South-East Asia E-commerce Markets - a Primer

E-commerce in Southeast Asia has experienced rapid growth in recent years, fueled by the region's large and rapidly growing population, increasing internet and mobile penetration, and improving infrastructure.

In 2022, the e-commerce market in Southeast Asia amounted to approximately 131 billion U.S. dollars. This was forecasted to increase significantly by 2025, in which the e-commerce market in Southeast Asia was expected to be worth 211 billion U.S. dollars.

Southeast Asia is made up of 11 countries with a combined population of over 650 million people and a combined GDP of over $2.8 trillion. The region has a diverse mix of economies, ranging from highly developed and industrialized countries like Singapore and Malaysia to developing countries like Cambodia and Laos.

One of the key drivers of e-commerce growth in Southeast Asia has been the increasing availability and affordability of mobile devices and internet connectivity. This has made it easier for people in the region to access online marketplaces and make purchases online. In addition, improvements in infrastructure and logistics have made it easier for businesses to sell and deliver goods to customers across the region.

There are a number of major e-commerce players in Southeast Asia, including Lazada, Shopee, and Tokopedia. These platforms offer a wide range of products and services, including fashion, electronics, home goods, and more. In addition, there are many smaller, niche e-commerce platforms that cater to specific markets or product categories.

Overall, e-commerce in Southeast Asia is a rapidly growing and dynamic sector, with significant potential for both domestic and international businesses. With its large and increasingly connected population, Southeast Asia offers a vast and untapped market for e-commerce companies looking to expand their operations.

Collecting and analyzing the data on different platforms are time consuming. Using EQI Data allows you to easily track the your online business performance in Southeast Asia.

Check out our website for more info!

Tmall or other, where to start in China

It’s easier now than ever before for brands to market their products on the Chinese market, yet the diverse and granular local digital eco-system can be confusing and even off-putting. So where to start?

Over the last decade, the influx of international brands targeting the Chinese market has accelerated exponentially. Although travel restrictions due to the covid 19 pandemic slowed the entrance of companies looking to set up a local office, those same restrictions were counterbalanced with an easing on sales of imported products through cross-border e-commerce (CBEC), which opened up the gates for thousands of new brands to enter the market each year.

Furthermore, since late 2021, the Chinese government has been cracking down on monopolistic practices of e-commerce giants such as Alibaba (Tmall), Tencent (WeChat) and Jingdong which now offers small platforms and private e-commerce channels, like own .cn domains or WeChat Mini programs a breakthrough opportunity to gain consumers attention.

Yet despite the increased accessibility for international brands to enter the China market, the p

ercentage of brands that manage to operate at a profit continues to drop. Our data suggest that about 65% of all brands operating on Tmall weren’t able to turn a profit in 2021, the diagnosis is clear, brands struggle to differentiate themselves as they invest in outdated strategies that don’t effectively enable them to connect to with consumers.

The main issue that brands are struggling with is relying on partners or local teams that reject the notion of branded e-commerce well after it’s become well established in China. In early years, brand differentiation was not essential as the choice of brands was limited consumers didn’t have the luxury of the choice, but that has changed. As of 2021 there were over 360,000 brand stores on Tmall alone. Differentiation is key.

(Source: Visual China)

First thing that brands need to remember is that developing a sales strategy should follow the same process as in any other market. It’s tempting to lean into a specific platform and invest into a one-channel strategy, after all this is what platforms want you to do and it’s what a lot of agency will sell you. However you need to think about the strategy as you would any other market, take a step back and consider;

1. How do you want to communicate your brand?

2. Who is your clientele?

3. What materials are available for you to communicate?

4. Where will your consumers will be most receptive to said communications?

A) How do you want to communicate your brand?

Consider brand values; localise those that work for the Chinese market, exclude those that do not and adapt where is necessary.

B) Who is your clientele?

For the vast majority or brands, demographic profiles won’t work, the Chinese populous is too large and too diverse. The way to effectively profile your audience is psycographically; who is your target audience, what are their wants and needs and how to they differentiate between brands?

C) What materials are available for you to communicate?

Judged your materials for whether they communicate your localised values and whether they will resonate with your target audience. Local content is shown to engage 3 times better than global one.

D) Where will your consumers will be most receptive to said communications?

Curate your touch points early on and forget the vanity metrics that large platforms offer.

Each channel needs to be considered specifically for this unique market, and that your consumer touch points are also going to vary from category to category.

For example, if you were a niche outdoor brand focused on elite athletes, a campaign on Xiaohongshu (RED) is unlikely to yield positive results. Xiaohongshu is a platform mainly centred around fashion, cosmetics and urban lifestyle, and their core audience is your female clients. According to Statista, Xiaohongshu has about 158 million monthly active users, with female users accounting for 70 percent.

Which leads on how to invest in communications; the system from the brand perspective is geared towards encouraging amplification to be the primary point of investment, which worked when consumers were starved for content, but as more brands have come to market it has become more important to differentiate the content.

Consequently, although it’s often easier to spend money on paid media or KOL campaigns, brands should first invest in making sure that the content is interesting for the local target audience. Only after you have something that is going to work well for the market should you invest in amplification, again though depending on the type of content different amplification will have a different effect. Some content is better suited to amplification by advertising and others via endorsement.

