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ecommerceIQ, together with Sasin SEC, created the Leadership Ecommerce Accelerator Program (LEAP) to provide the fundamental knowledge and skills needed to successfully run an ecommerce business in the world’s fastest-growing market.

The third week of LEAP dove into a session disproving what most marketers still commonly think of as the “magic dust of strong sales” and introduced digital marketing concepts such as SEO, SEM and retargeting tools to students looking to grow their customer base.

Here are some of last week’s LEAP highlights:

1. “Growth hacking is bullshit, there is no shortcut to growing your business”

SHEJI HO, GROUP CMO, ACOMMERCE
ecommerce growth marketing

Sheji Ho, aCommerce Group CMO at LEAP 2017

The biggest takeaway from Sheji’s two hour lecture on digital marketing is that companies should ask themselves “if the market needs their product” before spending money on Google and Facebook ads. Popular businesses like ofo, Seekster and Blue Apron, may run into trouble because they lack what Brian Balfour refers to as “market-product fit”.

Examples below:

ofo – Thailand’s roads are the second deadliest in the world, does it make sense to have bike sharing in Bangkok?

Seekster – home service on demand started in the US but churn rate began increasing because once a user finds a suitable cleaner through the platform, most home owners would take the transaction offline.

Blue Apron – once people learned what ingredients to buy and how to cook the meals, would they continue ordering expensive meal kits?

ecommerce growth marketing“Before you spend money at your product, does your business make sense in this time and this market? Because if not, people won’t use your product regardless of how much money you throw at it.”

2. Ok Google, teach me about SEO

KORAVUT PAVITPOK, HEAD OF GROWTH MARKETING, ACOMMERCE
ecommerce growth marketing

Koravut (Bom) Pavitpok, aCommerce Head of Growth Marketing

What is Google’s market share in Thailand?

A whooping 99%.

It’s almost essential then to understand how Google search can drive quality online traffic to your website through proper SEO (search engine optimization), SEM (search engine marketing) and dynamic retargeting.

Based on factors such as search volume and intent, companies can bid on keywords to capture the attention of Thailand’s most likely buyers.

ecommerce growth marketing

The more accurately you can target users on the lower end of the funnel, the more likely to see conversions on your ecommerce channels.

Think of Google search like street names,” says Bom Pavitpok. “You want to be on the most popular street for your particular category.”

The next LEAP class is on Thursday September 28th, 2017 taking a look at social media marketing, Google analytics and a Central Marketing Group case study. Stay tuned for next week’s takeaways.

[LEAP Week 1] eIQ Insights: The New Ecommerce Opportunity in Thailand

[LEAP Week 2] eIQ Insights: Refinement of an Ecommerce Channel Strategy


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ecommerceIQ, together with Sasin SEC, created the Leadership Ecommerce Accelerator Program (LEAP) to provide the fundamental knowledge and skills needed to successfully run an ecommerce business in the world’s fastest growing market.

The second session of LEAP dove into a common problem faced by many traditional businesses looking at ecommerce – what online channels should I be selling on?

Factors involved in building an effective retail channel strategy was dissected during this week’s module conducted by managers from leading regional ecommerce enabler aCommerce.

Topics for the week included: multi-channel online distribution, choosing a tech platform to build a webstore and key ecommerce metrics to capture.

Here are some of this week’s LEAP highlights:

1. Criteria for Choosing the Right Online Marketplace

RAPHAEL GAILLOT, REGIONAL DIRECTOR OF BRAND COMMERCE, ACOMMERCE
ecommerce channel strategy

Raphael Gaillot, Regional Director of Brand Commerce, aCommerce

In Southeast Asia, there are typically four channels a brand can sell through: a brand.com, a popular online marketplace, e-retailer, and/or social media (FB, LINE, Instagram, etc.). To test the market’s demand for its product, many brands begin with top marketplaces such as Lazada or Shopee in Thailand.

