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Tag: ecommerce

  • Business giants eye Singapore as springboard into South-east Asian e-commerce market

    Business giants eye Singapore as springboard into South-east Asian e-commerce market

    With South-east Asia’s Internet economy set to rocket to hundreds of billions of dollars by 2025, international business giants are eyeing Singapore’s strategic location to gain access into the region’s e-economy, in particular, e-commerce.

    In recent months, the Republic has seen several big names pump billions worth of investments into local e-commerce companies, including one investment by Chinese e-commerce giant Alibaba in Singapore online shopping website Lazada.

    This comes as brick-and-mortar retail giants pump up efforts to take their offerings online to ride the digital retail wave.

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

    “If you compare the overall share of e-commerce in Singapore to its overall economic development level, it is quite low. (But) Singapore has the potential because it is a hub for the South-east Asian economy. (And) because there is market potential for Singapore, of course foreign companies will come here, either independently or in collaboration with local companies. They can acquire local companies, just like Alibaba did,” said e-commerce and online retail expert Chu Junhong, associate professor of marketing, National University of Singapore Business School.

    “E-commerce is a trend, (retailers) cannot avoid it. They must take advantage of this trend; it is good for them. The good news is that if retailers go online, they can open their market to the whole of South-east Asia. However, they have to be ready for the increased global competition when they go online,” Ms Chu added.

    According to a report by Internet giant Google and Singapore state investment firm Temasek Holdings in May, South-east Asia’s Internet economy is expected to surge to nearly US$200 billion (S$273 billion) by 2025, up from US$31 billion last year.

    The e-commerce segment alone is expected to make up almost half of the entire Internet economy in the region, with its value estimated to jump to US$88 billion by 2025, a 16-fold increase from US$5.5 billion last year.

    Filtering down to Singapore, the e-commerce market here is expected to grow more than five times to about US$5.4 billion, the report showed.

    Singapore has plans to increase that figure even further.

    Last month, at the launch of the retail industry transformation map (ITM), the Government said it would look at e-commerce as a key enabler for retail businesses to transform, with the aim of growing the e-commerce share of total retail receipts from the current 3 per cent to 10 per cent by 2020.

    Some brick-and-mortar retailers are embracing the digital wave in bold moves.

    Local tech retailer Challenger opened its online store hachi.tech in April, saying that the new portal would deliver 50 per cent of its revenue in just three to five years.

    It also set up a unit — Challenge Ventures — last year with a budget of S$20 million to invest in online companies and enable the firm to expand its e-commerce strategy.

    International companies are also investing or participating in Singapore’s local e-commerce platforms, as a means to tap into both the local and SEA markets.

    In April, Alibaba agreed to buy a controlling stake in privately owned Singapore company Lazada for US$1 billion. Lazada is a pioneer of e-commerce in many South-east Asian countries, with a presence in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

    This month, Chinese gadgets company Lenovo launched an e-store on Qoo10, a Singapore-based e-commerce platform. With the opening of the e-store, customers will be able to browse Lenovo’s range of mobiles, tablets, PCs and accessories on Qoo10’s platform.

    Other than Singapore, Qoo10 has marketplaces in Indonesia, Malaysia, Hong Kong, Japan, Korea and China.

    Mr Max Bittner, CEO of Lazada Group said in an interview: “We believe that there are still significant opportunities for online shopping in South-east Asia and the six markets that we are in. Our focus remains on these six markets where we are raising the customer experience and becoming the leading one-stop online shopping and selling destination of choice for consumers.

    “Alibaba’s partnership is helping us in this goal by providing the know-how, systems and processes to enhance the online experience for our customers and sellers in these markets.”

    Mr Bittner added that the deal with Alibaba would help Lazada accelerate its goal of providing 560 million consumers in the region with access to the broadest and most unique assortment of products, bringing significant synergies that would enhance the online experience for both buyers and sellers.

    Mrs Kee Ai Nah, group director (industry & enterprise), Spring Singapore, said: “For both sellers and buyers, e-commerce has opened up options that were not possible in the physical world. To grow topline and stay competitive, businesses have to reach new customers through multiple channels. As e-commerce platforms allow businesses to internationalise without a physical footprint, and since this channel is already well-developed, Spring encourages all enterprises to explore the possibilities of selling online.”

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  • Global e-commerce grocery market has grown 15% to $48bn North Asia

    Global e-commerce grocery market has grown 15% to $48bn North Asia

    Sales of groceries through e-commerce platforms reached $48 billion in the 12 months to June 2016, according to a new report by Kantar Worldpanel, published today.

    The third annual Future of E-commerce in FMCG study shows that e-commerce now accounts for 4.4% of all FMCG sales. Whilst the e-commerce channel is growing, the FMCG market as a whole is flat, increasing just 1.6% during the same period.

    Stéphane Roger, Global Shopper and Retail Director at Kantar Worldpanel, comments: 

    “FMCG growth is slowing, but our data shows that people are looking for more convenience, which can be met by shopping online. Grocery e-commerce, although currently small, with only one in four people shopping online, is growing fast. We forecast it will grow to 9% of the market and be worth $150bn by 2025. With new entrants such as Amazon expanding rapidly, the industry is facing a shake-up.”

