Digital commerce in SEA: Navigating marketplaces, affiliate and influencer marketing

Why it matters

Amid an increasingly complex e-commerce landscape, brands should have a clear strategy to maintain control when using online marketplaces, and tap affiliate partners to drive traffic for more sales, while diversifying revenue sources to offset rising paid media costs.

Takeaways

• DTC is important for brands to maintain control over customer data, brand-customer interactions and customer experience.
• Collect data and drive traffic through influencer marketing and online sales channels like loyalty programs and email marketing.
• Work with different types of partners and different verticals within an affiliate, like cashback platforms and finance partners.

Online marketplaces account for more than 50% of e-commerce GMV globally, with e-commerce poised to overtake physical retail sales in 2024, says market research company Digital Commerce 360.

At the same time, affiliate and influencer marketing are set to flourish, according to eMarketer's Affiliate Marketing 2023 report, with 48.9% of marketers planning to increase affiliate marketing spend.

Meanwhile, influencer marketing platform AnyTag reported 74% growth year-on-year in its campaigns across seven markets in Southeast Asia and three markets in East Asia in AnyMind Group’s State of Influence in Asia 22/23 report.

Opportunities abound for brands in Southeast Asia’s online retail landscape, as industry experts chimed in on practical advice to navigate digital commerce channels with ease in a panel session at the eTail Asia conference in Singapore.

Brand.com and marketplaces: A love-hate relationship

Herein lies a real dilemma for brands: should they invest in brand.com at all?

“It's probably the one-million-dollar question,” said George Ionut Danifeld, chief marketing officer of Malaysia-headquartered car accessories firm Trapo. He was speaking alongside Mark Turner, Neo Media World MD and GroupM APAC head of affiliate marketing. Impact.com Southeast Asia general manager, Antoine Gross, moderated the session.

Danifeld added, “There is a little bit of love-hate relationship with these marketplaces. Do I like them? No. Do I need them? Yes.”

Consumers have been pivoting to marketplaces since the pandemic, which offers the prospect of high sales volume on marketplaces. But with marketplaces also commanding increasingly higher commissions, Turner said this has the ability to dent margins.

Danifeld said, “Five or six years ago, the commission (for marketplaces) was around 5-8%. Now, it's going up to 20-25%. My expectation is that it is going to get even higher, so revenue is going to grow smaller and smaller. As a business, you want to increase your revenue as much as possible.”

For Turner, maintaining control is why DTC is “absolutely imperative” for brands. This applies to customer data, brand-customer interactions and customer experience, for instance.

He said, “If you are only using marketplace solutions, then technically, you don't really have much control of how the customer interacts with you as a brand and what your brand stands for."

For instance, if delivery is delayed on any one of the marketplaces, there will be a knock-on effect on the brand.

“You have no control over it. There is also a lack of control over your sales pipeline and understanding what's happening."

Danifeld said finding ways to direct consumer traffic from the likes of Shopee and Lazada to brand websites, where possible, is a must for brands.

“I want as many customers as possible (buying) from my brand.com because I control the data (there); I own the data and I can use the data."

Turner advised brands to have a clear strategy when using marketplaces.

“Understand how you can lean in and how you can lean out. It's really important that you maintain that modicum of control."

Diversify revenue sources with influencer marketing and more

Amidst rising paid media costs, brands must collect as many sources of revenue as possible.

“Don't put all your eggs in one basket when it comes to the channel where your customers are going to discover you,” said Danifeld, divulging that the cost of customer acquisition at Trapo has been increasing by 10-20% each year.

“As a company, we are trying to be as performance-driven as possible," he said of the advantage that influencer marketing has wielded in terms of collecting data and driving traffic.

He shared one experiment by Trapo, which rotated influencers over five days for a product launch, versus having 30-40 influencers simultaneously “posting at the same time”.

The latter was found to be more effective.

“We've been seeing amazing results when it's about volume because the reality is that so much goes on social channels and the message can get diluted.”

In choosing influencers, he said it is important to prioritise working with key opinion leaders who are trusted by their followers for putting out authentic UGC. Consumer demographics matter in making the call for which platform to run influencer UGC on.

Danifeld said, “If you are going for the older demographic, you’d probably go to Facebook and YouTube. If you are going for a younger demographic, your audience is going to be on TikTok, Xiaohongshu for the Chinese market, and Instagram."

In addition to influencer marketing, Danifeld also pointed to loyalty programs and email marketing – both of which require first-party data – as powerful online sales channels.

“Email marketing, contrary to a lot of opinion nowadays, is still a really huge channel when it comes to driving revenue. We see around 15% of revenue coming from email marketing. It is important to collect as many emails (addresses) as possible."

Tap into affiliate marketing

Turner observed that affiliate marketing is a “pure performance-based” channel where affiliate partners drive traffic onto an endpoint to create sales.

It is also a channel that Trapo has been growing. Danifeld revealed how – just three or four years ago when affiliate marketing was still relatively new to the team – the team was initially at odds about whether to give out commissions to affiliates. Today, the company views affiliate marketing favourably as commanding lower costs in comparison to paid media and marketplaces.

Influencers aside, affiliates can also come in the form of cashback partners like ShopBack, as well as price comparison partners, banks or other brands, said Turner.

“There are many different verticals within an affiliate and different types of partners,” he said, adding that affiliate partners in the loyalty vertical could take the form of partners such as Singapore-based cashback platform ShopBack, while partners within the price comparison vertical work to aggregate product prices and information across different retailers to help consumers find the best deal and make purchasing decisions.

There is also the finance vertical.

Turner said, “We can build banking relationships and work with card operators and banks such as MasterCard, Visa, HSBC or OCBC. What banks are trying to do is to get more people purchasing with them, so they're very willing to help get more customers because that means more sales at the end of the day.”

For instance, brands can work with banks on card-linked offers where the consumer can use a linked payment card to redeem a discount off an Apple product at POS.

Affiliate partners can also take on the form of other brands.

"More and more, we see brands looking to drive relationships with similar brands that have a high relevancy together,” said Turner, singling out luxury electronics brand Dyson and home care and furniture brand Castlery by way of example.

“There is perfect synergy between them. If you create long-term relationships with other brands like this, it can really drive a brand halo effect between each other. You are piggybacking each other's efforts… to make sure your customers receive relevant information about other products that may be useful to them.”

In working with affiliates, Turner’s advice is for brands to communicate the terms of engagement clearly from the start, as well as to invest in the right tech stack to save time through automation, which can then go into defining strategy and optimising with these partners to develop even more revenue for the brand.

“It (influencer and affiliate marketing) is easily managed, you just need to have good tracking underpinning it and good communication with the party.”

A good tracking platform can ensure that whatever clicks the affiliate sends, “you can see that end-to-end through a single platform where you have a complete understanding of the results of the campaign”.

Embrace complexity, test and learn with rigour

As the e-commerce landscape gets increasingly complex with different partners and different solutions for brands, Turner’s advice is to remain unfazed.

“Go into it with an open mind and adopt new trends,” he said, adding that after choosing what to try new, it has to be given enough time, resources and budget to understand if it is valuable.

“If it is, fantastic. You've got another channel that you can add to your mix that's potentially incremental. If not, you've learned from it, you've closed a door and you can move on to the next thing to test and learn. Be comfortable with complexity, lean in, and try and learn.”