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Recovering from the weekend? Anxious about shopping during 12.12? Start your Monday with today’s top ecommerce headlines.

1. ShopBack Philippines crafts 12.12 ‘online fever sale’

ShopBack Philippines recently conducted a survey among 2,200 Filipinos who shop online frequently. The survey revealed that 4 out of 5 shoppers know exactly what item they want to buy when they go online, which shows that impulse buys were not high on their radar.

ShopBack Philippines curated the 12.12 Online Fever Sale around some of its top partner stores like Lazada and ZALORA, aimed at offering the smarter way to shop-and-save for Christmas presents, helping Filipinos to skip the congested metro traffic, long lines at check-out counters, and to save more money.

Read the rest of the story here

 

2. Online shopping festivals boom in Thailand as brands gear up for end of year sales

Following Lazada Thailand’s successful 11.21 sales campaign, where the marketplace giant made over 270,000 sales in 24 hours, its now preparing for 12.12 and will last until the 14th. The campaign is expected to bring in three times the sale of a regular shopping period.

Faris by Naris‘ makeup from Japan, solely imported by Better Way Thailand, will also be venturing into ecommerce for the first time on 12.12. The brand cited Alibaba’s 11.11 success as inspiration to finally go online.

Read the rest of the story (in Thai) here.

 

3. Alipay launches in Australia

Alipay and Quest Payment Systems Pty Ltd, an Australian payments provider, are teaming up to roll out Alipay at select stores in Australia. The digital wallet, which is currently used by Chinese nationals to pay for in-store purchases using their mobile phones, is now available at select stores within The Chemist Warehouse and My Chemist pharmacy groups.

 

Read the rest of the story here

 

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Southeast Asia in 2010 started to experience an ecommerce boom with the likes of Ensogo, Rocket Internet’s Lazada and Zalora, Groupon, etc. It seemed to be at the height of its peak with money pouring in, mergers and acquisitions happening every day, and Amazon finally moving in to capture the region’s potential but amid these buzzworthy headlines, down rounds plagued startups such as Lazada, were sold for scraps like Zalora Thailand, or shut down completely, such as Ensogo.

What happened? Smaller startups began venturing into other fields providing human resources (Getlinks), car wash services (Wash Mobile), recruitment (JB Hired), agriculture (EverGrow), hardware (DriveBot), and more. It seemed that startups were shifting focus to offer niche services to carve out their own demographic in a saturating market but could they sustain themselves?

A Sustainable Model: Fintech

Across the region and even in once-upon-a-time unicorns such as Flipkart and Snapdeal, news reported large reductions in hiring, peaking salaries, and a slowdown in capital flow shadowed the once profitable businesses VCs banked hard on. The customer behavior in Southeast Asia, more specifically trust, is simply not mature enough.

It also cannot be denied that a capital and inventory intensive model requires deep pockets. After running a successful ecommerce company in Thailand for three years, I realized it was necessary to go back to the basics, to start a business model that encompassed the three components of sustainability:

  1.       High margins
  2.       High customer lifetime value (LTV)
  3.       Low customer acquisition cost

A business with these characteristics usually has a strong foundation and presents a good investment opportunity because it shows promise for profitability down the line. While ecommerce does have low customer acquisition due to the nature of retail and lower commitment products, such as retail and consumer goods that are being sold, it severely lacks in margins and customer LTV (lifetime value).

Margins are often eroded away by high operation costs, packaging, shipping, and inventory while LTV is nullified by heavy competition as most ecommerce companies do not have exclusivity on products and pricing. After all, it isn’t in the best interest of product owners and manufacturers to only distribute their products through one single channel.

Fintech on the other hand, a recently booming industry, does not suffer from these disadvantages. Like most tech companies, there is no inventory to hold, the margins are much larger and once you have acquired a customer, you have an 80% renewal rate for at least the next four years (Bangkok Insurance’s internal data). By building better fintech, it would change the behavior of consumers in Southeast Asia and eventually fuel the growth of ecommerce in the region.  

fintech-southeast-asia

Lack of Innovation: More Room to Grow?