     

    “Although online sales have the potential to cannibalise in-store sales, it is vital that retailers act quickly to develop a strong e-commerce presence.  The retailer that goes online first in each market can enjoy a far higher market share – this can be a difference of at least 40% in France and up to three times more in the UK. In this report we’ve looked at how retailers and brands are finding ways to work across all channels.” 

    Rank

    Country

    E-commerce share of market 2016 (value)

    1

    South Korea

    16.6%

    2

    Japan

    7.2%

    3

    UK

    6.9%

    4

    France

    5.3%

    5

    Taiwan

    5.2%

    6

    China

    4.2%

    7

    Czech Republic

    2.1%

    8

    Spain

    1.7%

    9

    The Netherlands

    1.7%

    10

    USA

    1.4%

    Key findings from the report include:

    Global hotspots: a puzzle of performance

    E-commerce growth is not equal around the world and is not explained by connectivity.  It might not be surprising that digitally developed South Korea is the world’s largest online FMCG market by value share (16.6%). In the USA however, only 1.4% of groceries are bought online. China is the market which saw the biggest growth in the last 12 months, 47% – to a value share of 4.2%.  Europe has a relatively low adoption of e-commerce in all countries except the UK with 6.9% of the market and France which has 5.3%. France is a relatively unique e-commerce market as their success is with the Drive model whereby the online shop is collected from the store. Adoption across Latin America is currently very low with the exception of Argentina at 1%.

    Online generates more loyalty

    Once shoppers have begun shopping online they are more likely to continue doing so. Among this group in the UK, almost a quarter (23.3%) of all spend is through e-commerce, resulting in fewer trips to physical stores. 

    Impulse needs encouraging

    Comparative research across the UK, France and China has shown that one year after starting to shop online, shoppers in the UK and France spent less overall (-2.4% and -1.4% respectively), this is because there is less impulse shopping.  Brands need to work on driving impulse purchase online – for example by making suggestions for complementary products. In China, 50% of FMCG’s online sales is beauty, it is seen as a prestige occasion and they actually had an increase in sales after one year (+8.1%).

    Online shopping baskets are usually bigger

    Shoppers generally spend more per trip online than they do offline, so potentially this could be a lucrative group to win.  In the UK for example, the average shop online is $59 compared to $15 in-store.

    Brands that make it onto online shopping lists are more likely to stay there

    Kantar Worldpanel data shows that 55% of online shoppers use the same shopping list from one purchase to the next.  Brands need to focus their efforts on getting onto that list.

  • Online shoppers prefer control to speed, says Deutsche Post DHL study

    Online shoppers prefer control to speed, says Deutsche Post DHL study

    Rather than speedy deliveries, online shoppers prefer to be able to nominate delivery times and locations, according to a new study by Deutsche Post DHL Group.

    They also want greater visibility, such as easily accessible shipment tracking and details of the delivery company.

    “Speed isn’t everything,” says DHL eCommerce CEO Charles Brewer. “Through the survey of more than 1000 online shoppers in Germany, we found out that 78 per cent of them wish to specify the time for their deliveries, while 68 per cent want control over the arrival date for their orders.

    “Online shoppers also gain satisfaction from a greater choice of delivery location, with 94 per cent of respondents saying they are very happy when they can specify parcel lockers like DHL’s Packstations as alternative delivery addresses, while one in every two say they would like the option to have delivery to a trusted neighbour in their absence.”

    Print

    The trends are similar in Asia Pacific. “In a region where fast deliveries have become the norm, Asian e-tailers can no longer differentiate themselves on speed alone,” says DHL eCommerce Asia Pacific CEO Malcolm Monteiro. “We’ve also seen a growing number of e-tailers in Asia seek greater customisation and flexibility in the range of delivery options we offer their customers.”

    Quick deliveries are still important for some buyers, favoured by 66 per cent of those surveyed.

    Also, 88 per cent of online shoppers want direct access to shipment tracking, while 84 per cent want to know the name of the company making the delivery.

    “A successful delivery is no longer solely determined by the speed of the last mile – it requires a whole new level of digital infrastructure, from real-time fleet tracking to SMS alerts and mobile apps,” says Monteiro. “Providing that level of visibility determines how much trust customers will put in any eCommerce brand, and how effectively it can grow and maintain customer loyalty.”

  • Alibaba-KFC partnership more than a shareholding

    Alibaba-KFC partnership more than a shareholding

    Why did Alibaba decide to take a stake in Yum China, buying into the Chinese fast food market?

    The Alibaba-KFC partnership was growing strongly long before the tech paid $50 million for a stake in Yum China.

    Last week, the fast food company opened a KFC flagship store on Tmall, the eCommerce giant’s B2C marketplace, to cultivate deeper ties with more customers, chief among them China’s internet-savvy youth.

