Without Li Jiaqi, how can Southeast Asian e-commerce survive?

Li Jiaqi is essential for Southeast Asian e-commerce survival

How to do e-commerce in Southeast Asia?

With the dual benefits of e-commerce and social media, content marketing cannot be ignored when it comes to opening up the Southeast Asian market. In recent years, more and more Chinese brands have achieved significant success in the Southeast Asian market, such as Y.O.U, Skyworth, Skintific, Me Too, and many others. The success of these brands shows that content marketing is the key to opening up the market in Southeast Asia.

Of course, in order for a brand to establish a foothold in the market in the long term, in addition to excellent product quality and innovative spirit, the brand also needs to establish recognition of the product in the minds of consumers. Especially in the Southeast Asian market, which is mainly based on offline business, marketing to drive online traffic and create momentum, and ultimately to drive offline channels, is a necessary course of study for almost all brands.

So, how can we start with content and find our own place? In the midst of big brands, how can start-ups make their voices heard in the niche market? For entrepreneurs, how to develop a brand placement strategy?

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To answer these questions for entrepreneurs, Global Ready invited Na Xin, former Vice President of JD Intelligent Group and former CEO of Smzdm, and founder & CEO of PONGO, a Southeast Asian marketing company, to share his experience and insights on how consumer brands can seize the advantage of content marketing and overtake in the market.

This sharing session is a closed-door exchange and is open only to Global Ready members. However, we have also compiled some content highlights, hoping to be helpful to everyone~ Enjoy!

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What are the “taken-for-granted” mistakes in the Southeast Asian consumer market?

The first mistake is to blindly copy the domestic e-commerce model, relying on the “time machine” theory.

Many people believe that Southeast Asia’s infrastructure and e-commerce conditions are similar to the stage before the rise of e-commerce in China, so they can rely on the “time machine” theory to replicate China’s past successful experience.

Of course, this idea has some validity. The consumption level in Southeast Asia is low, the childbearing age is small and the birth rate is high, so family consumption is still the mainstream way of consumption. Before China’s consumption upgrade, large household appliances, maternal and child categories, and other categories also experienced rapid growth. Therefore, in the selection of e-commerce categories, China’s experience can indeed be borrowed to a certain extent.

However, unlike the time when short videos represented social media in the early days of China’s e-commerce rise, Southeast Asia is currently in the dividend period of short video/live content marketing. The rise of Chinese social media and e-commerce are two different stages, while Southeast Asia is currently experiencing the dual drive of social and e-commerce development.

In launching the consumer market in Southeast Asia, it is necessary to consider how to more efficiently utilize the dividends of social media. At the level of “Tao”, the development status of society and the level of consumption determine which major categories can sell well in Southeast Asia. Then, at the level of “art”, the complex and diverse marketing methods determine which sub-sectors and products under the major categories can truly stand out.

To be successful in Southeast Asia, as an entrepreneur, one must avoid arrogance, truly understand the situation, and approach it with a respectful attitude.

Due to the influence of “stereotype”, we sometimes have wrong perceptions of the development status in this region. For example, some views believe that Southeast Asia’s infrastructure is poor. But in fact, the infrastructure in large markets such as Indonesia, Malaysia, and Thailand is developing rapidly. Each country has at least four main payment methods, and e-commerce delivery in big cities like Bangkok and Jakarta can even be achieved on the same day.

Additionally, some people believe that “the unit price of products in Southeast Asia is low” and “suitable for small profits and quick turnover”, which is also a common misconception. I know an entrepreneur who sells low-priced products on TikTok. However, she later found that, with the premise of high-quality products, consumers are still willing to pay a high price for branded products because they care about brand identity. Despite the lower overall consumption level in Southeast Asia, consumers have high demands for quality.

A universal standard approach cannot be applied to all countries in Southeast Asia.

Entrepreneurs need to customize their strategies for each country’s major cities. Taking Thailand as an example, the country’s total population reaches 60 million, of which Bangkok accounts for about one-tenth, and Jakarta holds an equally important position in Indonesia. Therefore, viewing the entire Southeast Asian region as a whole is not feasible.

In addition, the positioning of marketing platforms and brand strategies also presents a trend of diversification. For example, Facebook is a traditional brand exposure channel with a diverse user base covering all age groups, making it suitable for stable brand styles with relatively official content styles. Instagram is more trendy, emphasizing individuality and fashion, but both platforms have announced the cessation of e-commerce business and are transitioning to more pure brand exposure.

Facebook, TikTok, and Instagram have their own content styles | Global Ready

Therefore, many small and medium-sized businesses are turning to TikTok, which is more friendly to e-commerce. The content style of this platform is more realistic and interesting, and businesses do not necessarily need to create a high-end brand image. Novel and grounded content can attract users’ attention. For example, some brands choose to showcase their production process and research and development department, increasing the audience’s understanding and trust in the brand through close observation of employees and bosses’ daily work.