Fintech is ripe for entrepreneurs because existing legacy players such as Viriyah and MSIG in the market lack innovation. Companies like Bangkok Insurance, HSBC, and other traditional financial institutions are only beginning to realize the magnitude of the tech wave that has hit the world.

As the saying goes, it is hard to steer big ships, and ships seldom get bigger than the companies that make up our financial industries. These companies earn a vast majority of their profits from traditional channels, leaving the unexplored to opportunistic entrepreneurs like myself with Frank.co.th and many others who have managed to convince investors for support.

A recent report from Accenture found that global investment in fintech has skyrocketed from $930 million back in 2008 to over $12 billion by the beginning of 2015. Europe experienced the highest growth rate with an increase of 215% to $1.48 billion in 2014. Globally, fintech startups have raised investments totaling $19 billion according to a insight report published by Citibank. This has begun to eclipse other startup sectors as it continues to grow.

Challenges of Fintech

The next big thing does not come without its own challenges. Fintech startups need to realize very early on that there are many rigid regulations which were not created with innovation in mind. For example, in Thailand, selling insurance online requires a business to report to at least three different governing bodies all of which have their own set of rules to abide to. This increases admin work for small companies and also requires legal knowledge that most new companies lack.

Companies are also not allowed to call a customer to confirm purchase as that would be considered “telemarketing insurance sales” and requires a different license. One of the biggest challenges for fintech companies is encouraging users to trust young companies with their financial information, savings, and future to adopt its products and services.

It takes time and a lot of marketing dollars to explain to customers who you are and why they should trust you with their money. These challenges do get easier as more startups enter the space and educate their audience through smart marketing initiatives.

Rabbit, a company based in Thailand, is the first integrated online/offline payment platform in Thailand accepted in multiple retail stores, restaurants and used for public transportation. Its partnership with LINE earlier this year means over 5 million users are slowly allowing their financial information to be connected to some sort of a tech platform.

“This joint partnership [Rabbit LINE Pay] will strongly support government policy in driving Thai people into a cashless society,” says Nelson Leung, chief executive officer of BSS Holdings, the operator of Rabbit card.

Influence from neighboring countries such as Singapore and Malaysia, a lot of which have already set up country specific ‘sandboxes’ to trial for fintech regulations, are also moving towards a cashless society to drive the realization that there is a need for innovation in the financial sector.

Ecommerce is a big marketbut until the shopping habits of Southeast Asians are shifted to online spending habits, it can never reach its full potential. The emergence of fintech and its supporters mean that by building the fundamentals, companies in the entire ecosystem can benefit from its success. 15 years ago, people would call a travel agent and ask them to book a ticket. And now? When was the last time someone called a travel agent to book a flight or hotel room? Behaviors change, but it takes innovation and time.

BY HARPREM DOOWA, MD & CO-FOUNDER AT FRANK.CO.TH

Wind down from a busy Wednesday with these headlines.

1. Rocket’s fashion stores are doing better, but still bleeding cash

German startup factory Rocket Internet today announced financial results for its fashion ecommerce stores in the months of July, August, and September. Overall profitability, however, remained elusive – a persistent trend that Rocket seems to be struggling to shake off. The emerging market incubator said it lost a little over US$34 million in the three months alone.

Read the rest of the story here

 

2. Amazon plans to launch ‘Brand Central’ to target counterfeits 

Details about Brand Central remain vague, but the people describing the project say Brand Central will help smaller sellers protect their trademarks and other intellectual property. Ensuring the source of products is also part of the project.

It’s unclear when, or if, Brand Central will roll out publicly or whether that name will be used.

Read the rest of the story here

 

3. DHL ecommerce invests in India to tap surging demand

Through its subsidiary Blue Dart Express, this investment will go into the expansion of its air hubs in Delhi and Mumbai, which are part of its network of 13 air hubs in India. The latest investment supports the growth of B2C e-commerce in India, and is part of the company’s broader plan to aggressively expand across Asia Pacific.