    The KFC Tmall store isn’t selling chicken outright, but it is selling the sizzle of the KFC brand by encouraging consumers to join its membership program through the sale of e-coupons and gift cards that can be redeemed at its restaurants by using the Tmall or Mobile Taobao apps. KFC has more than 5000 restaurants in over 1100 cities in China, and the company is hoping to “build a new O2O [online-to-offline] model” that uses digital marketing to boost traffic at its brick-and-mortar stores, said Guan Bin, digital manager at Yum Brands.

    Connecting with China’s mobile-happy youth market can be an important strategy for any fast-food chain, but it’s particularly key for Yum China, which has seen its once-dominant position in the mainland fast-food market eroded by growing competition and food-safety scares. KFC’s market share in China has dropped from close to 40 per cent in 2012 to 23.9 per cent last year, according to Euromonitor International. Same-store sales in China outlets declined 4 per cent in 2015, Yum Brands disclosed in its 2015 financial annual report.

    Against this backdrop, KFC is making what Guan says is the company’s first foray into eCommerce (Yum’s Pizza Hut restaurant chain already has a Tmall presence). The goal is to boost KFC brand awareness and customer base by leveraging Tmall’s “massive traffic” as well as Alibaba Group’s marketing ecosystem and wealth of online consumer data, he said.

    “By opening a shop on Tmall, we want to convert more customers to members, and understand their consumer behavior both online and offline so we can come up with tailored discounts and awards for them,” Guan said. KFCs in China last year adopted Ant Financial’s Alipay cashless payment solution, which includes app-based food ordering and home delivery.

    For its September 6 debut, KFC’s Tmall shop offered bulk purchases of top-selling meals at discounted prices, such as 30 breakfast meals for RMB 199 ($30) and five family meals at RMB 320 ($48). The debut included KFC’s participation in one of Tmall’s Super Brand Day marketing campaigns as well as an augmented reality game: Sept. 2-6, users armed with smartphones and the Tmall app were able to “capture” images of Tmall’s cat mascot in physical KFC shops, which entitled them to buy products from KFC’s Tmall shop for just one yuan.

    On September 6 alone, some 3 million users visited KFC’s Tmall page, according to Tmall. Coupons for the purchase of more than 80,000 30-piece chicken nugget packs–totaling some 2.4 million nuggets–were sold on the day. The results were “beyond our expectations,” Guan said.

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  • New roadmap issued for Singapore retail

    New roadmap issued for Singapore retail

    Guidelines aimed at spurring new life into the Singapore retail industry have been launched by the government.

    Its Retail Industry Transformation Map (ITM) follows the release of a food services roadmap as the city-state’s economy slows.

    According to Spring Singapore, an agency under the Ministry of Trade and Industry responsible for helping Singapore enterprises grow, the launch of the Retail ITM takes into consideration such challenges as fewer business travellers, lower spending per individual, and consumer shifts from brick-and-mortar to eCommerce. Consumers have also turned to foreign eCommerce sites to find a wider variety of goods at lower prices.

    “Retailers can look to expand their markets locally and internationally through e-channels,” says Spring Singapore, which encourages retailers to adopt an omni-channel strategy to better reach out and support targeted end-to-end consumer needs across both online and offline channels.

    Singapore has about 21,000 retail establishments which contribute nearly 1.4 per cent to GDP and employ about 3 per cent of the total workforce.

    Aside from optimising productivity, the ITM also aims to focus on innovation and the adoption of new technologies to drive competitiveness. It will also work on the industry’s flexibility to adapt to evolving trends in jobs and skills.

    Strong industry partnerships and internationalisation are considered key elements in pushing the industry’s transformation.

    Doubts over sale

    Meanwhile, the future of the Great Singapore Sale (GSS) could be in jeopardy after 23 years of helping bolster the city’s reputation as an international shopping destination.

    After three years of falling sales during the GSS, the organiser, the Singapore Retailers Association(SRA), and the Singapore Tourism Board (STB) are about to look at the annual event’s direction.

    “We need to discuss if there is a point in continuing it, or whether there is a need to reformat it,” says SRA president R. Dhinakaran after official sale figures confirm that efforts this year to arrest the slide have failed (this year the GSS ran for 10 weeks from June to the middle of last month).

    Singapore Department of Statistics figures released last week show a 3 per cent fall in July retail sales, excluding motor vehicles. This follows a similar dip in June’s figure.

    Orchard Road Business Association (ORBA) executive director Steven Goh believes it is time to reformat the event. He says it should be held when Singaporeans are not away during the school holidays.

    He urges retailers to come to a consensus on saving their best deals for the GSS. “That way, it will be really one-off and impactful.”

    Singapore is also competing with similar events in the region, such as the 1Malaysia Mega Sale Carnival, usually from June to August. Started in 2000, the nationwide promotion includes contests, prizes and street food.

    Launched the same year, the Korea Grand Sale runs from August to October, and January to February each year. It features celebrity performances and opening-day events at the country’s airports.

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  • Coach Tmall flagship abandoned

    Coach Tmall flagship abandoned

    The official Coach Tmall flagship shop has been abandoned.

