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On June 28, 2018, Alibaba announced the launch of Taobao Xinxuan (淘宝心选), which translates to ‘Taobao Selected’. After a year in alpha testing, the company’s new concept is finally available to the wider public.

Through the website or one of two physical stores in Hangzhou and Shanghai, users can shop for affordable quality lifestyle and functional daily necessity goods including home fragrance, smart power sockets, underwear, and sonic-control toothbrushes.

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Rimowa?

According to TechNode, the recently opened store in Shanghai was raided and emptied by eager customers in a mere two hours.

What is Taobao Xinxuan?

Appearance wise, the Taobao Xinxuan concept will remind many of Japanese retailer Muji, whose clean and simplistic stores offer a wide range of quality and affordable clothing, stationery, bags, and even furniture.

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Taobao Xinxuan Store Concept Design

From a business model perspective, Taobao Xinxuan is actually more like Xiaomi, the smartphone-manufacturer-turned-global-electronics brand. Its Manufacturer-to-Consumer (M2C) approach and short supply chain allows the company to quickly go from the latest consumer insights to manufacturers to create products and achieve go-to-market in a few months.

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Xiaomi Flagship Store in Shanghai

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Xiaomi Flagship Store in Shanghai

Arguably, Taobao Xinxuan could be considered a clone of the M2C ecommerce platform launched by Chinese gaming company NetEase called Yanxuan. Since its release in 2016, Yanxuan has seen rapid growth in a unique vertical that avoids direct competition with Alibaba and JD.com.

The Yanxuan model can be described as an ODM (Original Design Manufacturer) model as well. By going directly to Chinese manufacturers creating products for established global brands, NetEase is able to get the same quality while selling at a much lower price by skipping over distributors.

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NetEase’s Yanxuan website

By targeting young, mainly urban consumers who value quality and design but are also price sensitive, Yanxuan has been able to achieve rapid growth in the Chinese ecommerce space. The company reached a monthly GMV (gross merchandise volume) of RMB 60 million (about US$9 million) by Q3 2016, only a few months after its initial launch. This allowed Yanxuan to break into the list of top 10 Chinese ecommerce platforms based on GMV.

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Yanxuan Home & Living Category

Alibaba’s New Trojan Horse?

For a business to execute the M2C model well, it needs to understand what consumers want and then act on it swiftly. Considered the pioneer in M2C in China, Xiaomi is well known for asking its users directly what they’d like to see in terms of new features and products.

Another company that knows what its users want is – surprise, surprise – Alibaba. Being the largest ecommerce company in China, Alibaba has extensive data on what brands and products people are buying and when and where. This doesn’t even include the additional data it gathers through its other businesses Ant Financial, Ali Health, and its offline Hema supermarkets and ‘New Retail’ initiatives.

Alibaba’s US counterpart Amazon hasn’t shied-away from using its data to introduce its own private label brands to compete directly with the other brands selling on its platform.

“The company now has roughly 100 private label brands for sale on its huge online marketplace, of which more than five dozen have been introduced in the past year alone. But few of those are sold under the Amazon brand. Instead, they have been given a variety of anodyne, disposable names like Spotted Zebra (kids clothes), Good Brief (men’s underwear), Wag (dog food) and Rivet (home furnishings).”

New York Times, ‘How Amazon Steers Shoppers to Its Own Products’

And this move by Amazon isn’t a small pilot project. Amazon private labels have a large impact on revenue:

“The results were stunning. In just a few years, AmazonBasics had grabbed nearly a third of the online market for batteries, outselling both Energizer and Duracell on its site.”

Amazon’s home court advantage gives it a leg up versus other brands:

“Take word searches. About 70 percent of the word searches done on Amazon’s search browser are for generic goods. That means consumers are typing in “men’s underwear” or “running shoes” rather than asking, specifically, for Hanes or Nike.

For Amazon, those word searches by consumers allow it to put its private-label products in front of the consumer and make sure they appear quickly. In addition, Amazon has the emails of the consumers who performed searches on its site and can email them directly or use pop-up ads on other websites to direct those consumers back to Amazon’s marketplace.”

Alibaba has been flying under the radar with regards to any private label initiatives, and for good reason. Unlike Amazon, which started out as a retailer buying and selling products, Alibaba’s Taobao and Tmall properties are pure marketplace plays from the beginning. Because Alibaba’s main goal is helping connect merchants and buyers via its platforms, a neutral stance is essential to the platform’s success.

