E-Commerce in AsiaHow to drive profitable growthCharles Chan, Founder & Managing Director of CLEARgoPresented at The French Chamber of Commerce and Industry in HKJan 2014

About CLEARgo

The Brand eCommerce Agency

that delivers eCommerce success for clients

PLANE-Business

Strategy

BUILDOnline Branding, User

Experience & Technology

GROWPerformance Marketing, CRM &

Conversion Optimization

On 2013.11.11Over RMB100 million in sales during the 1st minute

RMB 35 billion sales at Taobao & Tmall in one day on

11.11 is a lot bigger than Cyber Monday & Black Friday Sales

*Non-travel (retail) e-commerce spending excludes auctions and large corporate purchasesSource: BCA Research, Alibaba Weibo, Comscore, Bloombery Industries, U.S. Global Investors

U.S. Cyber Monday and Black Friday Sales*Alibaba’s Singles’ Day Sales

In Billions

2009 2010 2011 2012 2013

$1

$2

$3

$4

$5

$6

China is already the #1 online retail market in value & penetration, with momentum that’s expected to continue

Retailer should no longer ignore online as its % of retail grows

The stages of eCommerce varies significantly for different countries in Asia Pacific

• Nascent

– India – Still tiny now (less than 1% compared to China), but expecting rapid growth (over 50% CAGR for next few years)

• Ascending

– China – Already huge in size, and is still growing rapidly

• Mature

– Japan, Korea, Australia – Reasonably large eCommerce markets but growth has slowed down

You know there is opportunity in tapping to eCommerce,

But HOW?

First, deciding on the eCommerce Channel Model

brand.com mall-operate branded store

authorized online distributionbrand-operate marketplace store

In China, eCommerce has been marketplace driven

Tmall and the rest

Horizontal and Vertical eCommerce Platforms

Horizontal Platforms

Luxury

Private Selling

Cosmetics Consumer Electronics

Media

Grocery

Fashion

Dual Channel Approach

Coach closed its online flagship store in Tmall only one monthafter it opened, and shifted to sell in its brand site instead

Olay has flagship stores in almost all platformsexcept brand.com

Brand Site

The luxury divide on brand site and marketplaces

Official eCommerce presence No Official eCommerce presence

So which channel is right for you?

Brand.com

Brand Operate

Store @ MallMall OperateStore @ Mall

DistributionOnly

Brand Image

Control

Demand Capturing

CRM/Loyalty Integration

Data Ownership

Setup & Operating Cost

Operations Complexity

To Sell in Tmall - Do you have a Chinese entity already?Have you registered and trademarked your brand already?

Tmall now allows foreign brands to setup without local entitiesand sell to Chinese consumers as cross border transactions

A few things you need to know about setting up your eCommerce operations in China

Create an eCommerce user experience for China – Information to help customers making decisions

* a typical product detail page in China

Payment methods in ChinaAlipay, China UnionPay, Direct Debit, etcMost people don’t have credit card and are unable to pay non-RMB transactions

“Fapiao” – not just an official invoiceThis is how local Government keeps track of your Value Added Tax (VAT)

Customer Service – Live ChatHotline & Live Chat for both Pre-Sales & Post-Sales is a must in China

AliWangWang is the standardLive Chat platform for Tmall & Taobao

Warehousing, Fulfillment & Delivery A range of domestic and international providersService quality from domestic providers still varies but improving

Amazon Fulfillment Service

In-house vs. OutsourceOutsource some or all aspects of the puzzle

Order & FulfillmentManagement

Merchandising& Inventory Mgmt

CustomerCare

Store Management Marketing & CRM

eCommerceTechnology

You now have your eCommerce presence,

Customers will come?

In the offline world, it is all about Location, Location & LocationIn the online world, it is all about Search, Search & Search

Get Exposure & Be Found

BrandeCommerce

Directory

Search(SEM/SEO)

DisplayAds

CSEProductSearch

AffiliateMarketing

E-DM

SocialMedia

The Keywords

Traffic Drivers &Customer Acquisition Cost (CAC)

Once you get a potential customer into your shop,the key is to get them to make purchase

Key Factors that determine conversions

Overall Site Usability &

Speed

Product Display

(Recommendations)

Pricing & Promotions

In-Site Search & Filters

Product Content

Cross Selling & Up Selling

Checkout Process & Payment

Shipping Fee & Delivery

Time

Cart Abandonment

Product Reviews

The Keyword

Conversion Rate & Average Order Value (AOV)

Typical Customer Database of an Online Store after a while

Non-Activated Members

One-Off Customers

Churned Customers

RepeatCustomers

BestCustomers

Business Value

Size of your Database

Improving e-Commerce Profit through moving customers to profitable life stages

NewMember(Subscriber)

First Purchase

Repeat Purchases

Best Customers

• On-boarding series• Welcome discount• 1st purchase push• Browse retargeting• Newsletter

• Post-purchaseCross-Sell / Up-Sell

• Browse Retargeting• Repurchase Alert• Newsletter

• Post-purchaseCross-Sell / Up-Sell

• Review Solicitation• Browse Retargeting• Repurchase Alert• Loyalty Update• Member-get-member• Newsletter

• Best customercare & reward

• Loyalty Update• Member-get-

member

• Win-back OfferSeries

Churned

The Keyword

Repeat Customers & Customer Lifetime Value (CLV)

eCommerce Metrics

Traffic Drivers

Cost per VisitQualified VisitsUnique Visitors

Channel Attribution

Conversion

Conversion RateAverage Order Value

Cart Abandonment Rate

Sales

Customers

Customer Acquisition CostCustomer Lifetime Value

RFM (Recency, Frequency & Monetary)

Net Promoter Score

Revenue & Profit# of OrdersInventory Turnover Ratio

11.11 – the date that takes months to get ready

How Chinese sellers are preparing for 11.11

Summary

Develop an e-Commerce Channel Strategy1

2

3

4

Understand the Chinese online purchase behavior and habits

Setup a suitable Operations & Organizational Model

Build Traffic, Optimize Conversions, Acquire & Grow Customers

THANK YOUfor your time & attention

For more information, please contact:

Charles Chancharles@cleargo.com

+852 9470 6088

http://www.cleargo.com