Raphael shares a few criteria brand managers should consider before choosing a marketplace to allocate resources to:

ecommerce channel strategy

What are the top marketplaces in Singapore? Share your email to receive it here

2. The Right Technology for a Webstore

MANDY ARBILO, HEAD OF REGIONAL WEB DEVELOPMENT, ACOMMERCE

Depending on the country a business is operating in, the level of ecommerce platform maturity differs but the most important part of any shoppable webstore is the features that allow businesses to retain customers and guide them down the ecommerce funnel.

ecommerce channel strategy

Mandy Arbilo, Head of Regional Web Development, aCommerce

Below are a few examples of website features as shared by Mandy:

  • Discovery – SEO/SEM, affiliate feeds, etc.
  • Consideration – Product details, beautiful imagery, etc.
  • Conversion – Promotions and discounts, etc.
  • Loyalty – Loyalty points, wish lists, etc.
  • Advocacy – Gift wrapping, product reviews, etc.

ecommerce channel strategy

“Products delivered to the hands of customers may be the final touchpoint in the theory of ecommerce but in reality, it is not.”

The last touchpoint? Implementing the right levers so they keep coming back.

3. Analytics to Monitor in Ecommerce

MARIE ENAUD, REGIONAL HEAD OF BRAND COMMERCE OPERATIONS, ACOMMERCE

Traditional businesses can think of the layout of their ecommerce storefronts similar to an offline store.

“In a supermarket, store managers would put the eggs and milk near one another because you know these are items that people commonly buy together. The same works for a webstore.”

ecommerce channel strategy

Marie Enaud, Regional Head of Brand Commerce Operations, aCommerce

Marie stressed that through data collection and rigorous analysis, companies would understand which SKUs (stock keeping unit) would perform the best and which products would do more poorly. This allows demand forecasting, stock allocation and determination of successful campaigns.

Opening a brand.com store would provide a wider range of customer data such as buy frequency, time of purchase, types of products bought together, etc. but marketplaces such as Lazada have begun sharing more customer data such as gender mix, age mix and geographical reach.

ecommerce channel strategy

“Is there any shortcut to capturing this data and understanding customer behavior?” asked a student.

“There’s no shortcut to gathering intelligence for ecommerce. It’s best to implement these processes as early as possible and to remember that what worked offline doesn’t mean it will succeed online. Monitoring the data is necessary.”

The next LEAP class is on Thursday September 21st, 2017 taking a look at digital marketing tactics in Southeast Asia. Read LEAP Insights from last week: [LEAP Week 1] eIQ Insights: The New Ecommerce Opportunity in Thailand.


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Smart lockers were a big topic at Last Mile Fulfillment Asia this year.

What are they you ask? They are the tech-world’s equivalent of high school cubbies but out on the street, in your condominium lobby or shopping mall accessible only to users with the right digital passcode.

smart lockers Southeast Asia

POPStation lockers in Singapore. Source: SingPost

Many e-locker providers such as PopBox in Indonesia, Box24 in Thailand and POPStation in Singapore talk about the future of their businesses as the best solution to the region’s ‘last mile’ problem. But is it that simple?

Let’s disassemble the smart locker.

How it works

As online retail grows in the region, it’s understandable that more packages need to be delivered to end consumers. Nomura International (Hong Kong) projects that the package delivery market for the six major Southeast Asian countries will more than double from 2015 levels to over $7.5 billion in 2020.

The last mile becomes costly for companies because of how geographically vast countries such as Indonesia and the Philippines are and the broken address system across Southeast Asia.

While the last mile of the supply chain may be the shortest physical stage in a package’s journey, it represents about 30% of total delivery costs.

“Delivery cost per package a few years ago used to be 60 THB and now, logistics companies in this red ocean are subsidizing costs to charge only 30 and even 20 THB to grab market share,” said Paul Srivorakul, aCommerce Group CEO, at LEAP by ecommerceIQ and Sasin SEC.

Enter the smart locker, a new delivery option that promises less failed deliveries, flexibility for customers, and cheaper last mile costs.

smart lockers Southeast Asia

Benefits of a locker-bank i.e. smart locker.