02

Social media dividend period,

how to do content marketing?

Put content first, plant a lot of seeds to establish user awareness

In Southeast Asia, content e-commerce is seriously lagging behind. Traditional SEO methods alone cannot efficiently establish user recognition of brands. For example, when consumers search for juicers on Google (Indonesia), they need to scroll to the second or third page to find relevant content, reviews, and purchasing tips, while the first page is full of e-commerce purchase links.

This means that consumers can only compare prices, which is very unfriendly to brands. Therefore, for small and medium-sized merchants who have not yet built their brands, “putting content first” is a very important step.

Taking the small home appliance brand EraClean as an example, the brand concentrated on planting product seeds for half a year before deploying a large number of products. This case illustrates the difference between content e-commerce and search e-commerce very well.

Before being exposed to the EraClean brand, most people had no awareness of refrigerator deodorizing home appliances in this category. Because there are no well-known big brands in this category, although it avoids the problem of market competition, it also leads to a lack of sufficient awareness among users in this category, and requires education from scratch.

Therefore, EraClean cannot promote through search engines, because few people will use keywords such as “ultrasonic cleaning machine, refrigerator deodorizing machine” to search. The brand can only start with content and let users directly see the usage of the product in order to truly establish awareness.

The brand invited many top influencers on social media platforms such as YouTube and TikTok to promote its products, and users found it to be an interesting category. After users learn about this category and then search for it and see others recommending the product, it will truly have a planting effect.

EraClean cooperated with influencers on TikTok to do live streaming, with an average daily conversion rate of 16%, a brand exposure of 110 million times, and a first-month sales revenue of $100,000 | Pongo

Brand advertising placement must be calculated carefully and be prepared for long-term operation.

There are three progressive purposes for brands to seek cooperation with influencers: clearing inventory, promoting products, and establishing brand image. In Southeast Asia and domestically, many large brands fall behind individual sellers and small companies in marketing innovation. When not understanding the market, medium and large brands are easily confused by the interference information of top anchors, thinking that they can immediately sell well as long as they spend money on advertising in the anchor’s live broadcast room.

In fact, this misunderstanding by merchants is due to not understanding the operational logic. In the early stage of opening up the market, brands need to fully utilize the influence of influencers for exposure and precipitation, accurately conveying product information to specific groups, and gradually increasing visibility.

It is not difficult to understand why some brands would rather lose money and go to a big anchor’s live broadcast room, or even lose money on postage. In the early stage, the cost of finding influencers to promote and expose the brand’s products should be included in the marketing budget, rather than being converted into sales costs.

During the live broadcast, brands can intercept more paid traffic through advertising placement, thereby driving the recommended traffic of the system and ultimately attracting more potential buyers’ attention. Brand self-broadcasting is one way, and another way is for influencers to broadcast, overlaying their private domain traffic on top of public domain traffic and paid traffic, forming a wider spread. Compared with celebrity influencers, sales-oriented influencers can effectively increase sales and exposure, thereby ensuring cost advantages.

If we want to truly build a brand, we don’t need to set our goals too high at once. However, we must realize that this is a long-term task and the cost of investing in influencers must be reflected in the budget.

Seize the opportunity for brand support from TikTok

Currently, TikTok strongly encourages brands to conduct live streaming on their own. Similar to the domestic Douyin, TikTok is gradually shifting its focus on supporting brand accounts for live streaming. This is because the platform wants to enhance its own brand image, lay the foundation for long-term operation, and establish a trustworthy high-quality social e-commerce platform image.

Specifically, TikTok’s support for brands is mainly reflected in the weight of brand accounts. Factors such as whether a brand’s account has live streaming and how long the live streaming lasts can all contribute to the distribution of traffic weight for the brand. In addition, TikTok conducted a page revision in Indonesia as a pilot country in 2022, adding a shopping mall entrance on the homepage, further enhancing the strategic position of e-commerce business. Increasing the frequency and duration of brand live streaming can also improve the weight of mall traffic.

For brands, they can open multiple accounts to cover different audiences and time periods. Before promoting a brand, they can test the delivery first, and then distribute the high conversion rate videos to KOLs for cooperation, which can better break through the circle of followers.

In addition, TikTok also encourages content creators to sign contracts with MCNs, and even actively contacts and collaborates with creators. For example, TikTok provides a promotion order platform similar to the Douyin Star Map, where brands can directly find high-quality creators for cooperation in the background.

