Starting up an entirely new Ecommerce in South East Asia

Before it was even possible to pay with credit cards online and when online shopping was a strange, foreign term, there was ISO. ISO was Denmark’s first online grocery store. The year was 1998, and Allan Vincentz was a part of the team that launched the online grocery store.

Allan has been involved in Ecommerce projects on/off during the years and later became the Ecommerce manager at the Danish ecommerce giant, Matas. However, he left that job in 2014 — he wanted to do something else, something different.

They had to offer something special to lure me away from my job back then. That is exactly what the job in Singapore did.
Allan Vincentz, Head of Digital, COCOMI

Today, Allan Vincentz is heading COCOMI, a brand new but ambitious Ecommerce shop based in Singapore, selling watches, sunglasses and jewellery. COCOMI is available in Singapore, Australia and New Zealand. Allan and his team is currently preparing the launch of COCOMI in an extra 9 markets in the next couple of months.

He has learned several important lessons, doing Ecommerce in South East Asia. Lessons, he is certain, would be incredibly useful in Europe.

We sat down to speak with him about the challenges, the joys and what he has learned being all the way out there, trying to start up an entirely new Ecommerce in South East Asia.

What is your ecommerce setup like?

Altogether we are eight people covering different areas; logistics, merchandising, marketing and so on. Basically everything you need to run a company. We have a warehouse in Hong Kong and one in Singapore from where we ship all orders. Recently we established an Ecommerce platform based on Demandware. Fully integrated with Navision.

The Ecommerce market in South East Asia is less than 1% of the total retail sale. In Europe it is around 8–10%, and the global average is around 8%. Furthermore there are currently around 200 million people online in the region. A number that is expected to grow to 400 million in year 2020.

This means, that if you decide to invest in South East Asia now, you get the chance of targeting an incredibly large number of potential customers. As mentioned, 200 million are already online, everyone use smartphones, but only few people are shopping online at this point. It’s like a travel back in time, with a lot of the same challenges as when Denmark just discovered online shopping 7–8 years ago.

What is your most important marketing channel?

The most important marketing channel to us is Google Adwords — but it all depends on the market. Here in South East Asia, Facebook is extremely important, as social media plays a key role out here.

When talking online marketing, where do you put your future efforts?

In the future we really want to increase our focus on content marketing. Not only do we want to be the watch shop with the nicest products, best pictures and most correct descriptions, we also want to be an authority, writing interesting content about watches and our products in general.

In a few years, when the online shopping market has matured, we will face a lot more competition than we do now, which is why we have to start immediately, building up our reputation within content marketing. On the long term this will also enable us to lower our marketing spend, which is important if we want to be profitable.

What is the coolest function you have implemented this year?

Here in Singapore it’s normal for people to receive promo codes or vouchers through their banking society. We will use Facebook to create advertising, that looks like it is coming from a bank, to direct people into our site and use the promo codes. If the bank contacts us we will just offer them a partnership.

It is incredibly easy to form partnerships out here — the entire market is driven by partnerships and promo codes. Something the market in Europe and US probably could benefit from, if it was introduced.

Cart Abandonment
We have all heard the statistics; about 7 out of 10 customers are abandoning your shopping cart without actually making a purchase. If we can get just 1 out of those 7 customers to come back and place an order, we can increase the revenue with almost 33%. That’s why we have created a quite advanced abandoned cart flow.

Allan sent me this diagram with their newest setup (Screencast from Bronto.com):

Sleeknote recommendation:
It’s important each email contains a permalink, also referred to as a permanent link, to a customer’s abandoned checkout enabling them to quickly and easily complete their checkout if they choose so. Remember to setup a checkout funnel in Google Analytics and track every little step you have.

Example email:

Where do you get your inspiration from?

I mainly get my inspiration from following relevant blogs and people in my network, colleagues in the industry, and so on. I highly doubt that online marketing is a learned skill, you can pick up from a course or seminar — you have to figure out what works for your online store, notice what others are doing and adapt it to your online store and the products you are selling.

In what way does the South East Asian market differ from the European market?

