Google to build its flagship Android device Nexus in 2015. The partnership is strategically important for both companies as they are leveraging one another’s credentials for a leg up in an oligopoly market.

To crack the US market and simultaneously beat Apple for market share, Huawei is collaborating with Amazon and Google in the launch of its updated premium flagship device, the Mate.

The device is the first of Huawei’s smartphone to come with voice-interactive app, Amazon Alexa, and is available for purchase in US through Amazon. The Mate 9 is also the first Google Daydream-ready device for users to explore immersive virtual reality (VR) content and experience.

With so many enticing features jam-packed into one device, the soon-to-be launch Huawei Mate 10 is expected to surpass the performance of Apple’s highly anticipated iPhone 8.

THE STRATEGY

A few years ago, Red Zhengfei, founder of Huawei, laid out the company’s strategy: Huawei must make progress in the mid and high-end range with high quality products and turn a profit.

In order to do this, the Chinese company has continued to sacrifice margins to spend on R&D, investing $11 billion (76.4 billion yuan) to further its business.

Huawei further announced that it will focus on the mid-high segment for higher profits.

“We are giving up the very low-end devices because of the margin in this is extremely low, and it’s not making enough profit for us,” said Richard Yu, CEO of Huawei Consumer Business Group.

Huawei premium strategy

CEO of Huawei’s Consumer Business Group, Richard Yu

“The priority is Europe, China, and Japan, where the economy is healthy and people are able to consume them.”

THE FUTURE

The company continues to works towards becoming the No. 1 smartphone supplier in the world within four or five years and seizing  20%-25% global market share by introducing visionary innovation to its products in order to charge a premium.

“In the past for the smartphone you could see Apple leading innovation,” said Richard Yu. “But in the future, you will see innovation led not by them but by Huawei.”

Here’s what you need to know today.

1. Carousell launches new app for buying-selling cars

Carousell Motors was born out of Carousell’s acquisition of Caarly, a startup that connects customers with used car dealerships. The Carousell Motors app sports more detailed product listings than Carousell, which usually features a product and seller name, a photo, and a price.

Carousell Motors was built by Caarly’s team, which transitioned into Carousell Motors.

The new app will let buyers search specifics like make and model, specific dealers, financing options, and car depreciation. Car seekers can also compare different car listings and use chat to get in touch with dealerships directly.

Read the rest of the story here.

 

2.  SK Planet and Samsung enter an ecommerce partnership in Southeast Asia

The MoU, signed in Singapore, aims to promote Samsung’s brand presence and provide increased convenience and access to the Korean company’s products in Southeast Asia through 11street Malaysia, 11street Thailand and Elevenia in Indonesia.

The Samsung Shop-in-Shop page enables consumers to search, browse and purchase Samsung products easily, as well as gain access to exclusive online-only products and presale offerings.

Read the rest of the story here.

 

3. Malaysia’s Delivereat secures funding from Gobi Partners to expand to new cities

The startup scored US$450,000 in pre-series A funding from the Gobi MAVCAP ASEAN SuperSeed Fund, Gobi’s collaboration with Malaysia Venture Capital Management Berhad.

With the funding, it plans to expand to other cities in Malaysia and increase its marketing efforts toward merchants to boost sales. Delivereat doesn’t offer a new business model, and still faces competition from Food Panda, recently sold to Delivery Hero. However, the funding derived from the team’s ability to execute.

Read the rest of the story here.

Here’s what you should know for Tuesday morning.

1. Alibaba unites with Louis Vuitton and Samsung to clean up its reputation

Alongside partners including Louis Vuitton, Samsung and Mars, the company announced the Alibaba Big Data Anti-Counterfeiting Alliance on Monday. The Alliance will use machine learning and other technologies to identify and remove counterfeit goods from its platforms.

By working with high-profile names like Samsung and Louis Vuitton, they’ve found significant allies in a bid to go global and attract reputable brands.

Why are they doing this? This is a good PR move to salvage the reputation that was earned last year, especially following Taobao’s re-entry into the US’s notorious markets list.

 

2. StorePower helps groceries deliver without giving away the keys to the store

A startup called StorePower wants to take a bite out of the grocery delivery business by giving supermarkets an alternative to working with courier marketplaces like Instacart, Postmates, Amazon Fresh or Google Express.

How? Chicago based StorePower’s technology helps grocery stores of any size take orders from customers and arrange for in-store pickup or delivery. Customers can order by text message.

Read the rest of the story here.

 

3. Cambodia pushes for ecommerce initiative

As a coordinator of a group of least developed countries (LDCs), Cambodia has plans to encourage countries within the group to implement elements of their own “ecommerce” initiative to further their advancement.

Commerce minister Pan sarosak says: “In trade, we are also doing very well, so we try to help those countries benefit as much as they can in terms of trade with Cambodia as chairman and coordinator.”

Read the rest of the story here.

 

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