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The BRAND Series from eIQ aims to provide a snapshot of how the world’s largest companies are changing their marketing strategies to incorporate digital to reach the newest generations of consumers around the globe.

The first of this weekly series kicks off with FORD, the American multinational automaker that recorded $151.8 billion in revenue last year.

Millennials aren’t investing in cars as the younger generation is already familiar with the on-demand transportation services like Uber and Didi. This has caused auto car sales to experience sluggish growth worldwide but Euromonitor predicts that 2017 will be positive for developed markets such as the US, while developing markets such as India and China have seen positive auto sales.

Where does Ford fit into this picture?

THE HISTORY

Known for its quintessential American middle class, suburban family minivan and pickup truck, Ford Motor Company has been operating for over a 100 years. Ranked as the second largest automaker in the United States, preceded by General Motors, Ford counted 11,971 Ford and Lincoln dealerships worldwide, with 3,238 locations across the United States.

The company has resonated with families as a practical and highly sensible car but missing the mark in appealing to young people, falling behind both Toyota and Honda in Google’s “cool factor”.

Google’s ‘It’s Lit’ report

“Millennials don’t remember the bad stuff,” said Chris Travell, VP of Maritz Research. “They’re coming in as mostly clean slates. Ford is not considered the ‘old Ford’ to this generation.”

THE STRATEGY

To reach a new audience, Ford’s 9-year old Youtube account boasts the most subscribers (830,000) among all auto brands according to L2 and its monthly visits to the US site sees 12 million visits per month.

The company has also joined the ‘driverless car’ trend after it was reported earlier this year that CEO Mark Fields is being replaced by Jim Hackett, Ford’s Head of Autonomous Driving. This, combined with the construction of its data center and investment in Pivotal, a San Francisco based enterprise software company focused on cloud technology, shows that Ford has its eyes on becoming much more than a suburban staple.

Over in the east, Ford Motors has also pushed an extensive online strategy in China, which essentially means a Tmall strategy as Alibaba’s marketplace remains a critical channel for brands to reach Chinese customers.

Ford’s recent moves are taking after global luxury auto brands like Jaguar and Alfa Romeo, the latter selling 350 cars in 33 seconds on Tmall.

Through the Ford Tmall official shop-in-shop, customers can purchase an online voucher to claim a special price offline at a Ford dealership. Because of the e-voucher, customers will have the chance to pay ¥136,800 instead of ¥153,300.

Ford shop-in-shop on Tmall

“Chinese auto buyers are using digital technology at all steps in the purchase process. A majority of Chinese buyers already know what model they want before visiting a dealership, and online research is a key influence factor,” said a report published by L2.

THE INNOVATION

This year, Ford has turned to technology to make buying cars a less painful process through a tech platform called AutoFi where Ford  has made a small, undisclosed investment in.

Once the platform launches, customers will be able to buy one of Ford’s vehicles through a mobile phone or on desktop. The customer simply needs to go into the dealership to finalize paperwork and collect the car.

The idea behind this, according to Ford, is to give customers the best of both worlds; reduced time in dealerships and a chance to see the car before signing the final paperwork.

As previously mentioned, through Ford Smart Mobility LLC, the company is focused on the autonomous cars. It also launched FordGoBikes in San Francisco and acquired Chariot, a crowd sourced shuttle service to target the overcrowded, underserved communities in the Bay area to target students and workers.

Ford Motor has also launched FordPass, an all in one app designed to help drivers find parking spaces ahead of time, compare fuel prices and access FordPay, the company’s digital payments platform that allows drivers to pay for parking and make payments for vehicle related finances such as maintenance costs at dealerships.

The company intends the platform to become the “iTunes of motors”.

FordPass app allows you to compare fuel prices and scan for parking spaces

THE FUTURE

Ford Motor is either building or acquiring pieces of what seems to be shaping up to an integrated digital ecosystem. It’s presence on Tmall also shows that the company is serious about its ecommerce strategy in the east, and through an online marketplace, it will be able to reach auto buyers beyond the capital cities.

Although Ford is emphasizing its digital strategy in the US and China, its Southeast Asian presence is mainly limited to offline advertising, commercials, and dealerships in countries such as Thailand and Indonesia.

