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Riding the momentum of e-commerce

News   •   Mar 18, 2016 12:34 +08

Kimberly-Clark shares five lessons that have allowed its e-commerce strategies to move quickly, overcome difficulties, and scale up in Asia-Pacific

While shopping has long been synonymous with the world-famous Orchard Road in Singapore or Xintiandi in Shanghai, it is rapidly taking on a different form across the Asia-Pacific. Beyond just browsing from aisle to aisle, consumers in the region are now spending more time clicking and tapping through pages of items, from shoes to groceries.

Online supermarket Redmart in Singapore and regional e-commerce giant Lazada are just two examples of companies that have invested substantial resources to provide consumers with increased choice and ease of shopping. In fact, online shopping is becoming so popular that 50 per cent of Singaporeans would do all theirs hopping online if possible, according to the Visa Consumer Payment Attitudes Study 2014.

Beyond the ecosystem of digital startups and businesses, however, this fast-growing e-commerce trend has also been validated by global paper products Kimberly-Clark across the Asia-Pacific region especially in key markets such as China and South Korea. There, e-commerce has been driving sales growth for the company over the last few years.

E-commerce provides the consumer multiple benefits, as a result of which many categories are rapidly shifting to this channel- a wider assortment of brands and products, price advantage on occasion and most importantly convenience, which is a big factor behind consumers' move towards e-commerce. By ordering online, busy mothers who are short on time and big on convenience have been able to get bulky baby and childcare products delivered right to their doors. As a result, these products, including items such as diapers, have been driving Kimberly-Clark's e-commerce growth in the Asia Pacific, with the region now accounting for more than fair share of the company's global e-commerce sales.

The rollout of the company's e-commerce strategy was not without its challenges, but the journey has presented five key learning points that have allowed the company to move quickly, overcome difficulties, and scale up the strategies around the region. To start, one critical insight that other companies, including smaller ones, should pay attention to is the need to make a quick first move into the landscape in order to seize the momentum of e-commerce in the Asia-Pacific. 

Make the first move

This has been a key driver of success. Kimberly-Clark's positive experience where the company entered early (and the harder time in markets where we were late) showed that coming in early- and scaling back early if necessary - is better than waiting longer, as it proves to be much more difficult to build up a strong online shopping profile once consumers are accustomed to the experience of shopping with a first mover in the market.

Brands also reap the benefits of the ripple effects that online shopping has in physical stores, as a large proportion of South-east Asian consumers view the Internet as a means of checking out products to inform their offline purchases. Reading online reviews, product research and convenience rank among the main factors motivating consumers in South-east Asia to go online to shop.

Test and learn

Among traditional business with established models and conventions, this "wait and see" attitude about e-commerce is not surprising, as the venture carries all the risks of experimenting in uncharted territory. Many also wonder if established customers will react positively to the change. In fact, companies that make the move early while risking failure end up engaging with consumers first, adding unexpected value and even shaping their behavior as a result.

Brands that get in early with a "test and learn" attitude are able to engage with online retailers while they are smaller and more eager to partner. This gives brands the opportunities to try out new things, learn fast (as data is more readily available) and choose the more successful strategies.

The additional outreach that e-commerce provides for a brand, whether directly through online purchases or through the ripple effect it has on physical stores, indicates that retailers need to ensure they do not neglect online capabilities as part of their overall engagement strategy.

Look local first

Localisation is another important factor to keep in mind when developing an e-commerce strategy. Building centralised expertise at headquarters and pushing it out to individual markets does not work well, as a region like Asia Pacific is extremely diverse and requires approaches that can vary significantly from market to market.

For instance, Western e-commerce and tech players have not been as successful in China as local players. Facebook and Google are both not present, and Amazon has a small market share. Instead, China offers its own thriving alternatives, like Alibaba and Tencent. This means brands need to be present on these platforms. China is also leading the way, ahead of the West, in innovation like social commerce, leveraging messaging platforms like WeChat. In a lot of cases, there is no playbook for this, and local teams lead the thinking.

In Australia, on the other hand, consumers tend to shop online on Western shopping sites, sometimes ordering straight from the US-based platforms.

Then there are also markets that present other nuances for consideration. India, for one, opens itself to e-commerce marketplaces based in the United States, but these players face stiff competition from well-funded local companies that sometimes have better name recognition. This diversity in the landscape shows that presenting a monolithic e-commerce strategy across such a large geographic region would not be successful. It is important to understand each market's constraints and consumer preferences, then tailor the e-commerce solutions accordingly.

This focused regional approach also means developing the front line teams supported by very lean regional teams comprising the right people with the right capabilities to drive and monitor success. Such a structure allows for much more intimate understanding of the situation on the ground and quick responses, both of which are vital to business success in a constantly shifting online landscape.

Think top-to-top

Due to the relative newness of e-commerce as a channel and its lower salience in the business, leading the e-commerce thinking and establishing the partnerships with retailers is often delegated to more junior and less experienced staff, or even teams that are focused mainly on technological infrastructure.

However, while being digital natives, these team members have yet to build up skills in account management and may also not have the authority to take decisions on the spot and close deals. Having the key decision maker in the meeting enables faster on-the-spot decisions and also signals to the online retailer that we take this business and the relationship seriously. In the time that it takes for team members to secure approvals, a few other nimbler players could have iterated, innovated and effectively eliminated the competitive advantage.

Thus, building a solid e-commerce strategy is a task that requires commitment and active involvement from the senior management throughout the entire process. Apart from facilitating swift decision-making, this also allows the strategy to be carefully integrated into the overall business process across the supply chain.

Embrace new tech

The future is now turning quickly to the mobile landscape. Across South-east Asia, the increasing penetration of smartphones has made them increasingly popular for most activities, including online shopping. In addition, improved availability of high-speed connectivity, more comprehensive online offerings, and the prospect of precise targeting through location technology will continue to drive e-commerce in the years to come.

The Philippines, Indonesia, Vietnam and Thailand already rank in the top 10 markets globally for use of mobile phones to shop online, according to Nielsen's 2014 Global Survey of E-Commerce. Meanwhile, Visa's Consumer Payment Attitudes Study in 2014 indicated that 30 per cent of Singaporeans who shop online use their mobile phones to make purchases at least once a week.

To not only survive but thrive, businesses and retailers of all sizes and across industries need to be proactive when it comes to seizing the e-commerce momentum. To reap the benefits and maximise all online efforts, one must be firstoff-the-mark in developing markets, focus on establishing strong local foothold while keeping the operations lean, ensure senior leaders are involved, and also embrace new technology. Whether through mobile phones, wearable devices, or the next generation of computers, e-commerce represents the next frontier of the connection between retailers and consumers- marked by deeper insights, as well as greater focus and commercial adaptability.

This article was originally published on The Business Times.