For couriers to deliver the package:

  1. Login with company’s credentials
  2. Access data and address customer’s information
  3. Choose an available compartment
  4. Scan the package
  5. Put the package in the compartment, lock it and confirm delivery

For recipients to pick up the package:

  1. Internet shopper selects the “parcel locker” while checking out online
  2. Shopper receives an email confirmation and SMS (or in app) with details and code on package pickup
  3. Customer can track shipment to know when package has been dropped off
  4. At the smart locker, customer provides the code and other details using the touch screen
  5. If a package is not picked up, it will be transported to the nearest branch of the logistics partner

 

In Indonesia, PopBox Asia allows customers not only to pick up packages but as well make payments and return packages. In Thailand, WashBox24 (now Box24), lets shoppers pick up groceries and washed laundry ordered in app through partnerships with supermarket Tesco Lotus.

In North America, 7-Eleven has opened its doors to partners like Amazon interested in renting lockers to stay relevant as commerce moves online.

smart lockers Southeast Asia

Source: WSJ

But lockers are risky for 7-Eleven as each locker takes up about the same amount of space as one large shelf, holding dozens of lockers, which by some estimates could represent thousands of dollars in lost sales each year.

Do they actually solve any problems?

In many ways, smart lockers sound like a perfect last-mile solution. Available 24-hours, simple to use, convenient for the consumer and cheap fee for ecommerce businesses as packages are consolidated at one drop-off point.

smart lockers Southeast Asia

SWOT analysis of e-lockers.

But do they work?

Based on recent app reviews for POPStation and Box24, the service and ‘seamless’ pick up experience have faced some problems.

smart lockers Southeast Asia

Source: Google PlayStore, POPStation (left), Box24 (right)

While understandable to have hiccups with the introduction of new technology, the hardware heavy system has proven to work well in markets like Europe. But in a unique market like Southeast Asia, there are a few factors unaddressed by most reports.

Apart from the fact that the lockers require prime real estate and are costly to build and maintain – $5,000 to $35,000 per piece – these machines don’t accept cash.

smart lockers Southeast Asia

Source: WashBox24

Given that majority of Southeast Asians, with the exception of Singaporeans, still prefer cash-on-delivery, this last mile option is not viable for many ecommerce companies whose customers want to see the item before committing to purchase.

smart lockers Southeast Asia

Source: aCommerce

In China, 15,000 lockers were put in place in 2014 but handled only roughly 1% of all deliveries.

As Lazada Vietnam Gerald Glauerdt commented LMFAsia 2017 to ecommerceIQ’s question if he believed lockers were a good solution for last mile, “these lockers are more expensive than couriers that can take the package directly to the door.”

Operating in low-labor markets such as Southeast Asia gives companies the luxury of re-thinking their last mile strategies. As logistics networks expand their networks in the region, such as hubs on Indonesia’s scattered islands, costs will decrease to reach customers in remote locations.

New startups such as Park N Parcel are also leveraging existing infrastructure such as mom and pop shops and convenience stores to offer another last mile solution.

With packages expected to increase in the region thanks to the rise of ecommerce percent of total retail sales, there is plenty to go around for logistics players, given they can handle today’s customer expectations.

“If you do last mile only, there’s zero loyalty. You don’t remember who delivered your order, but you remember who screwed it up,” – Vaibhav Dabhade, CEO and founder of Anchanto.

Is it possible to share everything?

Umbrellas? Molisan, E Umbrella, OTO
Basketballs? Zhulegeqiu
Power banks? Meituan-Dianping, Xiaodian, Jiedian
Concrete? Duola
Bicycles? Ofo, Mobike

Above are a few examples of China’s recent headline startups that seem to believe so. They’re banking on a collaborative economy in order to build sustainable businesses.

