Home Special Reports In navigating e-commerce, new online sellers need help too

In navigating e-commerce, new online sellers need help too

By Keren Concepcion G. Valmonte, Reporter

WITH mall shopping now a distant memory for many, how has the process of enticing customers to buy your wares changed in the e-commerce age?

“You have to really be able to know how people are using the different digital channels and being relevant there,” Roshan Ramesh Nandwani, chief strategy officer of advertising agency BBDO Guerrero, told BusinessWorld.

And while literally billions of pesos are riding on understanding consumer behavior when much of their spending has shifted online, perhaps the least understood aspect of this equation is how small businesses that are new to online selling can hit the ground running under pressure from an unprecedented economic crisis.

According to the 2020 e-Conomy SEA (Southeast Asia) report issued by Google, Temasek and Bain & Co., at least 37% of the Philippines’ digital service consumers were new to online services when the pandemic hit. The Philippine total is just above the 36% average for Southeast Asia. The e-Conomy report also found that 95% of the new digital consumers expected to continue using online channels post-pandemic. How might this new reality change the landscape for retail?

“There is a consumer behavior reset that is driving consumption patterns,” NielsenIQ Philippines, Vietnam, and Myanmar Managing Director John Patrick Cua told BusinessWorld.

One of the new consumption patterns that emerged during the pandemic is what NielsenIQ calls the “homebody reset” — a shift in spending favoring purchases made at home, rather than “discretionary out-of-home expenses.”

In response to these shifts, more companies, brands, and retailers have started to look for ways to get their products out on digital shopping platforms

“Over 300,000 sellers onboarded with Lazada Philippines since the start of 2021, and the number is growing steadily,” Lazada Philippines Chief Operating Officer Carlos Otermin Barrera told BusinessWorld, adding that the response of consumers has been “quite encouraging.”

But what sells?

With the pandemic forcing consumers to rethink their priorities, purchases have come with more thought behind them, with an eye towards preserving cash possibly for the long haul.

NielsenIQ said it identified two new consumer categories that emerged during the pandemic. The first is what it calls the “cautious insulated,” who have not been affected financially by the crisis “but are watching what they spend much more.”

The second category is the “newly constrained,” who have experienced financial difficulty and are watching their spending accordingly.

Preliminary results from the June round of the Philippine Statistics Authority’s Labor Force Survey place the number of unemployed at around 3.764 million, up from the 3.730 million logged in May.

The June unemployment rate remained unchanged from May at 7.7%.

Meanwhile, the underemployment rate rose to 14.2% from 12.3%, equivalent to 6.409 million employed persons who are looking for more work or are seeking longer hours.

“Consumers prioritize essentials, stretching their money for old and new needs, while still embracing online and convenience,” Mr. Cua said. “Pre-COVID, we were spending more time out of the house, and eating out became the norm. The pandemic (saw a shift to) convenience, which took the form of home delivery and online shopping.”

Lazada said it saw a “huge uptick” in sales of essential goods during the pandemic. Groceries, household goods, and cleaning supplies saw growth of up to 15 times their pre-pandemic levels, while sales of masks and other personal protective equipment grew 10 times.

“(It’s) a perfectly natural phenomenon as more individuals were looking to sanitize living spaces and acquire the right equipment to protect themselves during the pandemic,” Mr. Otermin Barrera said.

Work-from-home also boosted Lazada’s laptop sales, which grew five times from pre-crisis levels, he said.

“Similarly, the lockdown created the unintended effect where some people had more time to pursue personal hobbies, and this was reflected by an uplift (by six times) in the sales of bakeware and supplies, along with increased interest in gardening supplies and home exercise equipment,” Mr. Otermin Barrera said.

Some opted to go for pre-loved items during the pandemic.

“With COVID and the general weak market outlook, we see our users turning into buying and selling second-hand,” Carousell Philippines General Manager Raffy Montemayor said. 

Buyers are getting the products they want for less, taking advantage of the decluttering trend among sellers, who also raise cash in the process.

“As online selling becomes a bigger revenue channel for brands and sellers, e-commerce platforms need to implement innovative retail strategies,” Martin Yu, director at Shopee Philippines, told BusinessWorld.

“(With digital) it’s much faster… so quicker turnarounds, quicker response to what the culture is talking about, and much more rawness of content creation. It’s not as tailored as it was before,” BBDO Guerrero’s Ms. Nandwani said.

That trend is in part responsible for a widespread shift to digitalizing sales channels, though much work needs to be done to convince small businesses to jump in.

“There are various reasons why (small businesses) are reluctant to go online,” Martin Yu, director at Shopee Philippines, said. “Some are unfamiliar with the digital landscape, some are intimidated by cost implications, while some are not too familiar with how they can maximize their presence online.”

Small-business owner Sophia Stuart del Rosario started her business when the pandemic hit last year by selling her pre-loved items as well as starting her own makeup brand. 

The 18-year-old entrepreneur was nervous when she started selling her items over at Shopee since she did not have a significant following, so she went to a space she was more familiar with — social media.

“I decided to promote on Tiktok,” the youth-oriented short video platform, she said.

“It’s free and random people can see your videos. After I promoted on Tiktok, I gained followers, likes, and reviews, and sold items,” she said.

