Monthly Archives: February 2016
22 FebFebruary 22, 2016
HERE’S EXACTLY WHY MOST FMCG BRANDS FAIL IN E-COMMERCE
In the past week, I had the opportunity to talk to a number of clients and business associates (always great to catch up with people in the industry; so much new insights to learn from) in the fast-moving consumer goods (FMCG) industry, and the conversations invariably turned towards the impact of e-commerce and how evolving consumer buying behaviour in the digital age changes the way FMCG brands market their products.
One prevailing sentiment that I got out of the conversations is that while everyone recognises that e-commerce is an undeniable aspect of modern business that all companies need to address and tackle these days, FMCG brands in particular face more challenges in making it work.
One of the main difficulties is of course managing the delicate relationships with existing distribution channels, and avoiding cannibalisation in the meanwhile (Actually, not true; over 50% of all online purchases made in China are additional revenue for retailers and brands, in line with global trends).
Another challenge is justifying the investment for e-commerce setup and operations, especially for mono-brands considering establishing their own online storefronts, when online sales percentage against total global sales still hover in the single-digit range across all FMCG categories.
So over the last few days I’ve given this topic some thoughts and come to realise that more often than not, e-commerce in traditional FMCG brands is largely separated from the decision-making processes that drive offline sales. In some cases, e-commerce is also separated from the digital branding and marketing processes.
The lack of integration among these functions prevents FMCG brands from tapping into and unleashing the potential of holistic, omni-channel marketing and sales.
FMCG brands have been slow to realise that consumer consideration in the shopper path-to-purchase has irrevocably changed in the digital age; the first touchpoint of all consumer interactions with a brand is now a digital one.
It is puzzling to see that many FMCG brands’ digital marketing and e-commerce presence serve simply as signposts to bring the consumer back to the retail outlets, when a concerted effort to connect with the consumers directly and immediately on the e-commerce platform could have resulted in a much impactful customer acquisition and sales conversion.
A large reason why the disconnect exist in many FMCG brands could be due to the fact that traditionally, marketing and sales are separate functions that report to separate hierarchical lines with different business objectives.
But in the age of the internet, marketing and selling occurs at the same moment, first described by Google as the “Zero Moment of Truth” back in 2011.
While a world where a majority of shampoos is bought online is still some days away, the influence of e-commerce on consumer buying decisions can already be felt, with as much as 25% of all retail sales influenced by e-commerce interactions consumers made leading up to the point of purchase.
Established FMCG brands should also recognise that on the internet, away from the protection of traditional retail visibility accorded to them through scale and relationships with distribution channels, every brand has an equal chance to make a connection with consumers, whether it is a decades-long leader or a just-launched newbie.
This means that to win the hearts (and purses) of the consumers, FMCG brands have to put in more effort to tell a compelling brand story on the digital media, and use e-commerce as a primary destination to start the consumers on the brand journey, rather than just viewing it as simply another distribution channel.
In short, FMCG brands need to rethink how e-commerce should fit into the larger brand narrative that is being told to the consumers. Specifically, FMCG brands should formulate a clear strategy of integrating e-commerce into their overall brand communications, using it as the initial springboard from which all further consumer interactions down the path-to-purchase are influenced, eventually leading towards the overall objectives of customer acquisition and sale conversion, online or otherwise.
Is your FMCG brand facing similar challenges? Talk to us today and find out how we can help you formulate a winning e-commerce strategy and implement it effectively. Email us at: firstname.lastname@example.org.
15 FebFebruary 15, 2016
3 COMPELLING REASONS TO LEAVE ONLINE MARKETPLACES & START YOUR OWN ONLINE STORE
Just over the weekend, woke up to surprising news that Rakuten is shutting down its e-commerce sites in Singapore, Malaysia and Indonesia beginning March, 2016. Against the backdrop of an intensively competitive e-commerce environment in Southeast Asia, the war of attrition among the online marketplace giants (Lazada, Qoo10 being the other 2 leading ones) has claimed a major casualty.
