Double days drive e-commerce surge in APAC

Why it matters

The potential for FMCG brands and retailers to reap major online sales uplifts is very real on double days and must not be ignored because shoppers are waiting for these days as they know they are going to get a deal.

Takeaways

• To gain an advantage in e-commerce and tap it for increased sales, use different measures of success for online and offline.
• Optimise product visibility – the first three items that come up in a keyword search occur for 80% of sales. Positive online reviews and ratings are important, with high customer satisfaction required to stand out from the crowd.

In Asia, FMCG e-commerce now reigns as the second-biggest retail channel next to traditional trade, accounting for 19.5% of sales. But, as Vaughan Ryan sees it, it is still not being taken seriously enough.

NielsenIQ’s Managing Director of E-commerce, Asia Pacific said: “Online is becoming the second-biggest retail channel in FMCG across Asia Pacific. That is a big deal because I don’t believe that many manufacturers understand or place the importance on online to the extent that they should, when you consider the way that they treat supermarkets, the way that they treat traditional trade.”

Ryan was speaking at the recent eTail Asia Summit 2022 in Singapore where he shared NielsenIQ data on how e-commerce already accounts for 30% of FMCG sales in South Korea (34.8%) and China (31.6%), while other countries in the region such as Singapore (13.7%), though trailing behind, are also fast growing.

Image Source: Source: NielsenIQ MS and CPS data to Dec 2021, APAC Bases survey, Feb 2022

“This is a channel that is going to grow significantly faster than others,” he said of e-commerce. “It’s not going to slow down.”

Double days crucial for e-commerce surge

One phenomenon that the NielsenIQ team is observing is the sales spike on special e-commerce days, known as double days. While the original double day, 11/11 Singles’ Day, was started by Alibaba 13 years ago, these double days now extend to the other calendar months – think 6/6 or 12/12 for instance – throughout the year.

“The spikes continue and they are every month,” said Ryan.

What’s more, the sales surges are rather significant.

“40% of sales occur on one day in the month. (When you) take into account the fact that about 20% of your sales are online, that counts for a pretty important event.”

Research from the Nielsen E-commerce Accelerator 2021 report shows this sales increase on double days as being especially pronounced in certain markets.

In Indonesia, sales increased by 450% across 16 categories, while sales in Singapore saw an increase of 606% across 16 categories. Elsewhere in the region, sales in Thailand surged by 506% across 21 categories, while in the Philippines, sales soared by a staggering 1,700% across 16 categories.

“And that’s just for daily sales. Shoppers are waiting for these days. They are literally sitting online at midnight, ready to go, and they are doing it because they know they are going to get a deal.”

This phenomenon is not unique to certain categories. The two charts below show the surge in online product sales on 11/11 in the categories of facial cleansers and health supplements and vitamins in both Singapore and Thailand markets.

Image Source: NielsenIQ E-commerce Accelerator, Thailand and Singapore, 1 Sep to 31 Dec 2021

What this all means for FMCG brands and retailers, therefore, is that the potential to reap major online sales uplift is very real on double days and must not be ignored: “These deals must occur.”

Offline and online are not built the same

To really gain an advantage in e-commerce and tap this retail channel for increased sales, the industry needs to approach it differently, with different measures of success for online and offline.

This, he suggested, means anything from optimising product visibility – “The first three items that come up in a keyword search occur for 80% of sales; if you are not among these first three items, you are doomed” – to ensuring good customer experience from delivery to quality control.

“We worked with a toothpaste manufacturer recently that had a number of bad-quality toothpaste entering the market. The question was, was the retailer at fault, or was the manufacturer at fault? It’s pretty obvious that, at the end of the day, if the consumer did not enjoy the toothpaste experience, they won’t buy it again.” There is also a need – though challenging – to understand where the sales are coming from and what is driving these sales.

“The challenge is to understand who is selling your product. Because of the nature of the marketplace, it might be Lazada, it might be JD, but it also could be mom-and-pops that are around the corner, that are using the app. You need to understand who that store is, and why are they accelerating?”

Ryan said that what they can’t tell is, for instance, the difference in terms of their promotions – there is no seamless idea about whether it’s more direct sales or indirect sales.

“It is about understanding who is selling your product and understanding the impact of price promotions. The surge is super real when it comes to price.”

Singling out the example of an unnamed brand (brand B below) in Thailand that was the second-top performing brand online for 11/11 promotional sales in the facial cleanser category, he observed: “It grew by 13%. In the last six months, that brand was ranked 15. And if you look at it in the offline area, it is ranked 434.”

Image Source: NielsenIQ E-commerce Accelerator, Thailand and Singapore, 1 Sep to 31 Dec 2021

Positive online reviews and ratings are particularly important.

“When people buy something (online), they look for customer reviews. It is not by coincidence that this brand B had the highest satisfaction when it comes to reviews. It just stands out from the crowd.”

What this means, is that success is no longer limited to brick-and-mortar sales.

“Brands are now recognising that they do not have to go through traditional distribution to be successful. They are actually launching products just online. And they are doing extraordinarily well and competing with some of the biggest manufacturers and advertisers in the world, and winning.”

He added: “It is so important for manufacturers to understand who their competitors are. It is rapidly changing. The places you thought are offline and online are very different.”

What it takes to win online

“Everyone is playing into the hands of this omni-surge,” he concluded. “People could be in an offline store with their phone on and shopping in two stores at the same time. Consumers have become way more educated when it comes to price.”

What’s more, he said that “an omni-shopper is worth double that of an offline buyer”. This is based on recent data from NielsenIQ’s consumer intelligence tool Homescan, which found, for instance, that average FMCG online shopping spend is AU$111 versus just AU$50 for average FMCG offline shopping spend in the Australia market.

“You need to understand the omni-shopper. Across APAC, 30% of consumers are omni-buyers. This is the group that you want. If you are a retailer here, you need an omni-buyer to be successful.”

How can one win in the online space? A number of factors come into play.

“It’s keyword search and reviews, it’s visibility, it’s availability, it’s price – all combined under one banner.”

Ryan added: “It is a different playing field than it was in the past. It’s not one or the other, it is one and the other – it is offline and online.” 

*This article was written in partnership with WARC, a media partner of eTail Asia