In line of its core business of online sales, Rakuten, which has just opened its online store in Singapore in January of this year, held a panel event on the subject of effective E-Commerce Marketing.
Rakuten, being one of the world leading Internet service companies that just recently had been named among the world’s top 10 most innovative companies by Forbes, is now further expanding into South East Asia, a market the company defined as one of its key growth markets. To date, Rakuten Singapore already boasts 120,000 goods from over 170 merchants on its online sales platform and could achieve all this in just five months.
Looking at the development of the online market in Singapore that is expected to have quadruple its volume till 2015, compared to 2010, reaching S$ 4.4 billion, the key question to the panel was what are the advantages, what are the hurdles and where is improvement needed to be able to meet this target.
Invited panellists were Julian Persaud, Managing Director of Google South East Asia; Deepesh Trivedi, Head of Retail and E-Commerce, Facebook, South East Asia; Masaya Ueno, Head of Business Development division, Rakuten, Asia; Kiren Kumar, Director of Infocomms & Media, EDB; and Marcus Tan, Co-Founder of Carousell.
The synopsis of the event is basically the following: No matter if you are in a highly developed market like Singapore, with an excellent IT infrastructure, or in less developed countries like Indonesia or Thailand, over 50% of the online purchasing process is already done via mobile devices.
One of the key hurdles in emerging markets is the low penetration of credit cards, which makes billing of products, and therefore the sale itself, more difficult. Alternate charging systems are often quite expensive, as Mr. Masaya from Rakuten pointed out and logistical issues and connectivity are additional obstacles to overcome.
In contrast, one key hurdle today in developed markets like Singapore is no longer the ordering or acquisition process, but the logistical tail which comes along with the sale, including availability, delivery time, returns and claims. According to Google’s Julian Persaud the online side is by now the easy part although a lot still needs to be improved. At least s merchant are finally seeing the advantages of e-commerce as most of the people are already online and the market needs to follow where the customer is. The lack of talent in this technology industry is another problem, which is why EDB is sponsoring training and degrees in this area.
In the end it comes down to user experience though. Unfortunately, the chances are still high that a locally sourced online product by one of the many ecommerce sites in Singapore will leave the customer waiting for up to three weeks for delivery. Ordering something from a US webpage like eBay or Amazon only takes 3-5 days in comparison, as the infrastructure is already more developed, to the point of perfection, and the logistics via one of the large logistics providers is traceable and quick. This begs the question: why buy something online in a market like Singapore if it is so slow? As of now, the only reason to do this in such a small country like Singapore is the feeling of having gotten something for a very low price compared to going down to Orchard Road and getting it the same day. The reason for the long delivery time is that in most cases the products are not stored in Singapore, but sent in from close or far locations after the order, but in bulk shipments to keep the logistic costs low. So, there is still a lot of space for improvement here.
Listening to Deepesh Trivedi, the online consumer retail buying experience actually starts at Facebook. Many different examples were given that illustrated the buying experience – e.g. where the revenue generation starts out by actually getting excited about a product on Facebook. As for myself, though I can understand that a product or service can have a following on Facebook, the claims of 400% increase in sales due to Facebook, seems a bit far-fetched to me, except maybe in isolated cases. For me to understand why the social network suddenly is the ecommerce driving machine still needs some follow ups from my side, I guess.
Actually, when directly discussing the issue of delivery directly with Mr. Masaya of Rakuten, he also had to admit that we are still in the early stages and that some of the merchants even have to be reminded to deliver what they sold online at times. In fact that is a reason why warehousing of the products by Rakuten themselves is something that might be considered for the future in order to be able to guarantee timely delivery. Considering that both Rakuten executives who attended the event are actually still based in Malaysia and Taiwan respectively, as I found out through a call to the office for a follow up, means that this might still take some time for the hub function here to be in place.
In a nutshell: Yes, ecommerce is on its way to take more and more market share in Singapore and the region, but there are still a lot of concrete hurdles to overcome. Except for a better price, or just plain to be used as a research tool for competitive pricing, it in most cases does not give any other concrete advantages at this time, compared to going to the abundant and conveniently located shops next door, or a quick MRT ride down to Orchard Road.
But maybe we are there already in 2015, as the prognosis tells us.
By Roger Stadler