It’s not surprising then that Alibaba decided to launch Xinxuan as ‘Taobao Xinxuan’ rather than ‘Tmall Xinxuan’. Originally a part of Taobao, Tmall spun off to provide a more premium B2B2C marketplace for authentic brands to sell their products online. Mixing in Xinxuan’s private label products would only upset brands competing in similar product categories.

Lazada’s LazMall a stepping stone towards introducing Lazada private label in Southeast Asia?

Last week, Lazada officially launched LazMall, its Southeast Asian version of Tmall. It’s a move towards splitting Lazada (‘b-to-C’) and LazMall (‘B-to-c’) and aims to offer a premium place for big brands to sell online, away from the grey market sellers on the platform.

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From the outside, this looks like an obvious move against JD, known to offer a better customer experience according to our recent Indonesia online marketplace survey.

However, seeing Alibaba’s new concept in China with Taobao Xinxuan, it’s not far-fetched the LazMall spin-off will lead to Lazada M2C private label brands in the near future.

The Chinese ecommerce market, being about 10 years ahead of the Southeast Asian one, acts like a crystal ball for brands operating in our region. Battle-tested brands with operations in China know better to diversify their channels before putting all their eggs into a single basket.

Southeast Asian-native brands are recommended to shake off their naivety and learn from China’s history.

Monogamy in ecommerce does not lead to happiness.

You might recognize a signature Burberry trench coat because of its distinctive check pattern.

When Burberry first came to life in London in 1856, CEO & founder Thomas Burberry was, at the time, only 21 years of age. The brand focused solely on outdoor attire in its early days but quickly established a reputation for quality and longevity.

In 1879, Burberry received a patent for its ‘gabardine’ fabric – a water-resistant, breathable material that it would use for trench coats. The company went from strength to strength, opening a store in the upscale Haymarket area of London in 1891, designing its signature equestrian knight logo in 1901, and supplying outdoor attire to South Pole expeditioners in 1911.

Burberry’s popularity skyrocketed after its trench coats were used by British infantry forces during the First World War. An outpour of patriotism boosted its brand identity with members of the public clamoring to buy the products after the end of the war.

Further validation came in the form of high profile celebrity endorsements by movie stars such as Humphrey Bogart in Casablanca, Audrey Hepburn in Breakfast at Tiffany’s, and Peter Sellers in Pink Panther.

The UK luxury brand is best known for its sharp coats and jackets but has also ventured out in designing shoes, scarves, bags, & other accessories. By the mid-1980s as a result of spreading itself too thin and chasing short-term profitability goals, the brand started to stagnate. What happened?

The makings of a crisis

The 70s and 80s were rewarding for Burberry in terms of its bottom line. It signed licensing agreements with many global manufacturers to design suits, trousers, shirts, and accessories and distributed them via independent retailers as well as its own stores. The effect of this expansion i.e. higher operating profits was felt well into the 1990s.

But the licensing partnerships also had an unintended effect: counterfeit products flooded markets across the world, particularly in Asia, causing price disparities that existed even in original products.

Western countries were subjected to higher rates and items were often rerouted back to markets; for example, cheaper bags in Asia were exported back to Europe resulting in a blow to its image.

Burberry had severely diluted the power of its brand by adopting a mass-market route. Once associated with list-A celebrities and daring thrill seekers, Burberry had rapidly lost its aura of glitz and glam.

Shockingly, the elitist brand was now equated with thuggery, chicanery, and hooliganism; adopted en-masse by ‘Chavs’ – a pejorative British term used to describe degenerates and lowlifes. Bouncers would turn away people wearing Burberry outfits as it was assumed they would cause trouble once inside.

Shudder.

Turnaround

“Burberry was not able to identify its target group of consumers because of its uneven distribution and licensing policies in different countries of operation,” says Arittra Basu, business development manager at Westin Hotels.

The long road to redemption started in the late 1990s after Burberry hired Rosie Marie Bravo to steer the ship. She immediately tried to stem the decline by reducing the company’s footprint in Asia, ending price disparities, and appointing a new creative head to reestablish the brand’s core values.

In 2006, Angela Ahrendts was appointed the new CEO and began a journey leading the company to reemerge as a force to be reckoned with.

