Posts

We recently shared Google Consumer Barometer data that showed on average, stores and showrooms are still the most common places where 51% Southeast Asians discover new products.

39% of other consumers start their product journey online. Where exactly are they going to look for items online? Read more

This is what you should know today.

1. FedEx to boost ecommerce operations in Asia

FedEx will expand its global ecommerce business in an effort to compete for the growing number of packages shipped to consumers from China and Japan.

The company acquired Bongo International, a company that helps shoppers purchase goods from foreign retailers by automatically adjusting currencies and shipping costs, and is re-branding the business as FedEx CrossBorder.

Read the rest of the story here.

 

2. Warren Buffett just dropped Walmart, buys airline stock

The sale, which leaves Buffett with nearly no shares in Walmart, comes as America’s largest traditional retailer rushes to catch up to Amazon and other online competitors.

Amazon’s market value is now $356 billion, compared with Walmart’s $298 billion. Last year, Buffett acknowledged that traditional brick and mortar retailers are struggling to compete with the online giant.

“It is a big, big force and it has already disrupted plenty of people and it will disrupt more,” Buffett said at his annual shareholders’ meeting in 2016.

Read the rest of the story here.

 

3. Unilever just launched its own co-working space in Singapore

Where is it? The 22,000-square-foot space is located at Unilever’s regional headquarters in Singapore’s Mapletree Business City area.

What’s the goal? The space is open to startups that have a product in their hands, but it will focus on companies that work with marketing and ad tech, enterprise tech, products and ingredients, social impact, and new business models.

Who is Unilever partnering up with? For its creation and running, Unilever has partnered with Padang & Co, a Singapore-based startup that helps connect businesses to corporates and the government through events, workshops, hackathons, and more.

Read the rest of the story here.

4. Community Chatter: Walmart’s ecommerce regret

Source: Paul Srivorakul (aCommerce Group CEO)’s Facebook

1.8 billion out of 7 billion people worldwide are millennials, individuals aged 18-34 whose spending power is expected to reach 6 trillion USD by 2020. 72% of them shop and research for options online before making a purchase in store and 81% of them are mothers, typically in their early 20s and 30s, pursuing careers, building families and homes of their own.

Are brands or retailers really servicing this growing ‘mom’ demographic? For parents, there is a whole new arena of purchase considerations before the babies are even born. The infant formula market size in Asia alone is the largest globally and amounted to 30.35 billion USD in 2015.

This year, the global baby care market is presumed to hit 66.8 billion USD in sales. In Southeast Asian countries such as Indonesia and Thailand, sales for baby and child-specific products are expected to reach 280 million USD and 141 million USD by 2020, respectively.

Nowadays, with mothers juggling full time jobs and doing majority of the household chores, efficiency and convenience become top priorities. Where can Southeast Asian mothers look to ease their workload? Online would be a good place. 

ecommerceIQ ECOMScape shows that the current online selection contains only a few players focusing on typically called the ‘mom & baby’ vertical in Southeast Asia. Why is that? Is it because a demand doesn’t exist?

The Demand for Baby Products Online

The Baby & Kids fair is held twice a year in Thailand and attracts over 500 manufacturers offering discounts up to 80%. Similarly in Indonesia, the annual Maternity and Baby-expo welcomed over 400 brands and 36,000 attendees in 2016 looking for steep discounts.

But even on sale, baby care necessities such as a car seat and stroller can rack up a bill of 800 USD, not even including the cost needed to buy an accessory to connect the two items. A marketing manager in Singapore stated that she spends approximately 600 SGD every month on her almost two year old child.

New parents in the US spend around 12,000 USD in only the first year on diapers, formula milk, toys, clothing, strollers, toiletries among other baby care products. Price comparison is vital to save on large costs and today’s young parents have a resource their parents may not have, the internet.

Alessandro Piscini, CEO of Lazada Thailand, shared that during the online marketplace’s largest sale, Lazada 12.12 campaign, one of the top three selling items in Thailand was Enfagrow, a global baby milk brand that sold over 3,700 units in three days.

And out of the top three best performing brands, two belonged to the ‘baby diapers’ category being Mamypoko and Babylove.

A quick Google search will reveal that women are discussing on popular ‘mommy’ forums such as Mom Tricks, how purchasing in bulk online can cut the cost of diapers by 20% thanks to regular campaigns and discount codes.

In Southeast Asia, 19% of consumers have already purchased diapers online and 17% have purchased baby food online. And the demand for baby products will only increase. The largest buying group is in households with children aged 0-5 and Malaysia, Laos, Cambodia and the Philippines ranked in the top 100 for highest global birth rates in 2016.

 

Limited Selection for Mothers Online in Southeast Asia

With high birth rates, rapid urbanization, increase in purchasing power and greater access to high speed internet, shouldn’t brands be clambering to go online to serve the mothers of the region?

