The pandemic-driven e-commerce boom has accelerated the direct-to-consumer (DTC) trend, with more global brands like Nike and Adidas doubling down on their DTC strategy. With a greater trend towards DTC, where does that leave marketplaces, a key player in the rapidly changing e-commerce landscape?
In our previous study with iPrice Group, we looked into how marketplaces are in fact important enablers for DTC brands to reach new markets such as Southeast Asia.
In this exclusive interview, we speak with Ian Ho, Regional Managing Director and Brand Partnerships Director at Shopee, to give us an insider’s perspective on how marketplaces are collaborating with international brands.
Note: This interview has been edited for brevity and clarity.
Without using the words “e-commerce” and “marketplace”, could you introduce yourself to our community members?
Ian Ho, Shopee: As the Regional Managing Director and Brand Partnerships Director at Shopee, I oversee partnerships efforts and negotiations with favourite consumer names such as Adidas, Apple, Calvin Klein, L’Oreal, Nestle and Sulwhasoo across the region while heading the Malaysian market.
One of the trends we observed over the past year was international brands such as Nike, Adidas and Under Armour moving towards direct-to-consumer. What are your views on this?
Ian Ho, Shopee: I see potential for DTC brands to grow in Southeast Asia (SEA). However, the region is diverse in terms of populations, cultures, and tastes, while its fragmented geography impacts delivery efficiency.
To put this into perspective, let’s look at the Malaysian market. Geographically, the country is split into Peninsular Malaysia and East Malaysia (Sabah, Sarawak and Labuan). Within the country, there are four main ethnic groups – Malays, Chinese, Indians and the indigenous people. Besides race and culture, there is a need to understand and respect the consumers’ religious practices. Making things more complex, Malaysians also speak multiple languages.
What I am driving at is that brands must navigate this landscape and complexity effectively to attract and retain customers in the long term, and it begins first with the understanding and familiarity of each market.
So what is the role marketplaces like Shopee play in this regard?
Ian Ho, Shopee: Shopee has a deep understanding of the unique local needs in each Southeast Asia market. [To this end,] we help brands localise at scale with our rich and varied consumer insights, allowing them to customise their product assortment, prices, and marketing efforts for the specific needs of each market. For instance, brands can use a range of value-added features on Shopee tailored to mobile-first SEA consumers, such as live streaming with Shopee Live and real-time Shopee Chat.
Apart from consumer insights, Shopee has experienced local teams that add value to key but “hidden” aspects of e-commerce such as customer service. With data and experienced local teams, we help brands design better shopping campaigns, offer better product selections, and respond to customer feedback swiftly, helping them to optimise their brand presence.
One of the lesser known facts is how marketplaces also support retailers with order fulfilment and delivery, to ensure that end-consumers have a seamless post-purchase experience. How does Shopee collaborate with brands on this front?
Ian Ho, Shopee: We know that fulfilling orders in a timely and efficient manner is a key aspect for brands to achieve customer satisfaction. This can be challenging for brands who do not have strong logistics and warehousing solutions to cope with high volumes of orders. Therefore, Shopee supports them through our optimised logistics network, which allows brands to use our warehouses to store inventory and leverage our range of logistics partners to ship orders efficiently. For instance, Shopee partners with trusted logistics partners in each of our markets, including DHL eCommerce, J&T Express, Kerry Express, and Ninja Van who know the lay of the land and can ship with speed.
In 2020, we opened more than 10 warehouses across the region and had more brands using our warehouses to meet the growing number of orders and improve the experience for consumers. We also saw more brands tapping on our efficient logistics infrastructure with a 3 times increase in brand items shipped from our warehouses.
Another observation we made during our study with iPrice Group was the increase in official store products in marketplaces. Could you tell us more about Shopee Mall?
Ian Ho, Shopee: We launched Shopee Mall in 2017 when we saw an increasing demand from users to purchase their favorite local and international brands online. Besides providing a convenient and dedicated space on our platform for brands to offer a large assortment of authentic products, Shopee Mall also guarantees 100% authentic products, free returns and free shipping.
Do you think this trend is here to stay?
Ian Ho, Shopee: Since launching Shopee Mall, we have seen a 4 times increase in the number of brands and a 10 times order growth on Shopee Mall, outpacing overall platform growth. To date, we have over 25,000 official stores on Shopee Mall across the region.
Over the last year, we have also started to see more international brands like Apple, Muji, Adidas, Disney, Puma and many more joining the platform. We are confident that these trends are here to stay and we will continue to introduce new initiatives to accelerate the growth of Shopee Mall.
Marketplaces like Shopee definitely provide DTC retailers with a whole suite of services that help expand their reach. Such offerings have led to the official partnership between Shopee and Amorepacific, the parent company of Sulwhasoo, Mamonde, and Etude, allowing for more “data-driven strategies, joint marketing efforts, and more co-branded collaborations” between both parties.
It was also revealed that since its launch on Shopee Mall in 2018, Amorepacific has since recorded more than 13 times growth in gross merchandise value and has doubled its eCommerce business regionally in 2020.
As mentioned by Ho, Shopee’s extensive logistics infrastructure in the region also ensures that DTC brands, especially those without a physical retail presence or warehouse, are able to provide a satisfactory delivery experience for their customers.
Finally, are there any more exciting developments DTC brands and consumers can look forward to from Shopee in 2021?
Ian Ho, Shopee: For sure!
Some of the key initiatives that were discussed during our inaugural Shopee Brands Summit this year include:
- Strengthening in-app visibility and differentiating the user experience for Shopee Premium. Our recent regional premium campaign in April, Shopee Premium Brands Festival, saw 4.5 times more orders across the region recorded at the festival, than in the week leading up to it.
- Ramping up on Shopee Mart to help fast-moving consumer (FMCG) brands capture the growing segment of online grocery shoppers.
- Introducing a new Brand Membership program that replicates offline loyalty programmes. Brands can increase consumer retention by rewarding shoppers with loyalty points when they shop from brands’ Official Stores on Shopee Mall.
- Upgrading our Marketing Solutions Portal to empower brands with more market intelligence and convenient media planning.
- Launching the Regional Champion Brands Program to drive high impact projects with our top partners. Brands that are part of the program get to enjoy priority access and support on all regional initiatives and resources to support brand growth and better engage their customers.
Beyond just providing brands with access to a larger consumer base, marketplaces like Shopee offer tremendous value in the form of their in-depth understanding of the local context, rich consumer insights, and an efficient logistics infrastructure. These offerings are underrated and yet instrumental in helping DTC retailers boost their sales, enhance the customer experience, as well as improve customer loyalty.
Indeed, there is no doubt that marketplaces are an essential pillar to the strategy of direct-to-consumer retailers. Delivering a great end-to-end experience for consumers requires the collaboration of retailers, marketplayers and, of course, logistics carriers. As aptly put by Ho:
“… [Our aim is] to create an inclusive space for homegrown sellers including farmers, fishermen, mom and pop shops in the digital economy. Together with my team, we curate online strategies to help our brands and sellers connect to consumers through our technology.
Together with the Shopee family, we aim to grow the region’s digital economy and better the lives of consumers.”
(We would like to thank Mr Ian Ho for taking the time to answer our questions. You can connect with him on LinkedIn here and keep up to date with Shopee’s future developments.)
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