“Ridesharing, apartment/home lending, peer-to-peer lending, reselling, coworking, talent-sharing, etc. The sharing economy or collaborative economy, is taking off in all sorts of niches.”Forbes

Cars and homes made sense, not at first, but Uber and Airbnb have clearly been very successful platforms that connect users to existing resources. But these are success stories siloed in developed markets, not Southeast Asia or China.  

The basis for these models seem to be the same: consumers are willing to pay to ‘borrow’ services/products for a period of time and eventually, there is profit to be made in the distant future and companies can collect valuable user data.

Critics may be skeptical that any of these power bank or umbrella sharing startups can be successful but there has been no lack of capital backing, currently around $25 billion in total.

The sharing economy also reached a staggering 4 trillion yuan last year (USD $502 billion).

ecommerceIQ

Chinese basketball sharing startup Zhulegeqiu.

Chinese basketball sharing startup Zhulegeqiu was recently injected with a $1.4 million venture investment from Modern Capital, a Shanghai-based venture capital firm, in May. But raising capital is not a strong indicator for a good business model.

Have we not learned from the fall of “Uber for X” business model fad?

Let’s say we forget about profitability or the fact that these startups incur high costs by owning the inventory – what other factors are required to make a sharing startup tick? And is the industry conscious of the longevity of these startups suddenly popping up in China and Southeast Asia?

Trust ‘em or clean up the mess  

A share economy relies heavily on a trust system. If someone is borrowing a bicycle for a rate of 5 THB (USD $0.15) per hour, what is the likelihood a USD $300 bicycle will be returned in perfect condition or be left in a convenient location for the next rider?

Zhuang Ji, director of a social media ‘bike hunter’ group in China recently inspected 983 Ofo bikes in six cities (Beijing, Shanghai, Guangzhou, Shenzhen, Wuhan and Chengdu) and discovered the following:

  • 19 percent were damaged
  • 15 percent were unlocked
  • 12 percent had been stolen for private use
  • 2 percent were being ridden by children under the age of 12

Dump of broken bicycles from multiple share economy bike businesses in China.On the other hand, Umbrella sharing startup, E Umbrella, in China suffered a loss of almost all 300,000 of its umbrellas across 11 cities.

ecommerceIQ

Dump of broken bicycles from multiple share economy bike businesses in China.

Let’s do the math:

Loss → Cost of umbrellas: 300,000 x USD $8.82 (cost per umbrella) = USD $2,626,000

Gain → Customer deposit: 300,000 x USD $2.90 (customer deposit) = USD $870,000
Gain→ Raised capital: USD $ 1,470,000  

Total: minus USD $286,000

The loss isn’t too shocking when the business model relies on what Vox calls, “unpredictable weather and forgetful people”.

But founder Zhao Shuping is certain to succeed and plans to introduce 30 million more umbrellas across China by end of year. And like most of the other ‘share companies’, E Umbrella says advertising will be the main driver of revenue after announcing a partnership with ride-hailing app Didi Chuxing.

ecommerceIQ

Umbrellas waiting for users to ‘borrow’ in China.

Southeast Asia’s not ready.

Chinese bike-sharing giant Ofo recently entered Thailand by introducing its bikes to Bangkok university campuses. A brave move after competitor oBike was deemed a scam by the Bangkok Metropolitan Administration (BMA) soon after its launch and never took off.  

An analyst told Forbes that China’s economic downturn – roughly a slowdown from 7% to 6% real GDP – is making people less willing to purchase goods, creating opportunities for the sharing market.

The opposite can be said for the region, where the Philippines and Vietnam are propelling the region’s 5% average real GDP growth and Myanmar alone is expected to grow by more than 7% in 2017 and 2018.  

“After all these years, China is finally embracing its communist roots,” said Andy Tian, an entrepreneur and co-founder of Asia Innovations Group in Beijing. “That’s the essence of communism: communal sharing.”

“But there’s no question that it’s a bubble,” he added. “It may have roots in something valuable, but can you really share everything?”

China’s booming sharing economy is said to be attributed to a “surplus of money and shortage of good ideas” so it’s probably best not to follow in their footsteps.