Initially, there were subtle design changes. The check pattern was scaled back and started to appear less and less on merchandise. Stringent measures were adopted to crackdown on counterfeit items and the licensing agreements were gradually rescinded to centralize design and operations under one roof.

But the most important decision made by Ahrendts, along with Chief Creative Officer Christopher Bailey was the declaration of their vision to see Burberry as the world’s first fully digital luxury company.

The brand had, in their opinion, appealed to an older clientele for far too long. It was time to catch the attention of suave and fashionable millennials.

Digital would be central to the brand’s way of thinking and customers would be treated to the same experience whether online or in-store.

One of the most popular campaigns Burberry launched was the ‘Art of the Trench’, a unique play on user-generated content to bring consumers at the forefront.

Art of the Trench. Photo credit: Creativity Online

This was a standalone website where customers were encouraged to upload photos of themselves wearing their trench coats. They were featured on the main page for 15 minutes and customers could share these photos on social media feeds. There was also an option to click on a product and be redirected to Burberry’s main site to purchase it.

The campaign was a resounding success. In 2015, it was reported to have gained almost 25 million pageviews since launch.

Another hugely popular campaign was initiated to promote Burberry Kisses, a lipstick brand launched by the company. For this, it partnered with Google to enable users to send personal messages, sealed with a virtual kiss.

Users from 13,000 cities sent these virtual kisses within the first 10 days of launch.

In 2012, Burberry tried to bridge the gap between the online and offline shopping experience via its Regent Street London store. The store featured huge screens where catwalk shows around the world could be viewed live and the individual products were available for instant purchase.

“Burberry Regent Street brings our digital world to life in a physical space for the first time, where customers can experience every facet of the brand through immersive multimedia content exactly as they do online,” said Burberry CEO Angela Ahrendts. “Walking through the doors is just like walking into our website.”

Not only can shoppers buy online from Burberry’s digital properties, they can also choose to pick up in-store or have a sales associate order from the website for them while visiting an outlet. Burberry’s also experimented with flash commerce features via Twitter as well as allowing users in China to order via WeChat.

In China Burberry took the unusual route of opening a store on Tmall; a strategy consistently avoided by upscale brands. The move was meant to counter the growing grey market for its goods as well as embrace the Chinese penchant for online shopping.

Its savvy use of social media has also engendered the growth of a loyal community. The brand has embraced Snapchat to provide peeks into upcoming lines and fashion shows. Burberry’s YouTube channel has over 300,000 subscribers and hundreds of videos that not only showcase trench coats, but also includes makeup tutorials, music jams, and other engaging content.

And the result of all of this? In 2011 Business Insider placed Burberry in the top 10 brands of the world with a growth percentage of 86% as judged by an estimate of its brand value. That far outstripped any other company on the list.

Burberry shares, which languished in the $200 range in 2002 now trade at $1,539.

Of course, challenges persist. Weakening demand for luxury brands hurt Burberry’s profitability last year with the CEO saying that the product range “needs to be refreshed”.

But if it continues with its sharp focus on digital and out-of-the-box thinking, it should be able to weather the relative storm.

“Burberry’s digital strategy […] has so far not only put it at the top of the fashion luxury category but among top players across industries,” wrote Digiday.

This is Part 2 of an article by Jeffrey Towson about the aspects of Alibaba’s “new retail” strategy.

In Part 1, I discussed uni-marketing and how the view of new retail for merchants and brands is very different than the view for consumers. A quick summary:

  • For consumers, the view is great. They are going to get what they want, where they want it and when they want it. New retail is a purification of demand.
  • For Alibaba, the view is spectacular. Their huge online marketplace is going to be merged with parts of the physical marketplace. The number of users and the amount of activity on their platform is going to increase dramatically.
  • But the view for merchants, brands, and retailers is more confusing. New retail upends many of their businesses, strategies, customer relationships and maybe even their brands.

In this part, I take an asset and resource view of all this, which I think is a much easier way to understand it.

Point 1: Digital competition is a lot about key resources, which are usually intangible assets.

You can look at competition with various frameworks.

  • Michael Porter famously described five economic forces, which tend to play out over the longer term in more stable industries.
  • Columbia Business School Professor Bruce Greenwald argued that one force, competition, is actually far more important than the other four.
  • Warren Buffett focuses mostly on competitive advantages and their durability.
  • Wharton’s George Day writes about dynamic competition and the constant move and counter-move of many businesses.