    Luxury bag brand Coach Inc says it will replace its shop on Alibaba Group Holding’s business-to-consumer sales site by selling directly through its own website and on its WeChat account, the social-media app run by Alibaba rival Tencent Holdings. Coach has offered coupons and launched a media campaign on WeChat.

    A Coach spokeswoman says the company wants to consolidate resources and will continue to look for innovative ways to leverage digital and social platforms.

    Alibaba says Coach products are still available on TMall from other merchants.

    Selling shoes, purses and accessories, Coach was one of the first US luxury brands to launch an official store on the TMall. It started with a temporary pop-up store from December 2011 to January 2012, opening a full store in 2015.

    Early this month, nearly a dozen trade groups wrote to Alibaba complaining that it was not doing enough to combat counterfeits. And the loss of Coach comes as Alibaba faces added scrutiny from a US trade agency as to whether it should be added to a list of marketplaces that are known for selling counterfeits.
    Alibaba’s Taobao consumer-to-consumer marketplace was on the list years ago, but was removed in 2012.

    Meanwhile, LVMH Moët Hennessy Louis Vuitton SE’s Guerlain has just opened a flagship store on TMall, and MakeUp Forever and Sephora, two other brands under the LVMH umbrella, also have TMall stores. Also, the cosmetics unit of Salvatore Ferragamo will launch its store later this month.

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  • Lazada to join Tmall.com for 2017 Asean expansion

    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.

    The company will join forces with Alibaba’s Tmall.com platform and its logistics and payment systems to drive the market, said Alessandro Piscini, chief executive of Lazada Thailand.

    Global marketing research firm Nielsen forecasts that Thailand’s online retail e-commerce market, excluding online travel, will reach US$3 billion by 2020, up from $1 billion in 2015.

    Online retail e-commerce market in Southeast Asia is expected to value at $20 billion in 2020, up from $5 billion last year.

    The e-commerce market will be driven mainly by middle-income earners and the growing number of internet users, according to Nielsen.

    The number of internet users in Thailand is projected to exceed 50 million by 2020, up from 40 million in 2015.

    Mr Piscini said the synergy between Alibaba and Lazada can be used to support local retailers and manufacturers in expanding to cross-border markets successfully.

    Chinese retailers and manufacturers will also be able sell their products in Thailand through Lazada’s website.

    Lazada also plans to work with Ant Financial, the Alibaba affiliate that runs Alipay and other financial services in China, to facilitate online payment service to local retailers and merchants, Mr Piscini said.

    He explained Lazada plans to combine its six websites in Southeast Asia into a single website within two years, and continue sales through one retail e-commerce channel.

    Lazada Thailand’s marketplace platform accounts for 85% of sales revenue, with the remaining 15% from its own marketplace platform selling products from its own website.

    To help local merchants and retailers boost their sales, Lazada will conduct an online festival from Nov 11 to Dec 12.

    “We expect sales volume at this year’s event to be 3-5 times higher than last year’s event,” said Mr Piscini.

    Lazada has expanded the range of products sold at its marketplace to over 2 million items.

    Its best-selling products include cosmetics, fashionable clothes and IT gadgets. “We are focusing more on the high-growth product segments like auto accessories and pet care products,” said Mr Piscini.

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  • Lalamove Satisfies City’s Hunger for Food Delivery

    Lalamove Satisfies City’s Hunger for Food Delivery

    Hong Kong based on-demand delivery app Lalamove is moving into restaurant and food delivery across Bangkok to feed the growing appetite for appetizing restaurant dishes and produce to be brought straight to customers’ doors.

    Restaurants and food producers invited to use Lalamove’s 24/7 dedicated courier service receive a stamp of approval with a ‘Lala Recommended’ graphic featured on Lalamove social media. Invitees are selected for their high quality cuisine, outstanding reputation and popularity amongst customers.

    Alongside this insignia, dishes and produce are promoted on Lalamove’s Facebook and Instagram pages, giving businesses a real boost and satisfying demand for reliable delivery for hungry customers too.

    In return, ‘Lala Recommended’ restaurants and food companies are promoting Lalamove services via their own social media too; reminding customers that Lalamove is the go-to app for all delivery needs in the city, from important documents via motorcycle courier to large items of furniture via pickup truck, and everything in between.

    The food delivery scheme which began recently already offers a wide array of  tempting ‘Lala Recommended’ cuisine, from high-class dinners to nourishing comfort foods and lunches for health-conscious workers across the city. This includes fresh seafood from Lobster Gangster and The Cooking Crab, Japanese dishes with Taka Sashimi Express, plus juices and wheatgrass shots with Own Your Own Fresh, plus much more.  

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  • Coupang Sales Growth Bolsters SoftBank’s Bet on Korean Retailer

    Coupang Sales Growth Bolsters SoftBank’s Bet on Korean Retailer

    Coupang’s net sales more than doubled in the first half of the year, helping to validate SoftBank Group Corp.’s bet that the South Korean web retailer will carve out a piece of Asia’s booming e-commerce market.

    Net revenue rose to 868 billion won ($782 million) in the first half of the year, helped by retail expansion and increased margins, according to a financial document seen by Bloomberg. Gross merchandise volume climbed 26 percent to 1.8 trillion won in the period, the document showed.

