In SEA e-commerce, China-fication is only part of the story
Jeremy Webbon 22 January, 2020
This article was originally published on Campaign Asia.
My foray into the world of China e-commerce began in 2012. Brands back then were starting to open Tmall flagships, and agencies like ours were figuring out how to provide the most effective service model. I’m now five months into my new job in Southeast Asia, and the sense of déjà vu I’m getting from my China days is strong.
Because they are owned by Chinese platforms, Southeast Asian platforms such as Lazada, Shopee and Tokopedia are going the way of their Chinese counterparts. Alibaba owns Lazada and has large stakes in Indonesia’s Tokopedia. Tencent indirectly owns the largest stake in Shopee. JD.com owns a piece of Vietnam’s Tiki. These Southeast Asian platforms are implementing the best practices they have learned in China and, in some cases, replicating the technology.
Since clear leaders have yet to appear in most markets, platforms are copying straight out of the China playbook to compete: luring and monetising shoppers by enriching the shopping experience in new ways. This is why we’ve seen live streaming and gamification, for example, launching in Southeast Asia in the last year or so.
However, in addition to the China-affiliated platforms, the banned-in-China Google and Facebook ecosystems and the SEA-based super apps, Grab and Gojek, are all vying for customers across Southeast Asia. So the experience, for brands at least, will be very interesting.
Here are five important implications for brand marketers to consider.
1. The new creative canvas
Marketplace platforms, eager to provide better experiences, will increasingly rely on and encourage brands to do things on the platforms that make users stick around and be more likely to come back. This will represent all-new creative and content opportunities.
For example, during Lazada’s 1212 festival, a shopper could do the following: Build a city or play darts (as one of the many games available on the app), watch influencer livestreams, follow the feeds of favourite brands and stores, invite/add/chat with friends, collect vouchers, hunt for and scan QR codes to collect rewards, and match emoji facial expressions through an AR game. All of that was in addition to the obvious activity—buying something.
More brands are getting involved in this ‘shoppertainment’. As part of the same Lazada 1212 festival, Logitech sponsored the above-mentioned dart-throwing game, for example. Brands across the region, during this festival and beyond, continue to experiment with e-commerce livestreaming and gamified voucher collection/redemption.
As more brands enter marketplaces in this way, and as e-commerce becomes a bigger part of brands’ sales, brands will invest more on the shopper experience. That will make it harder for any single brand to standout. Creativity and great ideas will be essential—even more so.
The real opportunity will be beyond short-term sales. Marketplaces will be places to build brands. The winners in 2020 will be brands that deliver experiences that are on brand while also driving short-term sales.
2. E-commerce-first campaigns (and products)
E-commerce in 2020 will play less of a supporting role in the overall channel mix. More campaigns, even integrated ones, will be ‘e-commerce first’—designed with e-commerce in mind and augmented with other channels such as social and traditional media.
And this will go beyond campaigns to include products that are built for, or at least exclusively launched on, certain marketplaces. Below is a product and campaign that was built by Nescafe, for and with Tmall.
E-commerce-by-design campaigns and products will be even more important in Southeast Asia, where brands rely on a barter system to generate traffic from the platforms, rather than on on-site paid advertising. Marketplaces will therefore provide visibility and traffic for brands that promise platform-exclusive products or incoming traffic.
3. Challenges in making this work operationally
There will be more opportunities to engage in 2020, which is a mixed blessing. Providing material for three or more marketplaces in Southeast Asia and an ever-increasing number of shopping festivals, plus the need for shopping experiences to build long-term brand as well as short-term sales translates into an eye-watering amount of content and campaign execution.
As the ecosystem develops and vendors appear or adapt to meet these new demands, brands in Southeast Asia will experiment with different models in 2020.
While cultures and languages differ drastically in Southeast Asia, the big marketplaces have similar content formats and host the same shopping festivals in multiple countries. Brands should take advantage of hub-and-spoke models, whereby centralized asset production, together with in-market experts to localize, allow both efficiencies and market relevance.
As happened in China, some e-commerce distributors will struggle to make campaigns and content that build brands or are, at least, in line with wider brand efforts. A similar problem will emerge with brands that have handed over operation of their stores to the platforms themselves. Brands must create new workflows with the evolving partner ecosystem to ensure experiences are on brand. This will either mean brand teams getting more closely involved with e-commerce partners or handing more of the e-commerce work to creative agencies.
The above trends will continue in much the same way as they did in China. But, with Google and Facebook, which are banned in China, and Southeast Asia’s own innovative digital platforms, things are going to get even more interesting.
4. More opportunities to use data
In China, the two biggest digital ecosystems don’t talk much to each other. Brands cannot easily connect data between, say, Tmall and WeChat. Luckily, for brands in China, there is already plenty of traffic within the major e-commerce platforms, and many brands succeed with separate approaches for the Tencent and Alibaba ecosystems.
But in Southeast Asia, e-commerce platforms rely more heavily on external traffic from Facebook and Google, as well as local players, who have sophisticated ad tools to generate clicks.
Although data sharing is not completely open between platforms in Southeast Asia, it is arguably easier than it is in China to build single views of consumers and their journeys across touchpoints. Add to this the proliferation of brand-operated customer data platforms (CDPs), which collect data on customers as they interact at different touchpoints, and then activate the same data through CRM/loyalty programs and DMPs, which allow segmented communications in paid and owned channels. Even more than in China, therefore, brands will be able to use data to deliver better, personalised experiences as part of the overall e-commerce experience across more owned and paid platforms.
5. More online-to-offline integration through SE Asia’s messaging and super apps
WeChat is great. The penetration of its messenger and WeChat Pay make it indispensable for most consumers in China. But, in my opinion, for e-commerce marketers at least, it falls short in certain regards—namely that it doesn’t link well with the biggest marketplace, Tmall, and its ad tools are less sophisticated than western equivalents.
In Southeast Asia, there is a vibrant ecosystem of superapps like Grab and Gojek, and messenger apps such as Viber and Zalo. In no case has a single player monopolized in the way that WeChat or Didi has in China. For this reason, the hungry Southeast Asian apps will continue to innovate for marketers in 2020.
Platforms that began as ride-hailing aps, such as Grab, offer incredible online-to-offline marketing opportunities for brands. Ads can be served, for example, during a ride, along with a coupon redeemable at an outlet near the rider’s destination. As such, super-apps will become marketplaces in their own right; they may also connect further with Lazada and Shopee to create new multi-platform experiences. Expect such innovation to become more widespread in 2020.
So, in some ways, Southeast Asia marketplaces will follow in the footsteps of their Chinese counterparts, representing similar opportunities to brands. But, combine this with banned-in-China Facebook and Google as well as other native Southeast Asian digital players, and there’s a richer and more sophisticated ecosystem—a potent mix that will allow brands to drive sales and long-term brand equity in innovative and scalable new ways. Stay tuned… and happy new year!