Read the rest of the story here

For online shoppers, 11.11 has become a shopping phenomenon. The biggest online sales event of the year in China is co-opted by ecommerce giant Alibaba, where discounts from participating sellers range from 25% – 70% off, and a record $5 billion of products were sold in under 90 minutes last year.  

The company, which owns online marketplaces Tmall and Taobao sold $14.3 billion worth of goods during the sales period last year, targeting 386 million annual active buyers – a number greater than the US’s general population.

According to Fortune, the campaign is quite accurately labelled “Black Friday on steroids”.

The combined earnings of Black Friday and Cyber Monday, North America’s famous sales period, amounted to $7.54 billion last year, and while impressive, only amounts to half of Alibaba’s earnings in the same sales period.

11.11 southeast asia

11.11 Cultural Backstory

Singles’ Day originated in Nanjing University in 1993 where groups of young single friends would get together and celebrate their unattached status by shopping. In 2009, Jack Ma, chairman of Alibaba Group, saw an untapped opportunity and created an online shopping event around young peoples’ behavior, framing it as a day of personal indulgence.

‘Singles’ day’ was made famous and monetized by Alibaba, turning the obscure day into an online shopping extravaganza on its online marketplaces and boosting business during China’s slack period between October’s Golden Week and Lunar New Year in January to February. It was also introduced around the time ecommerce exploded in China, leading to a 5,740% growth in Alibaba’s “Double 11” sales event between 2009 and 2013.

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The company has since trademarked the term in December 2012, meaning that it can take legal action against media outlets that accept advertising from competitors who specifically use this term.

11.11 sales also reach hundreds of millions of Chinese shoppers beyond large cities such as Beijing and Shanghai, who rely on Alibaba’s Taobao and Tmall because they are without big shopping malls in their towns.

The event’s offline marketing impact also contributes to 11.11 success thanks to appearances from global celebrities such as Daniel Craig and Kevin Spacey for the launch event, which has been the company’s way of turning the shopping extravaganza into a sort of event to be celebrated.

For the first time since the launch of 11.11 campaign, Alibaba Group has announced that this year’s campaign will last for 24 days instead of 24 hours. It will also mark the first introduction of Alibaba’s virtual reality technology, Buy+ , which promises to transport shoppers to retail stores overseas through a VR headset. This year will also see the expansion of 11.11 to Hong Kong and Taiwan.

Alibaba’s 11.11 success means it comes as no surprise that Southeast Asia has followed in the footsteps of China. Despite it not being a day to celebrate single-hood, large online marketplaces have each adopted their own customized versions of Alibaba’s 11.11 campaign such as Lazada and Moxy (now known as Orami).

11.11 southeast asia

Online players are under pressure to perform and participate during this period as bigger brands and retailers begin offering better sales and greater discounts thanks to deeper pockets and larger number of merchants.

In Southeast Asia, marketplaces are using their big 11.11 spin-offs as a litmus test of how well they’re performing against competitors in local markets.

How Southeast Asia makes 11.11 their own

From hiring more manpower to ensuring that shoppers are well aware of the sales event, marketplaces push out social media strategies months before the actual sales event and calculate stock predictions to ensure the region’s largest sales event is a success. Here are how Southeast Asia’s biggest players successfully take advantage of the 11.11 buzz: 

Marketing blitz: Social personalization is key

As the largest ecommerce marketplace in the region, Lazada has adapted 11.11 by extending it with their very own 12.12 event on December 12th and coining it ‘The Online Revolution’, which started in 2012.

Lazada Thailand has seen a rise in their gross merchandise value (GMV), chalking up $40 million during 10th-12th of December 2015 and reflecting a gradual increase in participation from consumers.

Lazada Thailand saw a 300% increase in orders when compared to 2014.

“In Thailand, we notice that successful marketing channels are very social,” says Baptiste Le Gal, CMO at Lazada Thailand. “Customer relations management is the key channel to reach out to customers with personalized offers that match their interests.”