    SoftBank, whose investment in Alibaba Group Holding Ltd. has zoomed past $70 billion, backed Coupang in June 2015 with $1 billion in financing that valued the Seoul-based company at $5 billion. The bets are part of billionaire Masayoshi Son’s quest to replicate his success with Alibaba, an investment that started with a $20 million stake more than 15 years ago. SoftBank’s expansion in Asia has also led to deals with India’s Snapdeal and Indonesia’s Tokopedia.

    The number of products offered by Coupang more than tripled to 700,000 items from a year ago, according to the document. The startup launched its Rocket Pay services and opened a fulfillment center in Korea, the first of two planned for this year, the document showed.

    Matthew Nicholson, a spokesman for SoftBank, declined to comment. Coupang Chief Executive Officer Bom Kim didn’t immediately reply to an e-mail seeking comment. Backers of Coupang include Sequoia, Greenoaks Capital and Rose Park Advisors.

    The startup, founded in 2010, is burning through cash to expand and capture users as it competes with sites such as Ticket Monster, a Korean online retailer that’s owned by Groupon Inc., KKR & Co. and Hong Kong-based Anchor Equity Partners. Forward Ventures, Coupang’s parent, said its operating loss widened to 547 billion won in 2015, compared with a 121.5 billion won loss in 2014.

    SoftBank’s e-commerce bet in India is under even more pressure. Snapdeal, which has struggled to narrow the lead of its home-grown rival Flipkart Ltd., now faces competition from Amazon.com Inc. In June, Amazon Chief Executive Officer Jeff Bezos pledged to invest another $3 billion in his company’s Indian operations, bringing the total to $5 billion.

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  • Santa Rita launches on Tmall

    Santa Rita launches on Tmall

    The Alibaba Group which operates Tmall is the biggest e-commerce platform in China with more than 400 million users and 120 million clicks per day. Tmall is Alibaba’s B2C online retail platform that has recently listed other big brand wine accounts, such as Wine Australia, Mondavi andASC Fine Wines.

    Earlier this year, Jack Ma, founder and executive chairman of Alibaba Group announced the launch of the first ever ‘Wine Day’. Hoping to emulate the success of ‘11.11 Singles Day’ which recorded a massive US$14.32 billion in sales in just 24 hours, this event, called the “9.9 Wine & Spirits Festival”, took place today at 9am CST.

    The Santa Rita online flagship store will offer key wines from their portfolio along with specific offers and promotions targeted China’s 688 million internet users – most of whom connect to Tmall via their smartphones.

    Terry Pennington, Santa Rita’s east region export director, said the listing was a “significant milestone” in the estate’s route-to-market in China.

    “This opportunity provides an excellent platform not only for retail but one from which we can communicate to and with the many millions of Chinese e-consumers our brand heritage, values and story,” he said.

    Established in 1880, Santa Rita is one of Chile’s oldest and most renowned wineries and owns over 2,500 hectares in the wine valleys of Limarí, Casablanca, Leyda, Maipo, Colchagua, Apalta, Maule, Rapel and Curico.

    Brands in the Santa Rita portfolio include 120, Secret Reserve, Reserva, Medalla Real, Floresta, Pehuen, Triple C and Bougainville with the top wine being Casa Real.

    Santa Rita is part of the Santa Rita Estates (SRE) stable comprising three key wine brands: Santa Rita and Carmen from Chile and Doña Paula from Argentina.

  • Chinese Think Tank Says 1/3rd of Mainland Malls to Close Within 5 Years

    Chinese Think Tank Says 1/3rd of Mainland Malls to Close Within 5 Years

    More bad news for China’s struggling brick and mortar retailers as a recent report from the Chinese Academy of Sciences and Social Sciences Academic Press predicted as many as one-third of all shopping centers in China will close their doors during the next five years.

    With ecommerce heavyweights Alibaba and JD.com dominating the retail sales, some of China’s largest mall operators are already feeling the pinch. Joy City Property and Maoye International posted profit warnings earlier in the year as buyers opt to shop online.

    Change Predicted for All Mainland Retail Centres

    The report by the respected central government think tank predicted change across the board for Chinese shopping centres, foreseeing that, in addition to the malls expected to close, another third will be transformed into experiential shopping centres, while the remaining third will adopt an online to offline (O2O) model that integrates the Internet with physical shopping.

    While two decades ago China had an undersupply of malls, the country has quickly overcome the deficit, with the mainland now home to 4,000 shopping centers — three times the US total. That population of malls is expected to grow to 10,000 by 2025, according to the CASS report. Research from JLL revealed 40 million square metres in new mall space is expected to enter the market between 2015 and 2017.

    Department stores in the country fared still worse than shopping centres, with sales growth contracting 0.7 percent during 2015, according to data from the Fung Business Intelligence Centre.Malaysia-based department store Parkson, which operates 59 outlets in China, announced it was selling assets to offset heavy losses in the country.