I focus mostly on digital competition (note: China is the global epicenter for this). This is a lot about how new digital tools and data are changing the competitive dynamics of traditional industries. For example, retailers traditionally compete on fixed costs and fixed assets (lots of stores, get bigger than your competitor). But ecommerce has a different dynamic. There is a lot more focus on the degree of participation of consumers, merchants and other users.

It can get confusing. And a useful approach is just to take a resource and asset view. Stop looking at the economic forces and competitive advantages, and just look at the assets used to compete. One company has 10 factories and the other only 5. One company has a famous brand that everyone knows and the other is unknown outside of one region. In digital competition, this usually means comparing intangible assets like technology, IP, captured customers, business linkages, and data.

If you take an asset view of competition in ecommerce and new retail, I think there are three big things that jump out as particularly important in a marketplace platform. Note: Alibaba is a marketplace and a pure digital competitor. JD is more of a hybrid of a marketplace (enable transactions but don’t take inventory or be the seller of record) and a direct retailer (buy and sell the goods yourself). For marketplace platforms (like Alibaba and VIP.com), the resources that matter are:

  • Captured online consumers. Their number, time spent, money spent and their participation on the site. And your degree of capture.
  • Captured online merchants and brands. Their number, their percent of business on the site, the integration of their operations into the site and their marketing activity on the site.
  • Content creators. Although this can be done as another type of retail (like Amazon’s digital media) or as an audience-building platform (like Youku)
  • Data from ecommerce, entertainment, social media and other sources.

These assets (both the users and the degree of activity) on the platform enable virtually everything else.

  • You can add new services and products.
  • You can add new types of revenue streams (transaction fees, marketing services, operational services, gifting, advertising, etc.).
  • And hopefully, you can use these assets to build competitive barriers. Network effects are the most desired. But there are also data network effects, MSP advantages, softer data advantages and linked businesses.

I view Alibaba as a particularly powerful version of this with three interconnected platforms: a marketplace platform, an audience-building content platform, and a payment platform.

These core assets cost a certain amount of money to acquire (plus time and difficulty). It’s a useful way to look at a company. But it’s also important to remember that these asset costs are different from the value they can then create. Similarly, the cost of a factory is different that the market value of the products it creates. And the cost of a college degree is different than how much you will make from it.

If you take an asset view, the sequence for marketplace platforms is usually:

  • Get an initial critical mass of users, merchants and data. There is usually a chicken-and-egg problem to get started (to get the consumers you need merchants, but to get merchants you need consumers).
  • Grow the number of users and their activity, mostly by data and digital tools. In marketplaces, personalization and curation are two of the big guns for this. Ancillary moves into new products and services or into new geographies (cross-border ecommerce) also really work.
  • Try to protect the platform with network effects, linked businesses, softer advantages and assets that are difficult to replicate.

Point 2: How these assets change over time is really important.

Alibaba is a virtual marketplace (so far). There are lots of supporting and complementary services (entertainment, payments, logistics / delivery, credit, etc.) but the core business remains connecting consumers with merchants and brands. And then making money from their transactions – and also from the marketing and other spending by merchants and brands on the platform. It’s a virtual shopping mall (Tmall) and a virtual trading bazaar (Taobao).

So what is the big difference between the intangible assets that create virtual marketplaces and the tangible assets that create real shopping malls? One of the most important differences is how these assets change of time.

If we were looking at a real shopping mall or bazaar, we would depreciate the PP&E over time. There would ongoing capex to maintain and maybe additional to grow. And in times of higher inflation, these assets can be a big problem as they really increase the cost structure. Plus there is also the real estate and land price aspects, which can be particularly important in downtown locations and in places like China.

But a marketplace made of intangible assets doesn’t necessarily decay over time. It certainly doesn’t straight-line depreciate. You may have to spend to keep it running (a type of maintenance capex, operating cost and customer retention cost) and for required upgrades – but the economic goodwill (not accounting goodwill, which is nonsense) should increase over time. And it doesn’t get hit by inflation (although labor costs can be a problem).

The same process can be true for other businesses that rely on intangible assets. Share of consumer mind (a Buffett term) is a big deal for Coca-Cola. Intellectual property and data / claims history can be important in technology and insurance. And so on.

But two differences I think about for intangible assets versus physical assets are:

  • Intangible assets can increase in real economic value over time – and often quite powerfully. This is good news.
  • Intangible assets are easier to replicate and often do not offer the types of competitive protection you get with physical assets. This is bad news (and why network effects and soft advantages can be critical).