The consumer trend has shifted slightly in Thailand. Baptiste noted that electronic goods used to reign as the top selling category, but now more lifestyle centric segments such as health&beauty and home&living are moving faster on the platform.

Thailand’s high mobile adoption is also contributing to how consumers shop on Lazada.

“Mobile transactions accounted for 70% of the 400,000 items ordered during Lazada’s online festival last year,” commented Baptiste.

The mobile first market means that Lazada is focusing on the mobile aspects of its channels, and ensuring that Lazada’s mobile app is optimized for the best customer experience during the campaign period. The marketplace has also launched an advert, ‘make your dreams come true‘ in Singapore, gearing shoppers up for the big event.

Zalora, Rocket Internet’s fashion portal, also follows the Rocket formula by offering sales up to 80% off for both 11.11 and 12.12. Zalora Indonesia’s marketing strategy promotes online campaigns from October until the grand finale of 12.12, starting with Zalora Great Sale currently ongoing now, which shoppers can treat as a warm up to the main event.

“In 2015, overall sales for 12.12 increased by 30 times more than an average day, with participating brands seeing a drastic increase in sales even after the campaign was over,” says Priyanto Lim, Head of Marketplace at Zalora Indonesia.

11.11 southeast asia

But slapping big discounts on jeans and jackets isn’t enough. Zalora Indonesia also holds online competitions, provides extra giveaways and uses celebrity endorsements on social media as part of the big push to generate buzz around the sales event. Essentially, every customer facing channel is jam-packed with purchase incentives and triggers to drive sales.

It appears that speculations of brands feeling pressured to participate and make deliberate cost cuts to compete with other merchants don’t hinder the impact of the campaigns.

“Contrary to what articles suggest, brands are very willing to partner with us as they benefit from the extra traffic,” Priyanto adds.

Female centric marketplace Orami is focusing on curating original ‘Singles’ Day’ themed content and community to drive traffic to the site and engage shoppers rather than launch a big promotional campaign.

“To drive social media engagement, Orami will also use Facebook as a tool to create engagement with users through online games related to Singles Day,” says Shannon Kalayanamitr, co-founder and CMO of Orami.

Targeting a mobile centric region

Shopee, Garena’s mobile shopping platform, released its own version of the mega sale for the first time this year, coining it 9.9 on September 9th. Benefiting from a fast accelerating mobile market in the region, the platform targeted Thailand’s mobile first shoppers by progressively releasing specially marked down products throughout the day to keep shoppers anxiously clutching their mobile phones.

Shopee’s website even publishes a discount schedule ahead of time so shoppers can set up an alarm for the product they’re eyeing, creating a ‘ready-set-go’ mentality for shoppers to encourage competitiveness and in turn, more shopping.

11.11 southeast asia

Niche service providers jumping on the bandwagon

11.11 has also inspired online service providers in Southeast Asia to cash in on the online flurry.

Groceries on demand service provider, HappyFresh Indonesia, offered up to 30% off its most popular products in its marketing campaign last year.

11.11 southeast asia

And a recent addition to the online grocery scene in Thailand, honestbee, is currently working with popular Thai supermarket chain Villa Market to tap into the ‘necessary goods’ sector that includes everyday items such as water, fresh food and meat. These items will all be a part of the delivery service’s big sale campaign.

When groceries go on sale, shoppers tend to ‘stock up‘, especially when purchasing online as the selection is wider.

“We look at the purchase patterns of our customers to see what kinds of items are popular among shoppers. For example, customers in residential areas often order large volumes of mineral water and fresh fruit so we have to anticipate that these orders may spike during our 11.11 campaign,” said Piyawat Laiphithak, Marketing Manager at honestbee, Thailand.

honestbee is also playing directly on China’s ‘Singles Day’ gimmick as they plan to give away snacks such as gummy bears and popcorn for shoppers.

