Retail Tech Summit (RTS) 2018 is a half-day conference focused on the biggest technology and data issues affecting the retail tech sector hosted by RetailTechNews. This year was the first time the event had been held in Singapore, and in this post, I will be talking about some of the insights that were discussed during the forum.
eCommerce is a hot topic now in the SEA region. Within this space, there are a few prominent players in the region such as Taobao and Redmart who are targeting emerging markets such as Indonesia and Thailand. Though much has been going on in the various markets, Reuben Philip, the eCommerce leader of Kellogg’s South East Asia says that the FMCG scene is only just getting started. There is much to be sorted out in individual countries, and for FMCG eCommerce, the greatest challenge lies in its operations.
While many players focus and invest heavily in creating the customer experience, Redmart sticks to a tradition. They focus on building strong relationships with their suppliers, the reason being that customers in eCommerce are demanding. They want the best price, discounts, and as many products as possible in one place so that they are able to make all the purchases on one platform. For Redmart, the way to achieve this is to create great relationships with their suppliers and build a robust supply chain to bring the products to market. Jean, Marketing Director of Redmart warns however, that many companies suffer losses to bring the convenience demanded. Businesses need to proceed with caution when considering what value they want to bring to the table for customers.
That is not to say that customer experiences are not important. There is a reason why we see this shift in business models as major players begin to map out a customer journey with multiple touchpoints. In China, eCommerce sites are used three times more than their western counterparts. The country has an entire ecosystem based around eCommerce, mCommerce, social commerce and AR which is built around the customer experience. Online to offline (O2O) has seen a massive explosion in China – customers make their purchases with Alipay at Alibaba stores, and this generates data on what customers are purchasing both online and offline. This is the Chinese model of eCommerce, and SEA is being shaped by it as major players from China seek to enter the rest of the emerging markets within the region.
Define your business objectives for eCommerce:
eCommerce has to be defined properly when a business enters a market. What is it that the business is trying to achieve? Is it to educate, promote, or to sell? The way that you define eCommerce for your business will be essential in determining its success. For Kellogg’s, they began with the analysis of the data of consumers who purchased groceries on Taobao and Tmall. Through in-depth research they figured that their audience was mostly comprised of women aged 18 -30 who were obsessed with fashion and beauty products. Once Kellogg’s understood their purchasing habits and tendencies, they went back and created a new product specifically for the online platform. This was a granola product infused with rose petals, marketed by a prominent actor. The packaging was also well thought out- knowing that their customers were people who were always pressed for time, the product was packed in small pouches, able to be consumed in small servings rather than from out of the traditional box.
The product was a huge success.
Here is what Kellogg’s also learnt after the experience. eCommerce companies have to understand what they need to create for people. They need to identify the value that they can provide for the customers. For Kellogg’s, eCommerce was not only a channel for sales, it was also used as an education platform. Granola is traditionally a western snack which was not consumed in the Chinese market, so the company used the online platform to educate and shape customers into consuming granola by generating content on how to consume the snack. A similar analogy can be drawn to Pringles, a familiar brand that is under Kellogg’s as well. How do you eat pringles? Do you pour them out on your hand, serve them on a plate, or reach into the can? This education also becomes an important part of the consumer journey. Only after working out the map and walking down the path can you then look at the sales as at outcome. It took 4 years for Kellogg’s to accomplish this, and they still consider themselves at a stage where they are still trying to figure things out.
Advice to those entering the market:
Kellogg’s breaks the eCommerce path into three simple stages:
- The first where you are still trying to figure out what needs to be done.
- The second is where consumers realise the convenience of purchasing your products online, and
- The third stage is maturity where the purchase process has become integral to the consumer (which can be seen in China).
It is important to be patient when you enter the eCommerce space as the first stage can last really long while you try to figure your way in the market and into the hearts of the consumers. As a rule of thumb, do not rule against fellow eCommerce partners entirely as they are also building their businesses to enable FMCG brands. If you observe the mature markets such as Korea and Japan, eCommerce is co-branded. Brands partner with other brands, and sometimes, partnerships can become really creative. Digital has placed the power in the consumer’s hands and businesses need to work beyond simply placing ads and hoping that it will generate traffic. Invest in other brands and partners which can help you build an ecosystem which directs holistic growth in businesses.
For a start, brands should shift their focus away from just sales. As we observe this shift towards the Chinese model of eCommerce, business is all about engaging your customers, as well as the content which you are producing. Discoverability is important, and content has become extremely dynamic as well – beyond basic product content, there is a wide variety of formats – as a business, you need to find where you fit into that space to engage your customers.