Shopee also helps small businesses in reaching a wider customer base through Google Ads with Shopee. It offers marketing support for brands, customizing their content according to what consumers are looking for.

“Shopee would give me analytics,” Ms. del Rosario said. “They also provide data on how many visited your store and how many users have added your items to their cart.”

Shopee also launched Shopee Thursdays in partnership with the Department of Trade and Industry (DTI) to provide “masterclass sessions” to teach current and aspiring entrepreneurs how to maximize e-commerce.

“To give visibility to local sellers in our platform, we launched the #TatakPinoy Virtual Trade Fair and National Food Fair to allow local entrepreneurs and food sellers to grow their brand presence online,” Mr. Yu said.

At Carousell, the platform organizes monthly community webinars.

“(We conduct) direct-to-consumer online activities to get feedback from sellers and share with them insider tips on Carousell trends to help them sell faster,” Mr. Montemayor said.

Carousell prepares a “Daily Picks” reel, curating items for users according to their browsing history, and a “Deals Near You” log, which matches buyers and sellers in the same area. 

“In the app, we also highlight what buyers are looking for to help sellers list more of those items,” Mr. Montemayor said.

Lazada’s flagship LazMall in the Philippines carries over 8,000 local and international brands. It helps sellers by offering a more personalized experience for their shoppers via algorithm-driven artificial intelligence (AI).

“At Lazada, we offer brands and sellers access to our proprietary operating data dashboard, which provides them with real-time, actionable, and cost-effective insights on buyers’ preferences,” Mr. Otermin Barrera said.

He said data insights are useful for sellers in mapping out consumer journeys — from providing product recommendations as well as “optimizing the delivery process.”

For consumers who are careful about what they buy online, the pandemic has taken away the experience of trying out the goods before purchase. Both Lazada and Shopee have branched out to provide programs that let sellers interact with their customers aside from chat. 

Lazada’s LazLive gives potential customers product demonstrations via livestream. Meanwhile, Shopee Live also allows sellers to interact with their customers.

It’s the closest consumers can get for now, at least.

“Our live streaming feature has enabled brands and sellers to better reach and engage Shopee users across the region,” Mr. Yu said. At Shopee’s yearend “12.12” birthday sale in 2020, Shopee Live logged 450 million views.

Lazada, on the other hand, launched LazTalent, in which individuals join Lazada’s content creation platform. The program provides individuals training to familiarize them with the basics of launching a brand and how to use the tools on Lazada.

“The initiative has led to a new job category — professional live streamers, especially at a time where the new digital economy is rapidly developing in local markets,” Mr. Otermin Barrera said. 

“This also enables us to localize our outreach to consumers in our key markets, creating a more personalized shopping experience for all,” he added.

Online platforms are trying to build communities as well. Carousell has “Carousell Groups,” in which buyers and sellers can meet those with similar interests.

“We have over 30,000 members in our Korean Fashion group, over 50,000 members in Book Lovers, and over 42,000 in our Mommies & Babies group,” Mr. Montemayor said.

Shopee has a similar interaction channel called Shopee Feed.

“Through Shopee Feed, we allow users to share content on what they are listing, buying, and selling with the larger Shopee community,” Mr. Yu said.

These online groups — whether as an in-app feature or as another group on a social media platform — have been found to be helpful in driving sales.

The caveat is that brands and companies need to remember to be “more authentic” as they are now speaking to communities, BBDO Guerrero’s Ms. Nandwani said.

“When you go into the sanctuary of these people, you need to make sure that you are able to deliver a message that is relevant to them, that is authentic to them because as soon as you don’t, they kick you out. And when they kick you out, it gets worse for you,” she said. 

Being “present online” via community groups is seen as a form of availability, breaking barriers to allow customers and potential consumers to be more connected to your product.

“Digital marketing allows smaller brands the opportunity to connect directly to target consumers based on what they search, what media they consume and who they are connected with,” NielsenIQ’s Mr. Cua said.

“Shopee is helpful in gaining sales since its more convenient for people,” Ms. del Rosario, the make-up seller, said, adding that her customers like availing vouchers and free shipping promos from Shopee.

“I use Instagram for promoting and adding creative pictures that can help to persuade the customers,” she added.

Consumers will continue to look for convenience moving forward. The benefits of having everything within reach through mobile phones is expected to stick even post-pandemic.

“Consumers will continue to be connected online. Online activity will grow together with increasing internet penetration and as more online services become widely available,” Mr. Cua said. 

Shopee expects investment in logistics to continue as a priority, and perhaps take on a greater importance, after the pandemic.

“Logistics will only grow in importance as consumers continue to go on e-commerce platforms for their daily needs and essentials, and as more brands and businesses continue to employ an omnichannel strategy to growth opportunities,” Mr. Yu said.

Shopee reported 8.5 times growth in shipped items, specifically food products, from its warehouse.

“With a large percentage of our constrained consumers, value for money will be important,” NielsenIQ’s Mr. Cua said.

Carousell is hoping that more people turn to buying second-hand items goods sellers no longer need.

“We think it makes a lot of sense — people save money, make money, and even create possibilities for someone else in the process,” Mr. Montemayor said.

“Companies must constantly stay in touch with the consumer and adjust their communication and product offerings,” Mr. Cua said.