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The Wall Street Journal recently published an opinion article on the fragmented boom of Southeast Asian ecommerce. There has been a recent influx in opinions regarding the setbacks that the region has experienced due to the fragmentation of our landscape, but this has not hindered the growth of the online retail market.

With the recent acquiring of Lazada in Thailand by Alibaba, JD.com’s entry into Indonesia and investments in Tokopedia, Indonesia’s biggest online marketplace, the list keeps growing.

However, Southeast Asia’s online retail penetration level is only at 3%, representing $6 billion in sales. Comparisons keep being made to the US and China, but Southeast Asia is made up of very different smaller countries and is in a league of its own. Read more

WeChat is struggling in countries beyond China. Despite global ambitions since 2013, investing in big scale marketing strategies such as signing up soccer star Lionel Messi and infiltrating India, and differentiating themselves from Whatsapp, the global push has not amounted to much.

“The network effects of chat apps like WhatsApp and WeChat is what drives adoption; if your friends are users of a particular chat client, you’re more likely to use that client to stay in touch with them,” says Sarah Matthews, associate content marketing manager at US-based Jana, makers of an Android app store aimed at emerging markets.

This means that in Thailand, the majority of people use LINE and Whatsapp, and BBM one of the most popular chat apps in Indonesia. What also hinders Wechat’s growth is ‘The Facebook Trifecta’, consisting of Whatsapp, Facebook and Facebook Messenger. This applies to India, as they are the top picks for communication methods right now. Wechat is also trailing behind The Facebook Trifecta in Hong Kong, Singapore, Philippines and Mexico, all the countries Wechat was aiming at.

They have to go back to the drawing board to figure out the next step for global expansion, if the trifecta can be beaten, that is.

Read the full article from Techinasia here

Southeast Asia’s internet economy is expected to grow to $200B by 2025, according to a new report by Google and Singaporean sovereign wealth fund Temasek. The report focuses on the $200 billion digital opportunity in Southeast Asia. Cultivating from 4 independent data sources, the two companies identified expected values  of different start-ups and sectors, and made calculated predictions about challenges in the ecosystem. Read on for key takeaways:

e-conomy prediction for 2025

e-conomy prediction for 2025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Key Takeaways

  • Southeast Asia to be the fastest growing internet market in the world. With 480m users by 2020
  • Indonesia is the fastest growing nation in the world
  • Southeast Asia’s internet economy is ready to take off: 124k users coming online every day for the next 5 years
  • Southeast Asia currently houses 700m Mobile connections. This makes up 130% of the population
  • The ecommerce market is split into two key segments: First- hand goods and Second-hand goods (See figure 2)
figure two: ecommerce segments

Figure 2: Ecommerce segments

  • Investment flow is growing, but activity is concentrated to Singapore and Indonesia, with the majority of funding going to a few prominent startups.
  • A total of $40-$50B of investments must be injected over the next 10 years to make Southeast Asia a $200B internet economy in 2025.
  • Investment levels in India are higher than Southeast Asia. SEA had a GDP of $2.4T while India had $2.1T in 2014, it received less than a fifth of the funding.
  • Southeast Asia will face four key challenges (See figure 3).
ecommerce challenges for the region

Figure 3: Ecommerce challenges for the region

To access the whole report, click here

 

 

The 2016 A.T. Kearney Achieving Excellence in Retail Operations (AERO) study explores the pros and cons of store operations in the digital era, as retailers focus on Omnichannel strategy with a move towards ‘Bricks and Clicks’.  In an age where retailers are are revolutionizing themselves to meet more fragmented consumer demands, integration with technology becomes investment priority. However, this does not mean that the human aspect of the retail industry should be left behind…

Here are the key findings:

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Figure one: Consumer feedback on social media impact and social media usage

Fulfillment

  • 24% of people are happy with three-day shipping for ecommerce
  • 42% of people consider ‘delivery made during promised window’ more important than fast shipping

Technology

  • 60% of retailers admit that their companies struggle with executing and measuring their ROI.
  • 78% of retailers are focusing on inventory management. With 33% aiming to invest ‘ in inventory management technology soon’.

Social Media

  •  Over 60% of retailers say they are focusing on social media to create value. But two-thirds of consumers are not engaging at all.
  • Those that do engage with retailers on social media are mainly using it to obtain discounts.

Store Associates: The Unsung Heroes

The AERO findings show that despite investments being directed towards technology and social media engagement, consumers state that experience and service have the most impact on store productivity. However, retailers put too little investment focus on store associates. 70% of retailers expect spans of control to widen in the near future, and almost all express concern about the workforce adapting to omnichannel demands. This shows that retailers need to focus on properly supporting in-store staff, especially in customer service operations.

Bottom Line: Despite the focus on ‘bricks and clicks’ , retail is still a ‘people’ business. People are still a key ingredient to success.

To access the full report, click here

Does Ramadan Boost Ecommerce in Indonesia?

This is the question aCommerce sought to answer this Ramadan 2014. With over 200 million Indonesians concluding the holy month of Ramadan with Eid celebrations on Monday, July 28, aCommerce released a case study that analyzed the ecommerce data of five clients during Ramadan in Indonesia. We were interested in the implications of how 88% of the Indonesian population eliminating food and water from their daily life for religious reasons, 66.8 million of whom are online, would affect consumer behavior in ecommerce. Would consumerism decline during this holy month, or simply shift? Would the type of goods being purchased change? Are people spending more or less?

Our sample set includes five diverse clients in both size and category such as beauty, Muslim wear, general (department store), sports and fashion. Given the range of ecommerce development of these various clients this case study is intended to provide a snapshot of consumer behavior and may not be indicative of the whole Indonesian ecommerce market at large.