Discretionary spending, the act of buying things you don’t need by McKinsey’s definition, has been on the rise in China (unsurprisingly) as monthly disposable income of urban households double.

 

Spending expected to grow from $0.64 trillion (2000) to $4.38 trillion (2020). Source: McKinsey 2017

What does this mean? More Chinese shoppers, as well as Southeast Asians, are spending on items that are categorized as ‘semi-necessities’ (ex. high-end skin care lotions, designer hand bags, etc.).  

As one professor and author studying Chinese consumerism puts it,

“I think the Chinese dream is the American dream plus 10%.”

What’s important to note is that a growing portion of this spending is happening outside of the country.

58 million users in China are expected to engage in cross-border transactions in 2017 and cross-border ecommerce alone is expected to reach 7.5 trillion RMB ($1.1 trillion USD) this year.

Korea, Japan and the US are currently the most popular destinations for the Chinese to find products that they believe are better quality, worth the price and guarantee authenticity – some of the reasons why they shop overseas.

Recently stepping into the limelight is neighbour and resource-rich Southeast Asia, that has recently landed on China’s radar.  

Where do China-Southeast Asia trade relations stand?

China’s no. 1 and no. 2 ecommerce behemoths, Alibaba and JD.com respectively, are already directing the world’s attention to the region through recent activities. The former increased its stake in the region’s largest e-marketplace Lazada to 83% and the latter continues to fortify its local presence in Indonesia and Thailand and rumoured to be investing in existing ecommerce player Tokopedia.

The One Belt, One Road initiative that plans to build extensive roads, power plants, bridges, etc. to connect over 60 countries received financing from Chinese President Xi JinPing earlier this year.

How One Belt, One Road will connect over 60 countries. Source: Quartz

The super power’s leader pledged $109 billion SGD ($80 billion USD) to the “project of the century”.

It’s also easier to do business in China without a license as the country’s highest government authority previously approved 10 cities with a large number of warehouses for expedited handling of cross-border ecommerce purchases by customers.

Foreign retailers/brands can store merchandise they bring into China duty-free, and then send items as they are ordered through customs under the relaxed cross-border ecommerce rules.

Calculations from May 2016 counted total two-way investments between China and ASEAN countries to be over $160 billion despite political turmoil over the South China Sea.

As the gates open for easier trade between China and Southeast Asia – both literally and figuratively – businesses should have an eye open for opportunities in the other market.

It makes sense for brands operating in China to be marketing in Southeast Asia, especially when Alibaba holds around 60-70% China’s ecommerce market share and no player has more than 25% of the total cross-border ecommerce market share.

The Chinese giant long launched its very own Taobao shop-in-shop (SIS) on Lazada to target price-sensitive Singaporean shoppers with over 400,000 Chinese products.

“Southeast Asia is an attractive FDI destination for China because of its fast-growing and large domestic market,” said Lee Ju Ye Maybank economist in Singapore.

Jack Ma has also long-expressed introducing businesses to China.

These were snippets of an interview Ma participated in June this year,

“We’re interested in bringing local products to the world, to China. This has always been our focus.”

“For Thailand’s small and medium-sized ecommerce companies, don’t worry. If they want to compete with us in bringing Thai products to China and the world, maybe it’s tough, but if they do serve the customers locally, it would be great.”

In order to do this, companies in Southeast Asia need to capture Chinese consumers by bypassing marketplaces and selling direct to consumers through localized content marketing and offering products that the Chinese are already hungrily looking for.

Popular overseas goods include red wine, fresh produce such as avocados, milk and fruits.  

A BCG study also found that before Chinese customers decide to make a purchase, consumers make contact with a product through seven different touch points on average, such as store displays, product promotions, or social-media comments.  
The opportunities seem endless (keeping in mind tax revisions) or as Louis Li, the Deputy General Manager of JD Worldwide wants to remind the rest of the world, “don’t forget about China.”

honestbee Thailand officially introduced its on-demand groceries services to the public on March 16th earlier this year in Bangkok with a buzzy press conference.