Here’s how this can play out in marketplace platforms:

  • The more customers that come, the more valuable (and necessary) it is for merchants and brands to participate and compete with each other through marketing.
  • The more stores that arrive the more options consumers have and the richer their experience.
  • The more transactions and data from transactions, browsing and others sources (entertainment, etc) the more personalized and engaging the experience. This can enable more spending and engagement.
  • The more this ecosystem grows, the more difficult it is for a new competitor to replicate the entire ecosystem. The assets grow organically and become harder and harder to replicate.

Note: Parts of this can be described as a network effect. But it’s more about the degree of participation. Most MSPs do not have network effects and derive their value from their intangible assets.

Additionally, you get some competitive protection from an ability to cross-subsidize different parts of the platform (girls get free drinks at bars, men pay more). You can create complementary networks (Taobao helps Alipay and vice-versa). Yu can get linked businesses (Amazon’s cloud business subsidizes its logistics). And so on.

Question 1: How does “new retail” change a resource view of ecommerce?

This is the question I have been thinking about a lot. And a lot of this article is me thinking out loud.

But new retail is clearly a massive jump in the assets on the marketplace platform. And while all the talk is about physical retail, is Alibaba actually adding physical assets to their platform? I don’t think so. I think they are just leveraging in the intangibles of the tangible assets.

To me, new retail looks like it adds two big assets to the platform that Alibaba doesn’t have today. These are offline sales data and physical retailers, merchants and brands as users.

Take the “new retail” initiative in convenience stores. Alibaba is providing digital tools that transform mom-and-pop convenience stores in China. They plug in the tools and the stores gets three basic benefits.

  • Online customers can be driven into the stores from the local area (maybe). The merchant gets access to local online customers the same way an online merchant does. And they can market to them. Although in this case you are fighting for the customers in your neighborhood, not nationally. And you are fighting against other digitized local merchants, not every merchant in China.
  • They get digital tools that upgrade their payments, inventory, and supply chain. They get a bit of a store tech upgrade. Ideally, they get more efficient operations. Although adopting these tools also creates switching costs.
  • They get data that helps them choose their inventory for what people in that neighborhood actually want. This is hugely important and is part of Alibaba’s “uni-marketing” initiative.

And what does Alibaba get?

Well, the physical merchant just became as user in their marketplace platform. They add the transactions, the user and the data of the physical merchant without adding the physical assets. And they also probably got some new offline customers, but most everyone in China is already on Taobao.

So Alibaba is not going to own a lot of stores, such as Hema supermarkets or convenience stores. They are going to perfect the various business models and franchise out the system, the data and the technology tools. And for the hypermarkets, they will likely put that in a separate, associated and asset-heavy partner. And they will remain the data / tech partner for this, as they has done in logistics with Cainiao. The core marketplace, the engine of Alibaba, is going to remain tangible asset-lite and intangible asset-rich.

Now imagine they roll this out to 100,000 convenience stores in China? How many of those stores can be moved onto their ecosystem in this way? And then supermarkets? And then department stores? With a resource view, the size of the “new retail” opportunity is massive

Question 2: Who will own the customers in “new retail”?

This strikes me as a big question. Merchants are on Taobao and Tmall because they have to be. That’s where the customers are. They may also have their own branded website but they are also on Taobao and Tmall. And they can drive their customers to their stores and their own websites from here to a certain degree. But if they leave the Alibaba ecosystem customer retention is a problem. Famous companies like Zara and Apple have their own brands and customers. But most small merchants do not have this type of loyalty.

So this raises a question for new retail: if a physical merchant unplugs from the platform, do they take their customers with them? Or do those customers start getting directed to a different convenience store down the street? Who owns the customer in new retail?

WRITTEN BY: Jeffrey Towson

THE BACKGROUND

Unicharm has been manufacturing feminine and baby care products in Japan since 1974. The company’s origin can be traced back to Taisei Kako Co., Ltd where it found its niche by selling feminine napkins in 1963. By the late 1990s, Unicharm had successfully expanded its business overseas.

Spurred by rising income levels and populations in Asia, Unicharm has become the leading company for the feminine, baby, and healthcare categories in Asia and No. 3 in the global market thanks to portfolio brands like MamyPoko, Charm, Sofy, and Wave.