Although the traditional global baby care market is very competitive, Johnson & Johnson dominates the majority of market share in Southeast Asia. These are the other leaders in their respective markets:

  • Thailand: Johnson & Johnson leads with 45% market share followed by Colgate-Palmolive
  • Indonesia: Megasari Makmur followed by PZ Cussons
  • Singapore: Johnson & Johnson leads with 56% market share followed by Pigeon SG
  • Malaysia: Johnson & Johnson leads with 60% market share
  • Vietnam: Johnson & Johnson
  • Philippines: Johnson & Johnson 55% market share

 

One of the reasons Johnson & Johnson does well is because it engages in extensive marketing activities ranging from television, print ads to offline promotional events. It launched the campaign ‘So Much More’ aimed at educating mothers on the benefits of using its products.

 

The Rise of Local Baby Brands

Even though there is a large selection of international brands in the region, private label products with natural or organic ingredients are seeing greater growth as they are perceived to be safer for babies.

By highlighting the organic ingredients in their products, Care, Babi Mild, Cussons Baby and D-nee-Mild have become some of Thailand’s most popular household names.

As parents become knowledgeable, they will seek new products, follow trends and read more product reviews. Rather than aggressive marketing, domestics brands can use online channels to reach out to their demographic in a personable way.

 

The Wailing Opportunity No One is Talking About

Ecommerce is not only about offering competitive pricing. Today, it’s about providing an online environment that can capture the attention of a browser who has three mobile notifications, one browser pop-up and two advertisements long enough to make a conversion.

It is the brand’s job to appeal to the customer.

Parents are busy. Online shopping offers extendable shopping hours and a larger product assortment.

Create an Online Strategy for a Baby-oriented Brand:

Reach your demographic through the right partner

  • Choose a popular marketplace catering to your brand’s target market, an example would be female oriented Orami in Indonesia or Thailand.
  • A marketplace presence should be seen as an initial short-term strategy before adopting a direct-to-consumer strategy via a brand.com site.

Be active on online forums, mom groups/blogs and social media

  • Moms with young children are new to the experience of raising kids and keen to digest as much information they can before making a purchase.
  • 89% of millennials trust recommendations from family and friends before making a purchase.
  • Influencers or ‘mommy bloggers’ are an affordable method to gain new customers and increase brand awareness. Ex. Hi-Q milk brand in Thailand 

Offer subscription commerce and/or bundle deals

  • Diapers are a staple item in a young family household. This makes it attractive for subscription services like Nescafe has done for its coffee – a monthly supply gets  delivered straight to your door. Brands that have already have a website such as MamyPoko are recommended to test this approach.
  • As diapers are bulky and expensive to ship, brands can bundle its sale with other products with higher profit margins such as beauty products and bottles to increase online profit.  Ex. diapers.com 

 

How Are The Global Players Doing It? 

Honest Company increased its value proposition through an online blog that covers eco-parenting,  nutrition and wellness. 

Pampers, the world’s top selling brand for baby diapers under P&G, pulled on heart strings and strengthened its own brand awareness through “A Parent is Born” – a 12-episode series chronicling one couple’s emotional journey through pregnancy.

Amazon recently launched a subscription service for toys exclusive to them. This secures a recurring stream of revenue for the company. The monthly fee guarantees a new box of educational toys to the house every month. 

 

Whirlpool, one of the leading players of home appliances globally, released a series of programs and podcasts about parenting, women, and children health leading to over 30,000 downloads per show and mainstream media coverage. Fisher-Price toy-maker engages with parents via its ‘Share the Joy’ campaign, where consumers are offered a $5 coupon for visiting the website and given an additional $5 incentive to share a video with friends.

All of these global brands are taking big strides to capture a demographic that will always need the same products because there is never a shortage of new parents, new mothers and babies that grow too quickly. Local brands, it’s your move.

Amazon’s rapid expansion into private label brands

Earlier today, TechCrunch published an article titled “Amazon to Expand Private-Label Offerings—From Food to Diapers” detailing Amazon’s successful push into private label brands covering lucrative categories ranging from batteries, mom & baby to even perishable food items. The concept of retailers selling their own private label brands has been around for ages, mainly adopted by grocery chains with the goal to increase margins for often low-profit consumer packaged goods (CPG) categories. It’s not so much players like Amazon are doing this but how and why they’re doing this that should ring some alarm bells with brands.

The ultimate bait and switch

Global ecommerce giants like Amazon and, increasingly, local Southeast Asian players like Lazada and MatahariMall are offering perks to entice brands to open stores and sell through their platforms. This strategy resembles Ladies Night at clubs, where women are offered free drinks to indirectly lure men, who, more often than not, end up with a headache, alone and having burnt a hole in their pocket at the end of the night.