This isn’t the company’s first step into Southeast Asia, the Singaporean based company is already present in eight markets since its initial launch in 2015.

eIQ sat down with Joel Sng, CEO and co-founder of honestbee, to talk about the company’s on-demand model, product market fit and scalability in a developing market.  

Groceries online in Southeast Asia

Delivering apples and milk to a customer’s front door isn’t a new concept. Instacart, US born groceries service, took off in 2012, serves 25 markets in the US, and raised $400 million in March. The company’s valuation was $2 billion in 2015.

Jakarta based on-demand service HappyFresh that raised a $12 million Series A and an undisclosed Series B launched in both Indonesia and Thailand two years before honestbee entered the same markets.

Why has there been so much money swirling around groceries?

According to Nielsen, 30% of Millennials (ages 21-34) and 28% of Generation Z (ages 15-20) respondents say they’re ordering groceries online for home delivery, compared with 22% of Generation X (ages 35-49), 17% of Baby Boomers (ages 50-64) and 9% of Silent Generation (ages 65+) respondents.

And groceries are only the beginning. honestbee doesn’t only offer apples and oranges, they want to be the ‘everything, everyday’ app.

Much like the mentioned businesses, honestbee shares similar value propositions:

  • Exclusive partnerships with supermarkets and other retailer partners
  • A single check-out purchase through a mobile app
  • An operations network composed of part-time workers and motorbikes taxis
  • A vast inventory of groceries and fresh produce
  • Scheduled “slotted” deliveries
  • Asset light business: no warehouses, only hubs (grocery stores) and no delivery trucks

There are a few differences that make honestbee stand out: the company makes money from delivery fees and revenue share and can actually save up to 30% on labor costs because shoppers are hired as independent contractors, not traditional full-time, salaried employees.

Product market fit for a demanding income bracket  

Unlike the others, honestbee targets the top 10% money makers in each market by being more selective with partners to offer a service consumers are willing (and able to afford) to pay a premium before the rest of the market adopts the behavior.

Current exclusive partners include Villa Market, Fresh Deli, organic produce provider Fruits for Health, and all natural household cleaning line Pipper Standard.

“We figure out what each market needs and work with the right partners to bring value and convenience to our customers,” says Joel.

What also differentiates honestbee from its competitors is the varied service it offers across markets. How does the company decide what to launch? Through regular customer focus groups like the one held in Singapore of March this year.

A few questions the focus groups aim to answer before officially launching a new service:

  • Do the customers like our partners?
  • How do they suggest we improve the shopping methodology?
  • Is the infrastructure already there or do we need to build it?
  • Is the market growing fast enough in terms of age and adoption of behavior?

These feedback loops help honestbee work out what each market needs and led the company to discover certain market intricacies:

  • Offering garbage removal in Taiwan would be an instant success as the country has high stringent waste policies   
  • Launching an on-demand laundry service in Hong Kong works as there is large expat population in the country
  • Singaporeans would not pay for marked up meal deliveries as offered by rivals foodpanda, UberEats
  • Online grocers in Japan accounted for only 2%, or $5.5 billion USD, of the retail grocery market in 2015

Although each market is different, the core of the business still remains its groceries delivery service and is always launched first.

A teeny problem: “Managed crowdsourcing”

There are a few challenges with on-demand models:

  • Shopper retention and shortage because of fluctuating wages in a developing market
  • Expectancy for shorter and shorter delivery times by customers: same day → in two hours → next hour
  • Out of stock items and inaccurate deliveries – balanced with a “Bee” training program

Although it is risky to be spreading services so thin in concession, Joel is confident the company has the resources and isn’t concerned about needing more external investment aside from the $15 million it raised last year.

“We are comfortable with our economics right now,” comments Joel.

honestbee aims to become a one-stop solution for customers and make it possible to have anything available at the touch of a button by marrying the online and offline world.  

“Groceries is such a generic term,” comments Joel. “We never envisioned just being in the groceries business – we want to solve problems for our customers.”  

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