The data analyzes a data the period two weeks prior to Ramadan, June 7-20, and two weeks during Ramadan, June 28-July 11, and looked at the following data points:

Peak shopping hours: When were Indonesians shopping online?
Strongest performing shopping categories: What were they buying?
Average basket size: How much was being spent?

Below is a summary of the key learnings.

Traffic stayed constant, but shifted earlier

Overall traffic saw a marginal increase of 3% of visitors shopping during Ramadan, but the most important take away was that there was a major shift as to when they were shopping. This stems from the fact that the day starts and ends earlier. Instead of going to the office at 9am Indonesians start the day at 8am and leave around 5pm. See Figure 1.

However, for clients with Ramadan targeted or conscious campaigns and products such as Muslim Wear and Sports, these categories saw spikes in traffic of 29% and 18% respectively.

Indonesians eat, pray, shop shop shop

152% increase in traffic at 4am in all categories except fashion. Instead of waking up, praying, eating and then returning to bed, Indonesians are increasingly using the time to browse online. See Figure 2.

There was a 400% increase in traffic at 4am and a 7x increase in orders for our Muslim wear category. But these gains are not only seen for religious related retail. Sports saw a 189% increase in traffic and 26% uptake in sales at 4am. Lunch time browsing boosted during Ramadan with 12% more than normal at 11am, suggesting Indonesian Muslims are turning to ecommerce and retail consumption instead of going to lunch. See Figure 1.

6pm is the lowest time for ecommerce as people head home, but during Ramadan that drop off was even steeper with a 19% decrease. During Ramadan Indonesians are leaving work earlier and gathering with friends and family to break the day long fast at 6:30pm. See Figure 1.

The majority of shopping still takes place between 11am-2pm, but evening shopping hours were being shifted to early morning. See Figure 1.ecommerceIQ, aCommerce, eIQ

Religious related retail rules

Muslim wear category saw its sales skyrocket during Ramadan. The night long dinners, socializing with families and people returning home out of the city capital means that the demand for traditional and conservative clothing ran strong. There was a 96% increase in transactions of Muslim wear and 84% increase in revenue after Ramadan started.

And shoes. The majority of the sales in Sports rose in the shoes category.

Provocative sells, but not during Ramadan

Contrast this with modern female fashion, which saw a sharp decline in orders per day, suggesting that while Indonesia is a progressive Muslim nation, marketing provocative fashion during Ramadan needs to be done with care. We saw that the CTR for Ramadhan themed fashion (not necessarily including a hijab) but with long sleeves and little skin exposure performed stronger during this month. “Indonesians find it distasteful to see bare legs and bikinis during Ramadan,” MatahariMall.com CEO Hadi Wenas said.

A tisket, a tasket, a big sporty basket

Ramadan is not like Christmas where gift giving is the norm. Nonetheless average basket sizes saw significant increases. People were buying in much bigger quantities. For example, our sports category saw average basket size increase by 67%. The more decadent spending may be explained by the fact that prior to the start of Ramadan, working Indonesians have a major influx of disposable income as they receive their bonus for the year. The median basket size was around 120,000 IDR or 10.3 USD.

ecommerceIQ, aCommerce, eIQ

4 Strategic Recommendations for Ramadan Ecommerce

1. Shift marketing to 3am

Boost SEM, online marketing and promotional offers to between 3am-6am. Indonesian Muslims are waking up and staying up and they are shopping online as Figure 1 shows. Save money from marketing spend (online or offline) during the traditional prime time of 6pm-8pm. Prime time has shifted to the morning as families are eating together and going out in the evening. Do not miss the opportunity to capture the new age Indonesian customer.

2. Remove provocative images from homepage

That doesn’t mean you have to change your whole product to be religiously targeted or non-secular but use this month to feature more conservatively dressed models, long sleeves, no cleavage or bare chests, longer skirts etc. Or else risk facing major bounce rates (if you receive traffic at all). As a time for family and religious sacrifice, Indonesians find provocative imagery especially distasteful during Ramadan.

3. Rethink your bestsellers

For non-Muslim wear categories rethink your bestsellers and home product page to reflect Indonesian values and culture. What sold best last month will not necessarily work during Ramadan. Consider products and marketing that focus on family, community, their upcoming vacation time, etc.

4. Feature affordable items

Sites that did not feature lower priced items suffered a hit in conversions. Indonesians are price conscious year round and even if they are playing with a spike in disposable income from their bonus, thriftiness is a major factor in consumption behavior as we saw with our brands. Be aware of mixing up high priced items on the homepage with bringing the lower priced items to the forefront as well. This is a great time of year to flush out some of that inventory.

Conclusion

Ecommerce during Ramadan has the potential to be explosive as seen with the amazing shift in behavior as Indonesians woke up and immediately hit the internet for online shopping. Whether those potential shoppers are captured or not depend fully on strategic timing of marketing and a consciousness of traditional values integrated into product choices and campaigns.

ASEAN Today and its Digital Potential

The number of internet users has grown rapidly over the past decade and today two-fifths of the world’s population is online. Increasingly equipped with smartphones, consumers depend on the Internet for a growing range of everyday activities, from connecting with friends and family to shopping and banking. Businesses also harness the Internet extensively across their operations. A complex dynamic value chain comprising both global and local players has developed to deliver digital services to consumers and businesses. The digital economy’s value chain broadly consists of three elements: devices, networks, and applications.

By 2025, a digital revolution could transform daily life in ASEAN, making physical cash obsolete and cities smarter safer places to live.

Download the full report: ASEAN Digital Revolution AT Kearney