Unicharm Southeast Asia

In 2011, the company bought a majority stake of 51% in US-based pet product and supply maker Hartz from Sumitomo Group to branch out its reach in household categories.

The company’s success caused it to become too comfortable and made it vulnerable to competition. What was Unicharm’s response?

THE CHALLENGES

“Signs of a market change started emerging around 2013,” recallsUnicharm President and CEO Takahisa Takahara. “We should have responded a little sooner.”

Decades of lounging in its throne as Asia’s market leader for inexpensive products lulled Unicharm into a false state of security that eventually caused it to slip behind competitors like Kao and Daio Paper for disposable diapers in key markets like Indonesia and China.

The company’s early entrance to Indonesia when the country’s GDP was still low allowed it to gain market share and its cheap range of products was introduced to first-time consumers in the small remote islands.

As the country’s living standards improve, the citizens can afford to become more selective and choose higher-end diapers. The company’s market share has reportedly dropped to below 60% from the previous 70%.

Unicharm Southeast Asia

Unicharm’s operating profit decreased overtime in Asia. Source: Nikkei

Meanwhile in China, the company has watched its market share fall to 8%, half of what it was three years ago.

“With the growing preference there [China] for high-end products and the rapid spread of ecommerce, high-quality Japanese diapers have become more popular, said Masashi Mori, an analyst at Credit Suisse Securities (Japan).

What’s Unicharm doing about all of this and can it make a comeback?

THE INNOVATION

Last year, Unicharm began to introduce premium line called ‘Natural Moony’, Japan’s first disposable diaper with a surface sheet containing organic cotton, to reserve a seat in the higher-end product category.

In addition to an official launch event in Tokyo, the company also held a Super Brand Day event on one of China’s biggest marketplaces, Tmall.

Unicharm Southeast Asia

Unicharm Chief Executive Officer Takahisa Tahara on Moony launch in Tmall

“We propose new standards for the way you select diapers by putting Natural Moony on the market under the slogan of ‘selecting diapers is selecting materials’,” explained Yoko Kawakami, Assistant Brand Manager at Unicharm’s Global Marketing department.

Unwilling to repeat the same mistake in China by catching onto ecommerce too late, the company has an official presence on e-marketplaces such as Lazada and 11street in Indonesia and other Southeast Asian markets.

Unicharm Southeast Asia

Unicharm’s official store in Lazada Indonesia

The brand was also one of the first available on Amazon Prime after its long-awaited launch in Singapore last month.

Unicharm has taken to publicity stunts to reach the eyes of its consumers by celebrating its iconic mascot’s birthday in Singapore by gifting new mothers with a care-package for newborns at the Thomson Medical Center.

On its 15th anniversary in Thailand, the company’s Mamypoko brand launched Poko Chan Point, the diaper market’s first rewards program that allows consumers to redeem free gifts from collecting points from a code attached to purchased products.

Unicharm Southeast Asia

MamyPoko’s Thailand Facebook post

“We believe that the key success mix includes the right product that best addresses customers’ needs and the right marketing programmes. Based on this belief, we will continue to bring to our customers the right programmes that will enhance their experience with our brand,” said Unicharm Thailand Managing Director Tadashi Nakai.

THE STRATEGY

When the brand first entered India in 2009, it was the first to offer underwear-shaped diapers ahead of giants like Kimberly Clark and P&G. The reward was an 85% jump in sales and 42% in modern trademarket share.

“When there’s a low penetration or usage in certain categories, most companies do the obvious — try to develop the market with existing and affordable products,” said Devendra Chawla, Food and FMCG President at Future Group.

“Unicharm tried a different route by launching innovative products, which not just helped expand the market, but also in the process, diverted the entire segment towards their portfolio style, taking leadership while doing market development simultaneously.”

Unicharm believes in employing the same proven technique for the other emerging markets such as the Middle East, and Africa.

“The setting-up and acquiring of business operations in potential countries in the region is part of the key strategy set to grow our diaper and sanitary napkin business in Asia, particularly in emerging markets,” said Takumi Terakawa, Managing Director of Unicharm Thailand.

The company has also looked beyond Southeast Asia’s most popular markets. In 2013, Unicharm acquired Burmese diaper company MyCare that holds over 50% market share in the country.

In a company statement regarding the decision, “our management decision to acquire Mycare has been on the grounds that new markets are being created and overwhelming share is further secured by accelerating the speed of brand penetration through the expansion of product availability.”