    Chinese Shoppers Swap Malls for the Internet

    Jack Ma big mouth

    Jack Ma’s ecommerce empire has been taking a bite out of China’s traditional retail sector

    According to Reuters, Suning, one of China’s largest retail chains, needed 12 months to bring in the same amount of sales that Alibaba’s Tmall website generated in two months. And while the electronics retailer is able to keep the lights on, others have not been so lucky.

    A total of 138 department stores, 262 supermarkets and 9,464 clothing stores closed in China between 2012 and 2015 according to data from the Business Economics Institute under Beijing Technology and Business University. That goes hand-in-hand with findings from the McKinsey Global Institute that showed ecommerce accounted for 20 percent of all clothing purchased and 15 percent of all household goods purchased in 266 cites in China.

    McKinsey predicts ecommerce marketplaces will bring in anywhere from $420 billion to $650 billion in sales by 2020. That is in stark contrast to the slowing sales physical retailers are coping with.

    Data from Fung Business Intelligence Centre showed there was 4.3 percent sales growth last year among China’s top 100 retail chain operators, the lowest total since 2007.

    Physical Stores Not Going Down Without a Fight

    While the mainland’s earth-bound retail sector has been taking a beating, not everyone is ready to give up. China Properties Group, a Shanghai-based developer which owns and operates the Concord City mixed-use project and the World Trade Plaza in Chongqing, took out a full page ad in the New York Times international edition late last year pleading with consumers to boycott online shopping.

    Other retailers are opting for a more modern way to fight back against China’s growing ecommerce sector.

    Of China’s top 100 retail chain operators, 83 currently have their own online stores in 2015. Of this number, 20 also have a mobile shopping app for consumers to use.

    “Physical stores should abandon the old model. They can use online shopping and WeChat to facilitate transactions and provide more convenient service,“ Hong Tao, director of the Business Economics Institute, proclaimed.

  • SEA e-commerce revenue to pass $25b by 2020

    SEA e-commerce revenue to pass $25b by 2020

    Southeast Asian e-commerce revenues are likely to exceed $25 billion by 2020, Frost & Sullivan has predicted.

    This is more than double the $11 billion revenue in 2015, which the analyst firm said was achieved despite many setbacks as acquisitions, market exits and retailers’ struggles with profitability.

    New research, however, shows that growth will continue as the industry evolves.

    In 2015, Malaysia and Thailand were the largest e-commerce markets in Southeast Asia in 2015, generating revenues of $2.3 billion and $2.1 billion, respectively.

    Frost & Sullivan’s study, however, noted that both of these markets are expected to be eclipsed by emerging economies in Southeast Asia, including Vietnam and Indonesia.

    Meanwhile, total revenues from business-to-consumer (B2C) e-commerce in the six largest Southeast Asian countries – Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam – are projected to increase at a compound annual growth rate (CAGR) of 17.7%.

    “Despite being relatively young, the e-commerce market in Southeast Asia is developing quickly, thanks to the astounding rate of digital adoption in the region,” said Cris Duy Tran, lead consultant in e-commerce and digital transformation, at Frost & Sullivan Asia-Pacific.

    He said though that with fewer players in the market, e-commerce firms are beginning to compete beyond price points and logistics and moving into new areas such as Online-to-Offline (O2O) e-commerce and loyalty programs.

    Meanwhile, services such as Carousell, Tokopedia, and Shopee are aggressively pursuing a ‘mobile first’ strategy, and Frost & Sullivan expects to see more sector-specific services in areas such as travel, food delivery, and luxury goods.

    Challenges, however, remain such as low credit card ownership that stands at less than 7% in all Southeast Asia markets (except for Singapore and Malaysia).

    In some countries, more than 50% of the population does not have bank accounts, making payment the biggest challenge for e-commerce companies in the region. Logistics is another issue hampering e-commerce growth, especially in areas with complex geographies such as Indonesia and the Philippines.

    “The region is well-positioned for more M&A activities during the forecast period, and we expect to see more exciting market developments in the near future,” concluded Tran.

  • Indonesia asks Alibaba’s Jack Ma to advise its e-commerce development

    Indonesia asks Alibaba’s Jack Ma to advise its e-commerce development

    Indonesia has asked the chairman of China’s Alibaba Group Holding Ltd, Jack Ma, to act as adviser in the development of the Southeast Asian country’s nascent e-commerce industry, according to a video released by the government.

    Indonesia has the world’s fourth-largest population, boasting a young, internet-savvy demographic, and a thriving e-commerce market that is increasingly attracting global investors.

    Earlier this year, Alibaba bought a controlling stake in Southeast Asian online retailer Lazada Group for around $1 billion, while a group of investors led by private equity firms KKR & Co LP and Warburg Pincus LLC poured more than $550 million into Indonesian ride-hailing start-up Go-Jek.

    To promote growth in the e-commerce industry, the government is setting up a “steering committee” consisting of 10 ministers for which it has asked Alibaba’s Ma to be an adviser, Communication and Information Minister Rudiantara said.

    “The thinking behind this is to make Indonesia’s positioning in the international marketplace more prominent,” Rudiantara said in a video released by the state secretariat. The minister, like many Indonesians, only uses one name.