The smartphone market is incredibly dominant, more than 60% of our visitors are using a smartphone, when they are browsing our website. We really have to focus on phone solutions such as apps and mobile friendly sites. There is a much stronger focus on discounts and promo codes.

The competition to win the customers is hardcore, it’s mainly driven by prices. It might change when the market grows, but at this point, we all fight very hard to acquire the customers, and we are forced to optimize every little thing we are doing. In Europe you can often get away with solutions, that are not 100% optimized, and still win customers.

What are the five biggest barriers when running an online shop in South East Asia?

In every market, there will be barriers when running an online shop. What are the biggest barriers in South East Asia?

Logistics

In Denmark it is easy to partner up with Post Danmark og GLS etc. It is not that easy in South East Asia. Singapore is quite a small country, which means that COCOMI ships to the neighboring countries as well, to reach out to a bigger market. This makes the task even more challenging.

First of all, you need to find a logistics partner who are willing to deliver to other countries besides Singapore. Second of all, you need to find a partner you can actually trust. And, as if that wasn’t enough, you need to find a partner who is able to deliver to all the different areas — because in some places (like the Philippines), the houses aren’t even numbered.

The way we deal with the logistic challenge is, we try to explain the big companies, that we might only be a startup now with a limited amount of orders each day, but when we expand, we will be loyal to our partners — it could be such a strong cooperation.

Payment

A lot of people out here prefer to pay cash in hand, once the product is delivered — actually paying the delivery man with cash.

Maybe it is because they do not trust us, maybe it is because they do not trust the internet — no one knows, but you have to find a logistics partner, who is able to do cash payments. It also means, that we have to offer that option on our website — to pay at delivery.

Besides that, there is no smart solution to pay via mobile phone, which is a massive problem. That would make a lot of things easier, for us and the customers.

A lot of people out here prefer to pay cash in hand, once the product is delivered — actually paying the delivery man with cash.
Allan Vincentz, Head of Digital, COCOMI

Barriers between countries

Online shops in the EU are having such an easy time. There are trade agreements, ensuring equal rules and regulations across the borders. There are no such thing in Singapore and the neighboring countries.

The shipping rules are completely different — so we have to know these rules, apply them to our site and inform our customers of the various rules and fees, when shipping to their country. The rules are pretty complicated as well, so it has taken us a lot of time to get them right.

Trust
We see our website as honorable and trustworthy. We have great service, a decent return policy and the list goes on. Basically, we do everything right. I couldn’t think of anything else, we could do, to make the customers feel like they are in capable hands.

However, we receive daily questions from customers like “Are the watches genuine?” “Can I meet up with you in person and pay cash in hand?” It is something in their DNA. They live in a world packed with fake designer goods — they can buy a copy of watches we are selling for an eighth of the price.

Therefore, they really want to make sure, we aren’t scamming them. In Denmark, if you see a website and it looks fairly decent with realistic prices, you just instantly trust it. There is a lot of mistrust in South East Asia.

Yesterday on my way home from work, my taxi driver asked me, what I do for a living. I gave him my details on a card including a voucher for our shop. It took me a full five minutes to get him to trust the page and the whole online shopping concept.
Allan Vincentz, Head of Digital, COCOMI

Competitors
The competition is really tough. Rocket Internet owns numerous of online stores equivalent to known sites in the West such as Amazon, JustEat, Zalando, and so on.

They make such huge investments in their sites, that they are basically monopolizing the entire online shopping market out here — which isn’t big at all. In reality, the competition is so much harder than in Denmark, even though there is not a lot of customers. “Well, why are we out here then?” Simply because of the great potential. Once you have overcome these barriers, you have found yourself a pot of gold.

What’s the best Ecommerce advice you have received?

That would be an advice I got back when I was a young boy working in the supermarket, and which I still live by: It’s all about the customers.

Everything we do is about customers. Our website is merely a platform –the important thing is the customer’s experience. If you maintain your focus on the customers, and make sure they are happy, you have a chance of becoming very successful. The most stupid thing you can do, is to forget your customer!

They will dissatisfied and won’t return. We live of returning, loyal customers. The thing is, the customer is able to get all of us fired. If they don’t return, we don’t have a job.

This interview was originally published on the Sleeknote Blog.