Through the company’s various tech investments and efforts in ecosystem building, Ford Motor has a strong chance in strengthening its appeal to the growing digital audience.

Stay tuned for next week’s installment in eIQ BRANDSeries.


Sign up for eIQ’s weekly ecommerce newsletter here.

Here’s what you should know today.

1. Intudo Ventures venture capital debut with $10 million of capital fund

The launch debut fund is contributed by undisclosed limited partners as the founding general partners at leading venture capital firms, corporate investors, and top-tier family offices and founders from the US, Indonesia, Hong Kong, Taiwan, and Singapore.

Intudo Ventures targets 12 to 16 early stage companies in the field of consumer, finance, healthcare, education, and media led by local founders and returnee talents from overseas market.

The founders has invested in dozens early-stage companies in Silicon Valley, China, Hong Kong, Taiwan, Singapore, and Indonesia since the 1990s. Their portfolio includes PayPal, SpaceX, Palantir Technologies, Netscreen Technologies, and Fortinet.

Read the full story here.

2. The biggest private bank in Indonesia BCA launched chat-based virtual assistant

Since its launch on February, the virtual assistant provided by Indonesia’s BCA (Bank Central Asia) has attract more customer because of its faster response time compared to the bank’s conventional call center.

The AI-based service has gained more than 180,000 users from various messenger apps, including Facebook Messenger, Line, and Kaskus Chat.

Through the virtual assistant, customers can also access a range of information, including exchange rates, transaction information and appointments for credit card and mortgage applications.

Read the full story here.

3. Alibaba launches Tmall World to serve overseas Chinese

Alibaba Group has launched Tmall World, a service aimed at giving 100 million overseas Chinese access to 1.2 billion products it sells through its Mobile Taobao app and other online platforms.

Tmall World is primarily targeting Hong Kong, Malaysia, Singapore and Taiwan, all of which have significant Chinese-speaking populations. It will offer logistics and localisation for each market.

Alibaba is also aiming to tap more English-speaking consumers in Southeast Asia. Under Tmall World, Chinese speakers can tap into Tmall and all other Alibaba marketplaces through PC or mobile devices.

Hong Kong users will see expanded product categories, and in Malaysia Alibaba is launching a Tmall shopping festival from June 18 to 20, offering discounts to customers in Mainland China and overseas.

Jack Ma says the company intends to have 2 billion customers by 2036, with a large proportion living and shopping outside China.

Read the full story here.

 

Here’s what you need to know today.

1. Alibaba makes its move in Indonesia, partners Emtek on mobile payments

Alibaba’s Ant Financial has locked in a partnership with Indonesian media conglomerate Emtek. Together, they’ll launch a new mobile payments product as well as other financial services.

The payments solution will be offered on Blackberry Messenger (BBM), which is operated by an Emtek subsidiary and has 63 million monthly active users in Indonesia. 

Emtek is turning BBM into much more than just a chat app. It allows people to shop, play games, watch videos, and more.

Read the rest of the story here

2. Amazon gets a wallet license in India

Amazon India has received permission to run a wallet license in India, becoming one of the 84 companies authorised by the Reserve Bank of India to operate payment licenses.

The wallet will probably be linked to Amazon Pay, which Amazon introduced in India last December, although then it was seen as a rebranding of its gift cards business.

A one-click payment option doesn’t work in India without a wallet

Amazon also offers customers faster refunds with Amazon Pay, within 24 hours. Storing money in the wallet will help Amazon ensure that the money is spend on Amazon directly, and also allows it to offer cashbacks on purchases to wallets.

Read the rest of the story here.

 

3. Recommended Reading: Closing shop on China’s online platforms

The online store closures of a number of retail and luxury brand giants indicate that the competition is no less fierce online.

The closure of Lotte’s Tmall store seems to have stemmed from the fact that China is Lotte’s only international market where growth is stymying. Sales fell during the last three months of 2016, year-on-year. ASOS, the UK’s largest online fashion retailer, entered China in 2013 with high expectations but announced its closure in April 2016 due to a running loss of 4 million GBP.

Companies looking to take advantage of China’s market size and sell to Chinese consumers often mistakenly believe that ecommerce offers a shortcut to success because there are fewer licensing requirements to operate through ecommerce, and customs clearance is faster.