In addition to TikTok, brands also need to pay attention to traditional e-commerce platforms. Although the traffic of content seeding platforms like TikTok is not very stable, traditional e-commerce platforms such as Shopee and Lazada also need to be taken seriously because they can handle a large amount of short video traffic. Although there are not many dividends, they are at least very stable. In addition, Xiaohongshu has now clarified its global strategy and will also become an indispensable part of the Southeast Asian market in the future.

03

How to Break Through Under the Siege of Major Brands?

Selecting Fine Subcategories and Concentrating Resources for Annihilation.

For start-up brands, it is best to choose products that meet market demand, require no market education, and are in line with local consumer trends.

In addition, find a submarket that major brands have not yet ventured into as an entry point. For example, the Me Too mouthwash brand accurately identified the needs of Muslims to rinse and cleanse before Friday prayers, and found a foothold in the market gap focused by major brands such as Philips, which only focused on electric toothbrushes and irrigators.

Although mouthwash is not a necessity in the general sense, it is an essential daily product for Muslim believers who perform several prayers daily. On social media, Me Too has therefore gained more attention opportunities, while old mouthwash brands such as Listerine and Total Care did not focus on social media channels, giving Me Too the opportunity to successfully gain influence online.

After selecting fine subcategories, start-up brands should concentrate resources on breaking through the market.

For example, the beauty brand Skintific has a relatively high product price on TikTok and no price advantage, but it quickly dominates TikTok’s ecological space through a large amount of content output and grass-planting.

In December 2022 alone, Skintific’s sales in Indonesia reached 591,800 units, with 2,687 related influencers, 8,236 related videos, and an average of more than 500 new pieces of content added per week.

Skintific achieved rapid growth in the past two years, and its aggressive strategy made it the champion among the top ten stores in global sales, and also won the champion of small store sales in TikTok’s Indonesia and Malaysia stations.

Dare to innovate new categories, have a deep understanding of the market, and streamline marketing strategies

In order to stand out in a fiercely competitive market, brands need to engage in micro-innovation in clear and specific market segments. In this process, founders must have the courage to define new categories. For example, the Me Too brand successfully defined a new category of probiotic mouthwash. By adding oral care and odor removal functions on top of cleaning, they attracted consumers and formed a memorable brand label.

In addition to daring to define new categories, brands also need to consider whether the product is meeting the current needs of Southeast Asian consumers in its specific market segment.

For example, in Southeast Asia, sweeping robots are not a hot commodity because Southeast Asian consumers are transitioning from wired vacuum cleaners to wireless vacuum cleaners. Therefore, the sweeping robot may need to wait for the next consumer upgrade stage before it can tap into the market.

When developing marketing content, brands should pay attention to the cultural background and habits of Southeast Asian consumers, as well as their different understanding of advertising scales and numerical concepts. In the Chinese market, brands can engage in many innovations, but in Southeast Asia, brands need to use direct and simple display methods to showcase the product’s highlights to ensure that consumers can easily understand and accept the brand message.

Utilize internet celebrities, but don’t expect to create another Li Jiaqi

In the entire Southeast Asian region, due to cultural and language differences, there are no cross-national super internet celebrities, and professional livestreamers in niche categories are also relatively rare.

For example, a Southeast Asian entrepreneur wanted to find a livestreamer in the lingerie category to sell products, but quickly found that there were no professional livestreamers like Li Jiaqi. Instead, brands can only cultivate their own internet celebrities that are suitable for them.

After conducting research, it was found that young people in different countries have varying levels of familiarity with live streaming. In the Philippines, young people have very limited knowledge of streamers, while in Thailand, the industry is relatively developed, and Thai internet celebrities are more mature.

However, even in Thailand, there are very few beauty experts like Li Jiaqi and Mao Geping. Currently, the best-selling beauty streamers in Thailand are mainly divided into two categories: wealthy women and makeup tutorial professors. Although some vertical categories have begun to emerge, the degree of subdivision is much lower than in China. Therefore, brands need to spend a lot of time and energy to identify suitable streamers.

In Southeast Asia, finding popular streamers requires a lot of communication costs, and brands need to develop detailed scripts and product display processes. Many times, the work team needs to repeatedly remind the streamers of the details that need attention. Often, after the morning communication with the streamer is completed, they forget in the afternoon.

Brands also need to be aware that many internet celebrities tend to prefer short videos, and may not perform as well in live streaming. On the one hand, there are very few truly professional streamers, and they do not have the standardized sales skills like in China. Many streamers are former salespeople or shopping guides who have switched careers and have not yet formed a complete “people-goods-scene” methodology, nor do they understand the various ways to generate traffic. Therefore, brands need to have a deep understanding of Southeast Asian markets and be cautious when looking for internet celebrities.

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