This development would undoubtedly have an impact on the e-commerce strategies for hundreds of brands and many more merchants that are currently selling on Rakuten marketplaces in the 3 countries.
Besides shifting more resources and focus to the remaining online marketplaces (and simply hoping they survive longer), businesses should now seriously consider the need to set up their own e-commerce storefronts, instead of relying only on online marketplaces whose destinies they have no control over.
Here are 3 compelling reasons to leave online marketplaces and start your own e-commerce storefront.
1. Build your own brand
When you use online marketplaces, you do get the benefit of the brand names. After all, most online shoppers know what Lazada, Qoo10 and Rakuten are. You can be assured and even guaranteed of shopper traffic and eyeballs on your products listed on these marketplaces, that’s for sure.
With their seemingly infinite financial firepower, these marketplaces can advertise and attract many more customers than your own e-commerce storefront can.
However, when someone buys whatever that you are selling from one of these marketplaces, who do you think they will say they bought it from? Your company? Nope. They’ll say Lazada/Qoo10/Rakuten.
Without the ability to create your own content and build your own brand to differentiate yourself from a sea of similar sellers, you’re just a needle in a haystack.
In fact, you’re continuing to build someone else’s brand when you sell within the online marketplaces. Lazada and Qoo10 will just keep getting bigger and bigger, while your brand is just one of the many that contributes to their phenomenal, not yours.
And if one of these key players falters and cease operations the way Rakuten did, then you have to scramble for the next online marketplace to peddle and start the building process all over again.
Never hand over control of your business’ destiny to someone else.
2. Be in control of your marketing budget
Online marketplaces typically make money by either charging merchants a flat monthly subscription fee, or a % commission per transaction, or both.
Additional fees apply for benefits and features such as premium listing and highlighted marketing blitz, which many times you would need to be able to get your products noticed in the crowdedness of the marketplaces amid intense competition from other sellers vying for the same consumer dollar.
When all these costs add up, the cost of selling could end up being as high as 40% of your selling price, which leaves you with little profitability to show for after all the hard work that you have put in!
And you most likely have to keep doing it to attract new eyeballs and consumer interest to your products in a vicious cycle that you cannot get out of, not unlike the “Groupon effect” where customer-merchant relationships are reduced to the individual transactions with little to no impact on long-term loyalty and retention.
Given the proliferation of digital and social marketing options currently available and accessible to merchants, you would be better off channeling funds that you spend on online marketplaces instead to marketing campaigns that help can you build a loyal customer base and following right from the start.
3. Your efforts should reward yourself, not others
Notice how all the marketing advice that you get from online marketplaces always center around promotions, offers and special deals to attract consumers to buy more of your products, but never quite mention anything about building your brand?
This is simply because online marketplaces do not have any incentive to help you build your brand; they are only keen on raising your product sale volume, which contributes to their Gross Merchandise Volume, or GMV, which aids in their market valuation and hence appeal to shareholders and investors.
Sure, you get the boost to sales in the short term, but all the efforts (and resources) that you put into packaging and marketing your products on these marketplaces only end up serving their long-term brand objectives, not yours. Consumers attracted by your offers are going to the marketplaces to buy, not your own site.
In other words, you make them look good. Not yourself.
With your own brand and e-commerce storefront, everything you do, every single dollar you spend, to market your brand, your products, and your company, serves to elevate only yourself. No other company will receive benefits from the blogs and articles you write, the social media posts you share, or the interesting product clips that you post to YouTube.<
Everything that you do should only be towards realising your dream, and not someone else’s.
There is no doubt that online marketplaces have helped spur online shopping and created a compelling case for both buyers and sellers alike to jump onboard the e-commerce bandwagon, kickstarting many a successful online business in the process.
However, as a business with serious and long-term brand building intent, you should look beyond immediate convenience and benefits, and start immediately on developing your own e-commerce storefront to take control of your destiny towards a much more rewarding goal.
We recently helped a watch retailer build an e-commerce storefront that quickly outsold its product listings on Amazon marketplace. To find out how we can help achieve the same for your business, contact us at: email@example.com