However, as high-profile store closures in 2016 demonstrate, ecommerce requires extensive pre-entry knowledge of regulations, a realistic logistics plan, and a local marketing strategy.

Read the rest of the story here.

Not many companies can say they are growing faster than the country’s expansion but Jing Dong Mall or JD.com, one of China’s most well known online retailers, is growing at almost 40% year on year. The B2C company can also add the following achievements under its belt: Fortune Global 500 member, biggest competitor to Alibaba’s Tmall and last year, acquired Wal-Mart’s Chinese division, Yihaodian.

Louis Li, the Deputy General Manager of JD Worldwide, wants to let the world know that China’s market is still maturing and open for business.

It’s hard for industry businesses to forget about China when the superpower has overtaken the US in total online spend at $752 billion in 2016, see fig below, and expected to grow 20% annually by 2020.

What are some important factors brands and retailers need to consider before selling to consumers in China’s red ocean? eIQ speaks to Louis about his views at Last Mile Fulfillment Asia.

Be the little guy

“Even if you’re big overseas, don’t assume the Chinese will know who you are and what you offer,” comments Louis.

“Be prepared to do what the smaller brands have to do to become familiar.”

This means dedicating resources to consumer education about what your business can offer and rigorous content marketing on the right platforms. This also means legwork to build a trustable name from scratch no matter how big you are elsewhere.

The channels are different

“Unlike the West, the Chinese don’t use Google, Youtube or Facebook,” comments Louis. “Companies will need to find the right tools to do marketing.”

Some of China’s most popular platforms are Mobile QQ and Tencent’s WeChat, the country’s largest chatting app that also facilitates payments, taxi-hailing, news services, food delivery and much more.

The platform boasts over 800 million users and has welcomed notable brands such as Coach, Chanel, Burberry and Apple onboard who share promotions, support followers and run sales campaigns.

JD and Tencent formed a strategic partnership in May 2016 to share big data with brands to reach more niche customers versus general sweeping TV or newspaper ads.

Source: eMarketer

Through a WeChat campaign during Chinese New Year last year, JD was able to increase Japanese skincare SK-II brand followers by 20,000.

Knowledgeable customer service reps

It’s understood that strong customer support is vital to any successful business. Louis suggests automating as much of the general inquiries as possible, for example a chatbot answering common questions such as “where can I track my package? How can I get a refund?“

A few other pointers to keep in mind when serving the Chinese consumer:

  • 73% of consumers would expand their purchases with a merchant by 10% if the merchant delivered superior customer experience
  • If they already provided their telephone number and credit card information online, they do not expect to have to provide the same information again
  • Chinese consumers like to share online and expect to be heard, the reply of the company can determine their repurchase rate
  • 86% of consumers are willing to pay more for a better customer experience

*Source: Deloitte’s “Delivering Superior Customer Experience in China”

Invest heavily or drown in the red ocean

Ecommerce in China is extremely competitive, much more than other markets, so companies should be ready to allocate resources to a team and to logistics to ensure products are delivered quickly to the end customer – especially the Chinese consumer who already has expectations.

“If you promise people to deliver same day, people will more likely buy,” says Louis. “Our people will literally cross rivers and climb mountains to get the package to the end customer.”

In 2016, JD fulfilled a total of 1.6 billion orders through its own extensive logistics network: 256 warehouses covering 5.6 million m2 and 6,906 delivery and pickup stations in China.

China’s cross-border future

By 2020, a quarter of the country’s population will be shopping either directly on foreign-based sites or through third parties. Online consumption already accounted for 13.5% of all retail spending in the country in 2016 and consumers in low-tier cities are outspending those in high-tier cities online.

The demand for goods exists. The demand for goods in Southeast Asia also exists and is strong. Not only do Chinese consumers want Thai consumer goods such as fresh fruits, the amount of trade between China and Cambodia has taken off since 2012.

Source: Bloomberg

The more online retailers, the better growth for China’s economy and its citizens is how Louis sees it.

“Ecommerce helps consumers,” says Louis. “The farmer in China’s outer provinces would never have been able to get their hands on an iPhone 7 until now.”

Forget about China? I doubt anyone will any time soon.

By: Cynthia Luo

Here’s what you should know before the weekend starts.