With aggressive promotions and subsidies from their hosts, brands often see quick short-term gains in online sales. The extreme example here is 11.11, a man-made online shopping festival during which retailers compete in the Discount Olympics. Obviously, brands benefit from spikes in sales but little do they know that they’re actually selling their souls in the long-term. It’s like crack, it makes you feel great for a while but sooner or later it’s hollowing out your body.

With the massive amounts of data generated on a day-to-day basis, these ecommerce platforms can easily identify consumer trends, such as best selling products and categories beyond what brands are able to see themselves. This data is then leveraged by retailers to develop and introduce their own private label brands to compete with the brands they partnered with in the first place.

Once launched, these platforms could favor their own white-label brands by giving them more visibility through favorable product placements as well as top rankings on internal search result pages.

The bigger picture

Players like Amazon and Alibaba’s Tmall aren’t really traditional ecommerce retailers. Their main objective is to use competitive pricing, often subsidized, on retail products to acquire more and more users, which they then monetize through other means such as Amazon Prime subscription fees for Amazon and onsite advertising and Alipay transaction fees for Tmall.

Amazon’s new CPG brands like Happy Belly and Mama Bear are only available to Prime members in a move to incentivize joining its $99-a-year unlimited shipping program that’s fueling Amazon’s retail growth behind the scenes.

In a post-Alibaba acquisition world, ecommerce power-players like Lazada could potentially increase awareness of their own private label brands through better placements on their marketplace, eventually forcing other brands to pay more for advertising to rank higher and get traffic.

With private labels, Amazon and the likes of Lazada also have more “room” to play in terms of pricing, allowing them to maintain sustainable low prices, keep driving more users and spinning the flywheel.

Strategies for brands

Brands like P&G, Unilever and Nestle should look at ecommerce marketplaces as a relatively easy way to test selling online but in the long-term, brands are arguably better off selling direct-to-consumer where they have full control of the brand image, customer experience and, most importantly, user data.

A case in point is Coach. The luxury brand was one of the first brands to set up shop on Tmall in China but recently closed down its official flagship store, leaving the brand with only a brand.com and WeChat presence. Many luxury brands have expressed concerns about the mass-market image of some of the bigger marketplaces.

Brands don’t have to pick between marketplace and brand.com only. Some brands like L’Oreal have adopted a multi-channel approach where their marketplace presence generates sales for their more mass and lower price point items whereas their brand.com site sustains long-tail and higher average order value sales.

At the end of the day, marketplaces are a great way for brands to jump into ecommerce. However, brands should be aware of the pros and cons and especially long-term implications of such a decision.

BY SHEJI HO

Here are some key headlines to wrap up the day.

1. P&G Under Pressure to Make a Deal as Eco Friendly Products Surge

Procter & Gamble Co., which is losing market share to eco-friendly products, is under mounting pressure to either fend off the competitors or buy one of them. Unilever, P&G’s top competitor, raised the stakes last month when it agreed to acquire Seventh Generation, a Vermont-based company that makes sustainable cleaning products. The company had previously acquired Dollar Shave Club — another startup targeting America’s bathroom cabinets. Read the rest of the story here.

 

2. Body Shop launches AliPay to cash in on Golden Week tourists

The L’Oréal-owned brand’s new service will allow thousands of Chinese shoppers to pay for their shopping via China’s biggest digital transaction service, using the Scan Alipay App. Read the rest of the story here.

 

3. Business giants eye Singapore as springboard into South-east Asian ecommerce market

The potential for growth, government assistance and Singapore as an entry point into South-east Asia make the Republic attractive, experts say. Read the rest of the story here.

Before you get excited about the weekend, check out our ecommerce news roundup.

1. Lazada To Join Tmall.com For 2017 Asean Expansion

Lazada, a leading e-commerce platform in Southeast Asia owned by Alibaba Group, is gearing up to tap into the burgeoning cross-border e-commerce market next year, in a move set to create greater opportunities for small and medium-sized enterprises in Asean and China. Read the rest of story here.

 

2. Unilever said to be the early frontrunner to acquire The Honest Company

The Honest Company sells a number of consumer products like diapers, baby formula, bath and body care, and even laundry detergent. It’s also known for its high-profile co-founder, actress Jessica Alba. Read the rest of the story here.

 

3. Flipkart is still leading India’s ecommerce scene

Amazon India is still second to Flipkart (and is likely to stay so) despite a fast-growing market share, a recent Bank of America, Merrill Lynch report said. Read the rest of the story here.

 

4. Adyen, a payment platform that works with both Uber and Grab might outlast them

Adyen is huge. It processed US$56 billion in payments in 2015, doubled its revenue to US$371 million, and made US$45 million in profit. Read the rest of the story here.

 

5. Image recognition startup ViSenze gets $10M to power ecommerce in Singapore

Oliver Tan, ViSenze co-founder and CEO points out how rare it is these days to raise series B, as not a lot of players in Singapore writes these checks. Read the rest of the story here.