By Craig Armstrong, Customer Director, New Zealand Trade and Enterprise
E-commerce can help New Zealand overcome its two greatest barriers: distance from markets and scaling for export. E-tailers can trade in international markets without necessarily needing to establish a bricks-and-mortar presence.
The e-commerce market in South East Asia (Viet Nam, Thailand, Singapore, Philippines, Myanmar, Malaysia, Lao, Indonesia, Cambodia, Brunei) is thriving, driven by a large population, rapid economic growth, and world-leading e-commerce practices.In 2017, in the online grocery category alone, e-commerce sales grew 69 percent in Viet Nam, 88 percent in Malaysia, and 104 percent in Thailand.
This creates exciting opportunities if you are looking to start or grow online sales, however, as ever; there are important factors to consider before jumping in.
NZTE has partnered with market research agency Kantar TNS to publish new research into e-commerce in South East Asia. The report includes a snapshot of the e-commerce landscape, a comparison of markets, opportunities and challenges for New Zealand, and what this means for distributor relationships. Kantar TNS used interviews with several New Zealand businesses and NZTE Business Development Managers working in the region, together with a range of research it has done in the region, to inform its findings.
Some key themes:
Build your brand. Brand is key. Unknown products are likely to be ignored. They are also less likely to be trusted. Feedback from distributors in the region is that New Zealand companies don’t do enough brand-building. As one distributor quoted in the report says: “New Zealand companies need to better understand that marketing and PR here are huge, and to have a space you need to invest to establish a connection. New Zealand companies seem to expect the distributor to do that investment and work…but it’s not our brand it’s yours, so you have to work together”. Social media and other digital channels are a great tool for building awareness and loyalty among potential customers, for example by offering free trials.
Get social. Westerners tend to trust institutions and mistrust social media, but in South East Asia it can be the opposite. For example, 61 per cent of Indonesian consumers trust the information they consume on social media. These attitudes are driving social commerce (a form of e-commerce that uses social media to sell products). Social media is not just a tool for capturing recommendations and generating PR, it’s also a way to supply goods, exchange ideas with consumers, and talk to investors, service teams and employees. Being on one platform is not enough; Facebook, Twitter, Pinterest, YouTube, blogs, chat communities, Email, Google, Amazon, Alibaba, all need to be considered. Social media users are highly mobile-centric, so a ‘mobile first’ strategy will help reach these people.
Use recognised and trusted payment systems. Trust in sellers tends to be low. In some markets, cash on delivery is big, as many people aren’t in the banking system or don’t trust credit. For example, in Viet Nam, ATM network outages and high-profile embezzlements have tarnished the banking system’s reputation. In Thailand, there have been well publicised cases where the money was wired then the website disappeared.
Tailor your approach to each market. East Asia is not a monocultural society. Consumers and their lifestyles are very different between and within markets, driven by family structure, access to technology, spending power, education, transport options, media exposure and other factors. There are also valuable underserved niches, such as Halal-approved products and the grey dollar. Each market has advantages and disadvantages. For example, in developing markets, out-of-stocks can be common, and keeping products frozen can be a real challenge alongside leakage and transit damage. Traffic congestion in mega-cities can make a huge difference to last-mile delivery. In developed markets, complaints about non-envirofriendly packaging are increasing.
Get ready for New Retail. Smart mirrors with AI shopping assistants that provide info and recommendations, smart shelves with interactive wall screens, and smart lockers that shoppers install outside their doors for package and food deliveries are all part of the future vision of retail, where offline merges with online.
Download the presentation here.
Download the report here.