1. Alibaba raises stake in India’s crowded ecommerce market

Alibaba is leading a $200 million funding round in India’s Paytm to give it a controlling stake of 60% percent in the mobile shopping and payments app.

The funding is for Paytm’s ecommerce business, which the startup decided to split from its payments unit last year. It puts Alibaba closer to a formal entry into India’s burgeoning ecommerce market to combat market leaders Flipkart and Amazon. A clear indicator that Alibaba is intending to compete for market share.

Trouble for India’s incumbents? Alibaba’s investment in Paytm can pose trouble for local players Flipkart and Snapdeal. Both have been struggling to raise funds, with Flipkart’s valuation cut several times, and Snapdeal recently announced a 100% pay cut for its founders.

Read the rest of the story here.
 

2. Goldman Sachs: online shopping in China to double by 2020

Already the world’s largest, China’s online retailing market will grow to $1.7 trillion by 2020 compared with $750 billion last year. Perhaps more important to continuing growth is Goldman’s expectation that 200 million new Chinese shoppers will come online by 2020.

The biggest opportunity is the expansion of online sales of FMCG items such as groceries, personal care and healthcare, packaged foods and other everyday items typically found in supermarkets.

Tmall is also expected to control 70% of China’s online B2C market by 2020

Read the rest of the story here.

 

3. Insights: Target to overhaul stores and digital operations

Another reaction to the Amazon effect?

Target unveiled a series of initiatives designed to reverse the big box retailer’s same-store sales declines, including an investment of more than $2 billion of capital in 2017 and more than $7 billion over the next three years. The company will use about $1 billion of operating profits this year to improve brick-and-mortar and digital operations.

Insights from Retail Dive

“Target just took longer to feel the ‘Amazon digital effect’ than Best Buy, due to the categories and customer base they play within. Amazon initially went after books (successfully destroying physical book retailers), and then went onto CE and office supplies, and now are expanding into food and apparel,” said Matt Sargent, Senior Vice President of Retail at Frank N. Magid Associates, Inc.

The retailer should return to their legacy ability to differentiate with exclusive, affordable ‘fresh’ product offerings coupled with clean & easy shopper experiences.

Read the rest of the story here.

 

Welcome back to Monday-here’s what you need to know.

1. Alibaba makes its first entry into India-launches Paytm Mall

The new Paytm mall is an android application and is designed to replicate Alibaba’s ecommerce platform Tmall.

This comes at a time when India’s ecommerce market has become a two horse race between Amazon and Flipkart. Alibaba has already injected approximately $200 million into Paytm, valuing the company at around $1 billion and effectively making it a unicorn.

Alibaba would also be bringing sellers from Southeast Asia,  especially from Alibaba’s other investments such Lazada, and has set up 17 fulfillment centers for efficient service.

Read the rest of the story here.

 

2. Cross-border VC firm K2 Global has closed a $183M fund to bridge Singapore and Silicon Valley

K2 Global, a Venture Capital firm with its headquarters in Silicon Valley and Singapore, announced today it has closed a $183 million fund with the primary goal of “bridging Asia and Silicon Valley to create impact on a global scale.”

K2 Global also said it wants to work with “third-wave” startups — defined as companies that actively challenge incumbent players in major industries.

Read the rest of the story here.

 

3. Vietnamese tech startups could become target of private equity investors in 2017

“Service sectors such as health care, education and food and beverage are where we see the most attractive opportunities for private quitty in the short to medium term. Tech is the other sector to watch, with a vast number of startups attracting funding,” said Vinh Du Tran, partner at Ernst & Young Vietnam.

Vietnam’s attraction is in its rising economy, and an expanding middle class of 90 million people-more than 50% of the population are under 35 years old.

Read the rest of the story here.

 

4. Recommended Reading: J.C. Penney Is Latest Retailer Forced to Downsize

The 114-year-old chain, which had avoided mass closings despite years of losses, said it would shut as many as 140 of its roughly 1,000 stores by June.

Penney Chief Executive Marvin Ellison said the closings will allow Penney to adjust its business to “effectively compete against the growing threat of online retailers.” He said the remaining store base gives Penney an advantage since the locations can be used to ship or pick up online orders, minimizing delivery costs.

Key Takeaway

Read the rest of the story here.