11.11 Logistics: What happens behind the scenes?

The phrase “it takes a village to raise a child” is fitting here, if we swap the child for a large scale online campaign. How do ecommerce companies ensure optimal functioning during this hectic time?

For ecommerce solutions provider aCommerce, the company plans approximately two months ahead to accommodate the spike in orders for clients that participate in the sales event.

“We increase our manpower by three times through temporary contracts and run 24-hour operations during spike times such as 11.11 to ensure customer demands are tended to,” says Phensiri Sathianvongnusar, COO at aCommerce Thailand.

The temporary staff are hired through an agency and receive 2-3 days of training for their specific tasks prior to the sales event.

During the spike period, aCommerce also uses its multi-shipping platform to tap into over 20 courier networks to ensure that deliveries are made on time, for the best rate and no order gets dropped, as time and speed are the most crucial things during the campaign period.

11.11 southeast asia

“Inventory planning is crucial to campaigns such as 11.11 and 12.12, so we use historical data from previous years’ events to determine what types of products tend to be popular during big sales and avoid stock shortage,” adds Phensiri.

For brands that are not participating in the 11.11 campaign, they are part of the express line which ensures that their products still remain a priority during the campaign period.

A league of our own

Using China’s 11.11 as a backdrop, Southeast Asia’s online marketplaces are carving out their own versions of the mega-sale but they cannot simply replicate Alibaba to find success.

Southeast Asia can potentially leapfrog China with the region’s explosive mobile growth and gaining middle-class. Big campaigns such as 11.11 can only grow in success every year as more consumers move online. Mobile first platforms such as Shopee are already moving fast and capturing the surging mobile market in Southeast Asia, mirroring the rise of mobile shopping in China, where 72% of purchases during last year’s 11.11 came from mobile.

The positive reception and the duration of the campaigns is a testament to the region’s growing appetite for ecommerce, perhaps an indication that we are positively inching away from China’s shadow.

By Anutra Chatikavanij

Catch up on the biggest ecommerce headlines you should know for today.

1. ZALORA brings see now, buy now model to Singapore fashion week 

As the Official E-Tail Partner, ZALORA will be hosting a shoppable Singapore Fashion Week microsite on ZALORA.com that will feature curated collections from Fashion Futures Showcase and Singapore Fashion Week Access. Read the rest of the story here.

 

2. IBM partners with Singapore startup FreshTurf to use cloud, blockchain for parcel delivery

The partnership will create a network of storage lockers for shipping and parcel delivery throughout the city-state. The locker ledger network is designed to help improve the “last mile” of delivery services for consumers and businesses. Read the rest of the story here.

 

3. Visa Takes Inspiration From Bitcoin For Cross-Border Payments

the company recently rolled out a new technology aimed at taking on a new market by offering international B2B payments. The product is called Visa B2B Connect and,it will use a network modeled after the one powering bitcoin to navigate the complex world of cross-border payments between two companies. Read the rest of the story here.

Here’s what you should know before the meetings start this morning:

 

1. Thailand’s Tesco Lotus partners with Lazada to bring kiosks to upcountry areas

Tesco Lotus announced the launch of Lazada kiosks at Tesco Lotus Express and Talad outlets, so that customers can select from the extensive offerings in the Tesco Lotus shop on Lazada and conveniently have the products delivered to their homes. Tesco Lotus plans to introduce the kiosks at 200 stores every year, particularly in upcountry areas, to allow customers to have better access to products and services while saving time and travel costs. Read the rest of the story here.

 

2. Revenue up 36% for Zalora parent

The Lazada and Zalora parent is paring back its losses after divesting operations in two markets. With operating losses nearly halved and excluding disposals in India and Southeast Asia, Global Fashion Group (GFG) has reported a 36.3% rise in net revenue. Read the rest of the story here.

 

3. Facebook Messenger adds group chat Polls and AI payment suggestions

Facebook’s chat app wants to help you and your friends decide where to go for dinner or what movie to see, then use machine learning to remind you to pay them back. Read the rest of the story here.