    Rudiantara is part of President Joko Widodo’s delegation attending the G20 summit in the Chinese city of Hangzhou.

    An Alibaba spokeswoman confirmed that Ma was asked to be adviser to Indonesia’s e-commerce steering committee, but declined to say whether he had accepted the offer.

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  • Asian online shoppers habits uncovered

    Asian online shoppers habits uncovered

    Asian online shoppers research, locate, engage with and purchase products and services in entirely different ways in different markets, according to a new report.

    For example, almost all consumers in Indonesia knowingly provide brands with wrong details, including name (93 per cent), phone number (94 per cent), and email address (95 per cent) when researching or shopping online

    And the biggest driver of online-to-offline (O2O) conversions is with email in Singapore; SMS in Indonesia; chat apps in China; social media in Malaysia and Thailand and video ads in Hong Kong.

    And 27 per cent of consumers in China and 10 per cent of consumers in Singapore unknowingly input wrong payment details, breaking the region’s eCommerce’s momentum.

    Those are among many takes from The Digital Consumer View 2016 (Asia) report, released by global information services specialist Experian today, containing research from International Data Corporation (IDC), aimed at helping businesses better understand digital consumers in Asia.

    The report reveals how consumer behaviour varies across the key Asian markets of Singapore, Malaysia, Indonesia, Thailand, Hong Kong, and China, based on surveys with over 1200 digital consumers.

    Differences exist across channels (SMS, app notifications, email, social media, chat apps), devices (smartphone, feature phone, Wi-Fi/cellular tablet, wearable) and content (ads in email, ads in mobile apps, ads in social media, video ads on websites, and search ads). The findings highlight the complexity of reaching digital consumers in Asia across many channels, but also highlight how crucial that is, says Jeff Price, MD of Southeast Asia at Experian.

    “While the region is fast-growing, consumer behaviour in each market has unique disparities. Businesses today cannot succeed without intelligent insights based on consumer data,” he advises.

    “Asia is in the midst of a great digital revolution, with an explosion of smart devices, social media interactions and eCommerce transactions. While this evolution has greatly enabled and empowered both sides, it has also challenged businesses to be more effective and targeted in the way they communicate and market to this modern, digital-savvy consumer.

    “For companies to keep up with digital consumer behaviours – how they act on information – it’s absolutely vital to adopt and leverage what their consumers are providing them with every day – invaluable data. Businesses slow to act on this data will see their competitive advantage erode.”

    Key findings

    Experian - DCV - Region - Key findings

    • Search and discovery: Social media is the top channel in Singapore (31 per cent), Malaysia (49 per cent), Indonesia (67 per cent) and Thailand (58 per cent). It’s equally important as chat apps in China (47 per cent); in Hong Kong, video ads (63 per cent) trumps all.
    • Triggering product interest: Social media, once again, is the key driver in Singapore (28 per cent), Malaysia (44 per cent), Thailand (49 per cent) and Hong Kong (25 per cent). However, in Indonesia it’s SMS (62 per cent), and in China it is chat apps (48 per cent).
    • Triggering purchase intent: Email is the biggest driver of online to offline conversion in Singapore (27 per cent); SMS tops in Indonesia (57 per cent); chat apps in China (45 per cent); social media in Malaysia (44 per cent) and Thailand (51 per cent); and video ads tie with social media in Hong Kong (23 per cent).
    • Finding good deals: For unplanned purchases stemming from promotions, email leads in Singapore (34 per cent); social media in Malaysia (50 per cent), Indonesia (68 per cent) and Thailand (58 per cent); SMS in Hong Kong (36 per cent), and social media in China (51 per cent).
    • Brand engagement: Email is key for marketers to build engagement in Singapore (58 per cent) and Thailand (60 per cent); chat apps in Malaysia (62 per cent) and China (70 per cent); banner ads in Indonesia (56 per cent), and SMS in Hong Kong (61 per cent). While email is important, marketers need to be wary: more than 70 per cent of consumers reported receiving too many emails, up from 52 per cent in 2015.

    Experian - DCV - Region - The rise of omni-channel engagement 1

    Shiv Putcha, associate director, consumer mobility and telco strategy with IDC Asia Pacific, says businesses and brands cannot afford to ignore Asia’s multi-trillion-dollar digital commerce market. China alone is now the world’s largest retail market.

    “The challenge lies in the fact that the region has extraordinary differences – language, economy, purchasing power – and consumer behaviours, especially with the digital generation. That uniqueness will not diminish over the next few years and may even increase, making it challenging for marketers not using data-driven insights to research, plan and execute effectively. The Digital Consumer View 2016 (Asia) will hopefully serve as a valuable guide to deciphering some of these key trends, mapping the path forward for brands and their connected consumers.”

