ASIA
We all know that online is the core channel for driving business growth and transformation in Asia – especially in the beauty sector. This is particularly true in light of the ‘new norm’ established during the pandemic in 2020, which we expect to continue as the status quo over the coming years. Due to recurrent and new outbreaks of Covid in Asia, beauty brands in many countries are still struggling to recover in full, especially those in the make-up category.
Across Asia, we have identified the basic ‘moments’ that play a key part in all online purchase journeys, regardless of the development stage the market is at. These are the hygiene factors which most shoppers look for when buying beauty categories through online channels.
First and foremost is price competitiveness. Online channels typically have higher levels of promotion than offline, and this is working effectively in attracting traffic. What we need to be alert to is that the more mature the market, the stronger the competition, leading to higher promotion-driven recruitment. Brands and platforms need to be mindful of how much promotion is enough to drive shoppers, without giving away too much.
Convenience is another reason online shoppers turn to digital channels to buy beauty products. It’s very convenient not to have to go to the store, especially for those categories that have regular consumption, which shoppers can easily buy in bulk to reduce the cost of delivery and to stock up when there’s a discount. As a result, online basket spend tends to be between 1.5 and two times higher online than offline. It is usually the categories used by all family members that are purchased online as a convenient bundle – such as basic moisturiser, facial masks and cleansers.
Lastly, online shoppers tend to seek something more premium. There is a demand for mass brands, but consumers are looking more for exclusive items or brands that are not easily available offline, or which can be picked up at a more attractive price.
We can see that the value contribution of premium brands is higher in online channels. In developing markets like Thailand or Vietnam, it’s usually the availability of premium brands or advanced formats that drive online value, whereas in more developed markets it’s seasonal promotions that lead to premium brands’ greater value contribution. This indicates that for emerging markets, online can be leveraged to reach more shoppers, while in developed markets the most effective strategy is to use seasonal promotions to give a quick extra boost to sales.
Cleansing and basic moisturisers like lotion or cream have the potential to become key categories for bundling or stocking up, as they’re part of the regular beauty routine. This meets the need for convenience and also, where offered at a discount, price competitiveness. However, once shoppers build their confidence in the online channel and shopping routine, brands should seek to drive loyalty through more sophisticated items such as serum, UV protection skincare, toner, or even make-up. Encouraging the purchase of slightly higher priced items or brands can also be an opportunity for beauty players in Asia to motivate consumers to trade up and grow their share of wallet.
In addition to ensuring basic online moments are addressed, offering a smooth and friction-free experience is another vital factor in growing the online channel. This is more of a responsibility for retailer than brands.
Easy navigation, sign up, payment, delivery and discovery all play a role as building blocks for growth.
Easy navigation. When the development of ecommerce was at an earlier stage, most platforms were designed to be accessed via a PC, which meant there were limitations on both the time and place consumers could shop. The shift to mobile allowed this ‘shopping window’ to open much wider, resulting in a nearly 10% incremental growth in shoppers recruited to buying beauty products online. It’s important that retailers build their platforms to make it intuitive for shoppers to navigate across both PC and mobile environments, interchangeably.
Easy login. Login is another issue many shoppers find is an obstacle when buying products online. Having to go through a lengthy registration process can prevent shoppers from converting. They may browse but, unless the complexity is eased, it will be a challenge to recruit new shoppers to a retailer or platform. Nowadays, we see many ecommerce sites link login with their social networking platforms to address this issue. If this is not an option, e-retailers can at least simplify or offer non-registration login to ensure easy buy-in to their platform.
Easy payment. There are infrastructures readily available to support this across the region, but where this isn’t the case there are always ways to work around the problem – like allowing shoppers to pay cash upon delivery in south-east Asia. In Korea, the implementation of easy payment in online beauty brought 15% of incremental value sales growth in just a year. This growth was led by retailers addressing a particular special moment: impulse purchase. As we know, not all shopping moments are planned. We make many impulsive choices, and easy payment systems allow shoppers to quickly convert that decision into a quick sale. Brands and retailers should check to see if their platform or offer continues to trigger and facilitate shoppers’ impulse buys.
Fast delivery. In the early stages of online beauty development, delivery took 3-5 business days. This prevented many urgent shopping occasions from being fulfilled in the online channel. The arrival of more efficient delivery times allows shoppers to purchase from most categories that meet urgent needs. Similar to easy payment, the embracing of another special online moment – emergency need – has grown online beauty sales by another 15% in a year. It’s not always a priority for shoppers to have next day or same day delivery, but there are clearly opportunities to be uncovered if brands and retailers look into the urgent needs their shoppers have.
Easy discovery. In the past, active discovery usually took place offline. Going to a store to try out products and engage with beauty assistants was part of the shopping journey. Online was not a platform through which to explore new brands or products because it’s physically impossible to offer the sensory experience that beauty categories rely on. But due to the growing number of influencers, and the ready availability of live commerce ‘see now buy now’ platforms, shoppers are increasingly using online to address their ‘discovery moments’, and are willing to buy products without the full sensory experience. A rising number of platforms and retailers are curating the products they offer through experts, and building abundant and customised reviews that give shoppers the confidence to buy without trying offline first.
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