The main traps to avoid are thinking that you’re going to come in and be able to copy-paste strategies and have an easy time recycling messaging. China is really its own market and requires its own strategy.

(Chinese top KOL Li jiaqi)

Work with a partner or do your research, the important thing to winning in China is to start preparing.

by David Ries 2022

What data can I have through Tmall?

What is Tmall and what part do 'TP’s' have to play in launching a brand in China?

Tmall is the biggest B2C ecommerce platform in China, it dominates the market with a 63% market share and generated a gross sales revenue of $1.2 Trillion USD (Statista) in 2021.

Alibaba, Tmall’s parent company achieve this by having the most complete ecommerce ecosystem in China. Aside from Tmall, Alibaba also owns Tmall Global, Taobao and Alipay. The company also boasts stakes in a number of other digital platforms in China, from social media to vertical marketplaces.

• Tmall is the B2C marketplace for online sales. The name tells you everything you need to know; it is a virtual mall for brands and distributors to market their products directly to consumers.

• Tmall Global is exactly the same as Tmall but exclusively for products that are sold directly from abroad, either via direct import or more commonly through cross-border e-commerce.

• Taobao was born as a sort of ‘producer directly to consumer’ platform but has since then evolved to cover the whole spectrum of e-commerce sales modes. You can purchase directly from producers, resellers, and other customers or even buy services, hence there is some overlap in scope between Tmall and Taobao. However, we can think of Taobao as being less ‘official’ and prestigious for sellers.

The magic is that all of these platforms are connected through the Taobao app. In a single app, in one search customers can find products marketed by their favourite global fashion brand and in the next search, they can purchase ingredients from a local farmer and right after they can find baby formula directly from abroad.

If you’ve already tried to get into the Chinese E-commerce market, then you’ve likely heard the term ‘TP’ (which is often expanded to Tmall Partner, Taobao Partner, or probably most accurately Trading Partner). TPs manage E-commerce platforms for their clients. There are many different TPs as operating on Chinese e-commerce marketplaces is very complicated and in most cases creating a specialised internal team can be very difficult and expensive.

(Image: Tmall.hk)

TP Teams are often composed of ex-Alibaba / ex-JD employees that understand the system and have connections and leverage within the platform to achieve extra traffic. This is useful, with thousands of competing brands, it is important to stand out in as many ways as possible - both to the consumer and to the platform.

Ultimately, it’s crucial to choose the right TP, who can both properly market your product and help you stand out to consumers as well as leverage your brand store to help you stand out with tmall. It can be the difference between paying Tmall to work for you versus paying Tmall to host you.

To understand what data is available we can split it into two perspectives Operational and external.



Operational:


Input -how much we are investing into ‘in-platform’ marketing, the channels within Tmall that we can use to promote products within the Alibaba eco-system such as keyword SEM and banners.

Output - how much are we selling, to whom and their behaviour. All the sales data is available through Tmall, as well as some demographic information

External:

What are the best performing brands in my category (primary product category as defined by Tmall when registering your store), an index of their sales and the category trends?

How do I know if I’ve made the right choice? What data should I evaluate?

It’s hard to know whether you have the right TP. Some of the largest TPs that do incredible work for big-name brands, perform very poorly with smaller brands, and vice versa, small TPs might not have the capacity to work with large brands. Prior to signing on with a TP it’s very hard to know if they’re the ones for you, within the industry there is a lot of secrecy about who manages whose store, so although you might look for a TP with industry-specific know-how, it is hard to guarantee you’ll get it.

Any decent TP will provide you with your own sales and traffic data which combined with some benchmark industry data should serve to analyse performances critically.

There is also competitor data available on the tmall backend, though as it is almost entirely indexed, or presented in summary it is only useful for learning broad market trends.

However, this is only a fraction of the incredibly granular information the TP can access through the platform backend.

Why don’t I always get all the information?

A good TP will use the platform backend to maximise the store performance, but due to Tmalls limitations on data export, reports have to be compiled manually, which is extremely time-consuming, consequently, the TP will have to make a conscious decision of how much data to share with the brand. TPs may do this in either an effort to save time or to limit the client's ability to critically evaluate their work.

Striking a balance is important - the TP needs to be reactive and wants to be profitable. Thus they usually must choose between keeping their clients in the loop and operating at a margin.

What if I’m not getting any of that information?

Often TP operations are some sort of informational black hole, if you feel that is the case, the best option is to communicate specifically which information you would like to see and take an active role in defining the reporting you are looking for. If that still doesn’t work, then the brand needs to take the information at its disposal - how much money is being invested vs how much is being earned and make a hard choice over whether this TP is the right partner.

Understand the limitations

Even the best and most open TPs have limitations in sharing data, after all reporting is sourced manually. Therefore the process of reporting is time intensive and often riddled with mistakes.

Most reporting suffers from massive entropy.

EQI Data automates the sourcing of data by connecting directly, not only to your e-commerce but also your social media so you can have access to all of your data in real-time.

David Ries 2022