Winners & Losers of eCommerce in COVID-19
On 6th Aug, experts from iHerb Korea, Nestlé, Shopify Plus and the Singapore Institute of Retail Studies discussed about the impacts of COVID-19 on ecommerce and retail.
- Christopher Hatfield, Head of eBusiness, Nestle
- Yonghyun Noh, Head of eCommerce, iHerb Korea Ltd
- Neel Bhatt, Head of Partnerships, Southeast Asia, Shopify Plus
- David Lee, Head of Digital Commerce & International eCommerce Standard Working Committee, Singapore Institute of Retail Studies (SIRS)
Below are some questions which the speakers addressed.
- What is Nestle's POV on driving impulse categories online in an environment which is more planned in shopper bias and with products that shoppers want to consume immediately?
- What is Nestle's POV on DTC and subscription models for Retail Ecommerce?
- What ecommerce marketing techniques have you seen to be effective at driving sales?
- In certain markets, ecommerce marketplaces have become dominant and have even performed better than brand-owned storefront. What is your POV or experience with this?
- What are your top tips on how Retailers can deliver a more compelling online shopping experience?
- How can services-based professionals/businesses be more effective in the e-commerce space?
What is Nestle's POV on driving impulse categories online in an environment which is more planned in shopper bias and with products that shoppers want to consume immediately?
For the impulse channels that have been disrupted from physical foot traffic. Partner to build a brand/product offering with customers that can deliver via delivery partners. (Uber Eats, FoodPanda, Grab). We have launched a number of new offerings in 7-11 and BP this year.
During this period the options around immediate consumption are potentially disrupted and helping consumers be better planned on the occasions like snacking is key.
What is Nestle's POV on DTC and subscription models for Retail Ecommerce?
Nestle support a number of different subscription models directly via Nespresso, Nescafe Dolce Gusto, Purina & Nestle Baby. Each proposition must be evaluated on criteria of financial benefit/profitability, consumer engagement & differentiation to alternate channels.
What ecommerce marketing techniques have you seen to be effective at driving sales?
This will depend on the eCommerce platforms you are driving sales too. Clicks and Mortar, Pure Play and Direct all have different levers available to them, and different challenges and opportunities to build a successful business. Consider first the consumer purchase journey & within each channel you are playing, determine the priority pillars required to generate the traffic, conversion & sale that you are aiming for.
There can be a lot of techniques, but if I have to pick one, I pick partnerships and collaborations with right partners.
A major issue on Ecommerce is how to bring more traffic at a reasonable cost. If both parties from such partnerships/collaborations agree on exchanging the value of each brand/retailer's core value, it would be super cost-efficient yet fun and outstanding work.
Generally, partnerships or collaborations can work effectively when:
1) both parties are not competing with each other
2) both parties are from different industries (i.g. iHerb working with beauty & health community app)
3) unexpectedness is found (i.g. flour company working with makeup brand to launch powder products line)
Millennials and gen-Z look for stories to share online, so deliver something fun, valuable, or meaningful works with partners to those audiences so that they can be your fans and bring their friends to your website/social media channel who can be potential fans in future.
It depends on your strategy/ concept of ecommerce marketing techniques. At SIRS, for example Lazada platform, we train the marketers strategy first: 1) Engagement, 2)Visibility, 3) Basket Building. Then, to decide on the combination of marketing tools to optimise sales.
In certain markets, ecommerce marketplaces have become dominant and have even performed better than brand-owned storefront. What is your POV or experience with this?
My experience in my Asia Pacific capacity, definitely in some markets a shift to marketplace dominance vs direct or retailer sites. Whilst scale can be achieved with a dominant player tied to that is risk. Would suggest first evaluating the ecommerce footprint in a certain market and where to play. Having a channel diversification strategy can maximise growth, minimise risk and reduce the dependence on a particular channel. Consider for the role of brand owned storefront. This should be your brand flagship store with differentiation to other channels (information, reviews, content, product, consumer services). It might not be a large contributor to sales in a marketplace dominant market but can still play a role in building brand equity and consumer engagement.
We should differentiate the purposes of running DTC and marketplaces.
Marketplaces are where customers visit with intentions of purchase:
1) simple browsing for fun and possibly finding a good deal,
2) checking the price of a specific product, or
3) purchasing a specific product that the customer already decided to purchase.
So, the conversion rate can be relatively high and most big players have such huge numbers of traffic which can be very expensive for a DTC website to bring in.
On the other hand, a DTC website is where brands can communicate with their loyal customers who have the intention of visiting the website that only has a range of products of one particular brand mostly.
Generally, quite a lot more sales will be generated through marketplaces than ones through DTC. That is very common among many brands and not a wrong situation (only 20-30% of total sales are generated through DTC for many indie beauty brands).
Marketplaces input lots of budgets to bring more traffic into their websites, which should not be done the same by a brand as it costs millions of dollars every month.
So, brands can consider marketplaces as where they can reach out and showcase their brands to potential new loyal customers in future while driving sales.
The costs of benefits - huge traffic and sales - are the service fee and ad budget spent on marketplaces.
Meanwhile, brands can polish up their DTC websites to deliver clearer messages of brands, interact with customers, and make customers to be fans.
Ecommerce in Asia really started on marketplace, with the likes of Taobao, Rakuten, Qoo10/Lazada/Shopee. They offer a low risk entry point to e-commerce and are a valuable part of a multichannel digital strategy.
A brand should be your digital flagship. Marketplaces in Asia have had a head start, but more and more brands are investing in their own sites to have greater control over customer experiences and have less reliance on sales/promotional periods on marketplaces to drive GMV and create deeper and more valuable customer relationships.
Consider the risk of over reliance on certain channels and how a brand .com enables you to strengthen your brand equity and customer relationships over the longer term. We’re already seeing this happen, as the barriers to entry have lowered significantly in the last few years - allowing those brands to invest in innovative growth, rather than just maintenance.
Different e-commerce marketplaces have different customers’ profiles: 18-34 years young girls look for very crowded promotions, PME looks for clean/ well distinct site. From google ranking aspect, the algorithm (I think still valid today) of brand ranking is based on aggregated traffic of the brand webstore/ website from multi e-marketplace presence (brand site traffic= eBay store traffic+ amazon store traffic, etc).
What are your top tips on how Retailers can deliver a more compelling online shopping experience?
Range of product offering, ease of navigation/purchase, excellent customer service, faster delivery, ease of return & more personalised relevant suggestions or content.
Tactics can vary depending on which category each retailer manages mostly, but the topic that is considered as the most important task in general is how they can deliver the real-life-like experience to customers.
For example, L’Oréal acquired ModiFace, an app-based augmented reality system that allows a customer to virtually try on makeup, hair color, skin care or get a skin care diagnosis in 2018. The app's features can deliver such try-on experiences to customers very similar to what they experience at a physical store.
This can be applied to fashion: featuring 360-degree high resolution images of products for customers to better understand how it would look on her/him.
The target of improving online shopping experience should be eliminating uncertainty of online purchase. Fast delivery is eliminating concerns of products not received. More selection is eliminating concerns of where a customer finds the right product at. So, retailers should define what the uncertainties are in their business area and roll out actions to eliminate them.
How can services-based professionals/businesses be more effective in the e-commerce space?
Applying similar methodology to business related space as B2C is fundamental. What is the traditional customer journey of the business? What is the digitization of the lead generation strategy that may have been done physically? how are those leads acted upon? Develop a role of site and develop relevant content and review analytics on traffic and search behaviours, develop CRM strategies on building a database. Leverage relevant marketing tools to promote your business to the most relevant customer. Ie Search, Linkedin.