    Experian - DCV - Region - Top 3 types of ads that influence consumer's buying behavior

    Key Learnings for marketers in Asia

    • Over-reliance on a single marketing channel will not work. Depending on the country and its current state of digital sophistication, marketers need to think carefully about the right mix of channels to employ.
    • Quality over quantity. Consumer preferences for receiving promotional material varies from market to market, and by specific use cases. On a broader level, more is not necessarily better. A relevant and targeted message will ensure better conversion. Too much, and consumers are inclined to unsubscribe, delete, or mark content as spam.
    • The quality and integrity of data is crucial for marketers to find success. A significant number of consumers across the region either knowingly or unknowingly provide inaccurate information, which in turn causes errors and inaccuracies in marketer’s data sets. Around 27 per cent of consumers in China but only 10 per cent in Singapore unknowingly input wrong payment details; 40 per cent of consumers in China, and over 20 per cent of consumers in the rest of the region provide a wrong address at online checkout.

    Asia comprises 49.6 percent of the world’s Internet users, according to Internet World Stats (2016), digital commerce in the Asia-Pacific (excluding Japan) region will rise to US$17 trillion by 2019, up from US$7 trillion in 2015 according to International Data Corporation (IDC). The combination of rising incomes, increased consumption, acceleration of internet use, and the proliferation of mobile broadband access continues to unlock tremendous opportunities for marketers across the continent.

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  • How brands are using VR to improve customer experience in China

    How brands are using VR to improve customer experience in China

    Tech-enhanced customer experiences have always had a very receptive audience in China, and as a result, VR technologies are being widely embraced by both brands and platforms.

    China has the world’s biggest ecommerce market and by 2020, it will dominate the retail sector also, according to PwC. The sheer size of the country’s retail consumer market is one reason why the rest of the world sits up and takes notice when China adopts new technologies in this sector.

    And while the rest of us have been dipping our toes in the VR pool, trying out Oculus Rift headsets at trade shows and testing the low-tech, low-cost Google Cardboard on the relatively limited VR apps available via smartphone, China has been forging ahead with this new technology, putting it to practical use and building a market for virtual retail experiences.

    It’s no coincidence that China’s big three Internet platforms (Alibaba, Tencent and Baidu) have all invested significantly in VR, in what is expected to become a market worth $8.5 billion by 2020. these figures suggest that VR is no mere novelty to the businesses that shape the country’s economy.

    Alibaba

    Alibaba’s Buy+, launched last month, is a virtual reality shopping programme, which allows users to choose clothes and accessories via the headset, assisted by a virtual shopping assistant. It will give Alibaba’s 400 million users access to a VR shopping experience with 3D renderings for hundreds of products, and will eventually allow retailers to create their own VR stores.

    China_VR_Alibaba_Buy+_Alizila_600

    *Source: Alizila

    While it’s still in concept mode, Alibaba anticipates that the technology will become as central to the shopping experience as smartphones are today, picking up on and exploiting consumers’ appetite for ever-evolving and exciting experiences.

    Tencent

    Tencent has taken a different approach in its quest to dominate the VR market by launching its own operating system (Tencent OS) and VR console project – the miniStation. Tencent is focused on China’s gaming community to kick start user interest, and plans to integrate all of its services and apps into the platform, including WeChat and QQ. This will undoubtedly open up all kinds of opportunities for retailers to engage with customers in entirely new ways.

    China_VR_Tencent_miniStation_600

    *Source: Tencent’s miniStation for QQ and WeChat.

    As these ecommerce giants lay the foundations for a vibrant and viable VR market, physical retailers also have their sights set on the growing interest in this technology and how it can work for them.

    Suning + Gome

    For example, Chinese electronic retailers Suning Commerce Group and Gome Electrical Appliances Holding Ltd have done a deal with HTC to set up around 10,000 VR experience sites across China by the end of this year, including virtual rollercoasters and other adventurous in-store experiences.

    OnePlus

    Another example is smartphone manufacturer OnePlus. It developed a VR space station to launch its latest handset. As part of the campaign, 60,000 people were ‘beamed up’ to the space station where they learnt about the phone and its features. Within six hours, the conversion rate was an impressive 30%, giving a very promising return on investment.

    Takeaways

    What these pioneering retailers and retail platforms have learned is that VR has a number of advantages as an experience mechanism:

    • It allows them to showcase multiple products in a very cost-effective way – around 80% of the cost of building a traditional, brick-and-mortar showroom

    • There’s no physical limit to what VR can do – it’s possible to develop truly innovative and extraordinary experiences which would usually be out of reach. Going into space, on a rollercoaster, under the sea or any one of an almost endless list of scenarios can be developed and delivered to customers

    • There’s a huge appetite for VR experiences in China – according to industry analysts Canalys, the country will account for 40% of all VR headset shipments this year, and people are queuing up to try out local offerings from DeePoon, Pico, Pimax, Idealens and, most recently, Xiaomi.

    China_VR_DeePoon_600

    *Source: DeePoon homepage.

    As the market continues to develop, industry insiders say VR in China is reaching a game-changing tipping point. Yang Tao, general manager of Beijing-based VR startup SweetTech, told the China Daily in March: “The market feels like it did on the eve of the first iPhone when it was unveiled in 2007”. Given what happened to the smartphone market in the years since then, this is something retailers can’t afford to ignore.

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