THE FUTURE

Unicharm is targeting a consolidated plan of $7.2 billion in 2020 with sales growth at 7% CAGR and plans to tackle Asia first before pushing a global agenda.

Unicharm Southeast Asia

“Our goal is to build a dominant market presence in Asia, the world’s largest market for nonwoven fabric and absorbent material products,” said CEO Unicharm Takahisa Takahara.

“This will be a key step toward achieving our vision of becoming a leading company in the global market.”

Here’s what you should know:

1. Alibaba and Tencent similarly launch campaigns to wins over cashless customers

As Chinese’s adoption for cashless society grow, the competition heats up between the two leading mobile payment giants, Tencent’s WeChat Pay and Alipay by Alibaba.

Both company have pushed out marketing campaigns to promote their respective payment apps. Alipay named the week beginning August 1 “Cashless Week”; on the same day, WeChat Pay (under Tencent Holdings) picked one day—August 8—and declared it “Cashless Day,” and also nicknamed the entire month “Cashless Month.”

During the campaign period, both apps provide consumers with real-money incentives to reward them for going cashless shopping with their apps.

So far, Alipay still dominates the market as 80% of Chinese consumers are using Alipay as the primary mobile payment app in China. WeChat Pay’s adoption rate is  25%.

Read the full story here

2. Uniqlo launches vending machines for its clothes

The company are launching vending machines called Uniqlo To Go for its items of functional clothes.

The first venue chosen for the machine is the Oakland International Airport in California, and Uniqlo will roll out nine more at airports and shopping malls around the US, this month.

The machines can also give Uniqlo insight on US consumers, which Uniqlo has been trying to reach—not always successfully—for years. Currently Uniqlo is the third largest brand, behind H&M and Zara.

Read the full story here.

3. Tmall wants to bring ‘car vending machines’ to China

Car-shopping in China might be getting easier as Tmall is looking to bring ecommerce experience of buying cars to the next level with the “Automotive Vending Machine.”

According to Yu Wei, general manager of Tmall’s automotive division, the company hopes to launch the first such vending machine in China later this year. There is currently one operated by another company in Singapore.

Customers could also pay it in installments through Alipay if they have over 750 points on Sesame Credit, Alibaba’s credit-scoring system for consumers.

Read the full story here.

Here’s what you should know today.

1. Google is slapped with $2.7 billion antitrust fine by EU 

The European Commission – the European Union’s top administrative body and antitrust regulator – has fined Google US$2.73 billion for anti-competitive business practices.

The Commission found that the US company’s web search function gave undue prominence to its own price comparison service in search results.

The Commission has demanded that Google end this conduct within 90 days, or face additional penalty payments of up to 5 percent of the average daily global turnover of its parent company Alphabet.

Read the rest of the story here.

 

2. Indonesian ecommerce site Alfacart drops third-party sellers

Alfacart, the ecommerce endeavor of major Indonesian mini market and convenience store chain Alfamart, is changing its business model. As a result, Alfacart’s entire C-level management will resign.

What’s certain is that Alfacart will no longer operate as a marketplace after the change. It will only sell products already available in Alfamart’s own product assortment. That’s mainly groceries and everyday household items.

Mini markets work well in Indonesia. Growth of such retail locations is outpacing that of larger stores, according to rating agency Fitch.

Indonesia Stock Exchange-listed Alfamart operates more than 12,000 stores (link in Indonesian) across Indonesia and the Philippines.

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3. Online accounted for over 17% of China’s total retail sales Jan-May 2017

China’s total retail sales of consumer goods reached 2,945.9 $430.8 billion in May, up by 10.7% YoY. Online retail accounted for over 17% of total retail sales from January to May.

The retail sales of consumer goods in China’s urban areas was 2,536.0 billion yuan in May 2017, up by 10.4% YoY while that in rural areas was 409.9 billion yuan, up by 12.7% YoY.

 Of the online retail sales of physical goods, food, clothing and other commodities went up by 21.5%, 20.6%, and 29.2% respectively.

This puts China’s ecommerce market and potential at a much more developed landscape than other Asian countries, namely Southeast Asia’s developing markets. Brands in China have potential to capture a nationwide audience of both urban and rural shoppers who are discovering brands on WeChat and Tmall, whilst also being very receptive to online payment platforms.It seems that ecommerce in China can only get bigger in size and value.

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