Brands take up more shop space - online

Singapore

WHEN Elaine Tan, 28, was looking for a smartphone for her grandmother, she skipped the lines at telco and retail shops, and went straight to online retailer Qoo10, to pick up an older model of the Samsung device.

One month later, the assistant marketing manager eschewed the same retail stores, and picked up a Samsung tablet from e-commerce store, Lazada, using the app, for her grandfather.

And while she chose the lowest-priced item from Qoo10 earlier on, she bought the tablet from the Samsung store on Lazada, to ensure that she got a local warranty.

While buying and selling online is not new, more tech brands, including Samsung, Lenovo, HP and Philips, are starting up online stores on established e-commerce marketplaces such as Qoo10, Lazada and Hachi.tech, to woo a new breed of online consumers.

Having a branded store on a marketplace means that instead of using distributors, the brands run the show themselves. The products available are not parallel imports, have local warranties and come with the same after-sales support as store-bought items.

While some of these companies already run their own online retail stores, the move to open more e-stores, much like physical stores, is to tap consumers who are are browsing for other items in these marketplaces, or who may be looking at using discount vouchers from such third-party services.

Aside from simple item listings and delivery options, these marketplaces also provide additional resources to brands which might not want to develop their own.

These include mobile apps and established social media links already put in place by these omni-channel, or multi-channel, marketplaces.

According to MasterCard Asia Pacific, the Asia-Pacific region, excluding China, generated US$127 billion in e-commerce transactions in 2014, and the region is set to become the largest e-commerce market in the world within the next five years.

The move to existing e-commerce platforms is not just for the big boys, as smaller companies are leveraging the existing payments management, logistics implementation, customer service, mobile apps and back-end IT support that these marketplaces have in place.

German cleaning products company Karcher started an online-exclusive branded store on Qoo10 in January this year, to tap the marketplace's 8.7 million monthly visitors.

"Having an additional platform on Qoo10 allows us to streamline our product offering. Qoo10 is hassle-free in terms of product promotions, customer service and logistics management, which is advantageous to us as we have a lean team in Singapore," explained Veron Chew, Karcher Singapore's marketing manager.

The company declined to reveal sales figures, but noted that with Qoo10's discounts, final online prices can be cheaper than those at retail.

It started with five items on Qoo10 and currently sells nine, including high pressure washers, steam cleaners as well as dry vacuums.

"While we offer the e-commerce option on our own website, we are often limited in terms of marketing efforts. Qoo10 helps us to minimise resources yet still offer convenience to our customers, which is an ideal scenario for us," said Ms Chew.

Though it did not break down sales based on the different sellers, Jacob Yu, brand manager, Qoo10 Singapore, said that sales of electronic items have doubled year-on-year, with sales volume currently hitting between S$8 million and S$10 million monthly.

"Retail growth has been increasingly challenging so brand retail channels have expanded to cover both online and offline. Online retail is also advantageous as there are no restrictions on opening hours," said Mr Yu.

Lazada Singapore says it has also tied up with the likes of Gain City and Big Box, and has seen an uplift of eight to 10 times the number of electronic brands on its platform in the last 12 months.

"Sales of electronic goods on Lazada have increased approximately three times over the last 12 months," said Andrea Baronchelli, Lazada Singapore's chief marketing officer.

Another reason why brands are going more aggressively online is that they recognise that they cannot succeed alone.

"With our own website, our main objective is to increase our level of engagement with our consumers and build consumer loyalty," said Aw Ee Ling, senior marketing manager, Philips Singapore.

"At the same time, we are actively growing the online retail channels with our valued partners, as this helps us to increase engagement and widen our reach."

Back in 2010, Philips Singapore started branching out beyond its own e-commerce platform, and it now manages 10 branded stores together with partners such as Lazada and Qoo10.

While prices remain the same as in stores, brands do offer online-only promotions to differentiate their offerings.

For example, store pre-orders for Samsung's latest Galaxy S7 smartphone came with a set of Gear VR goggles. On Lazada, Samsung offered a pair of its Level U Pro headphones instead.

For this month's launch of the Huawei P9 smartphone, the Haze Gold version will be exclusive to Lazada.

And while conventional wisdom might point to consumers buying only small items, and not bulky electronics such as washers and TVs, the situation is changing.

"Shoppers these days are more likely to have researched products online and know exactly what they are getting. Combined with not having to go through the hassle of getting to and from a store, and the fact they may end up actually knowing more about the product than the store staff do, it makes sense to take their transactions online," explained Norrelle Goldring, APAC shopper lead at research company GfK Asia.

"It's also a lot about convenience. If a bulky item offers free home delivery or add-on services when bought online, this could lead to a higher likelihood of purchase as well."

The spike in online buying prompted GfK Asia to conduct a market study. It showed that of the 85 per cent of consumers polled across the Asia-Pacific who had purchased a consumer electronic item in the last 12 months, half of them made the purchase over the Internet.

But while signs are pointing to a healthy online retail market, brands should not forget that they have little control over third-party platforms.

"It is important for the brands to understand that they do not own any of the customer data, and this limits their ability to turn customers into brand advocates, or re-target or re-market those that did not complete a transaction," warned Haran S Pranatharthi, head of Business, SEA, at e-commerce software company SAP Hybris.

"Brands can better address concerns around negative feedback and experiences when they have their own e-commerce sites. Setting up a dedicated online and phone-based support centre that effectively records and tracks customer concerns and feedback goes a long way in improving the trust level in that particular brand. This is usually the biggest concern when brands look at positioning their products via third-parties and public market places as they do not directly control the logistics."