Alibaba MD shares strategies for market growth in Southeast Asia

• Asia is the largest and fastest growing e-commerce market in the world
• Companies must leverage on data to engage with consumers and merchants

“THE brands and retailers who win online are those who treat online retail not merely as an extension of offline retail but rather as the core of their sales, marketing and branding. Online retail has become top priority and companies should have a comprehensive business strategy for it rather than just treating it as an afterthought,” said Guru Gowrappan (pic above), global managing director of Alibaba at the Retail Congress Asia Pacific 2016 today.

Gowrappan presented a talk entitled Connecting Billions: Serving the new Asian consumer at the congress, touching on online consumer behaviour in Southeast Asia and providing a few strategies for engaging with consumers in this growing market.

Using Alibaba as an illustration for how a business can start locally but create a global reach, Gowrappan said that though Alibaba was created in China, it was made for the world and connects suppliers in China to the rest of the world. The company’s core mission is to make it easy to do business anywhere in the world and it is actively creating an ecosystem that supports this aim.

“We’re not about enterprise domination. We want to build an ecosystem that supports our users and merchants. Small businesses and retailers are a core part of our ecosystem so as we create the future infrastructure of e-commerce, we are taking these elements into account,” he said.

Trends of growth in Southeast Asia
“Asia is where the consumers are,” said Gowrappan, using the Chinese and Indian markets as examples of the growth the region is seeing. E-commerce in particular makes up a large percentage of retail and is projected to grow by 20% by 2020.

Gowrappan highlighted three key drivers of China’s consumption economy: a new generation of spending consumers, a rising middle class and growing e-commerce power. This is parallel to the three major drivers of forces driving the overall Southeast Asian retail markets: rising income levels, more smartphone adoption resulting from better infrastructure and an underpenetrated offline retail market.

India is an example of the Asian consumer base – it is the largest youngest nation in the world, with its median age being 27, and it is a mobile-first (sometimes mobile-only) user economy.

Gowrappan said that while the Indian market is relatively small compared to the Chinese one, it is seeing the same kind of growth that China experienced about seven years ago, which can be taken as a reflection of growth in other Southeast Asian countries in years to come.

Using data to engage
Capitalising on this growing customer base is important and this can be achieved by leveraging on data to engage customers.
 
Gowrappan said that for a platform such as Alibaba, it is about giving brands, merchants and retailers data so that they know their customer better and can upsell and cross-sell at the customer’s next shopping experience. Such services will enable them to expand their global customer base. 

While Alibaba also achieves better engagement with its merchants in this way, Gowrappan says that it is able to directly engage with users in other ways. For example, a user’s Alibaba credit score can be used when applying for a travel visa; it is taken as an example of a good credit rating.

Trust plays a big part in both relationships. Gowrappan used Maserati’s launch on TMall to illustrate: the launch on TMall was livestreamed and within the first 18 seconds of the brand being on the platform, 100 Maserati cars were sold. By the end of the day customer participation was at 1,100,000 people.

“This speaks to the power of an e-commerce platform – how it can engage millions if not billions of customers at the same time. Consumers are willing to buy these products online once you have their trust,” he said.

Expansion aims
In 20 years, Alibaba wants to reach two billion users; it currently has 425 million. It has roughly 10 million merchants and brands now; in 20 years it wants to have tens of millions. It will also continue to leverage on its enabling businesses, which are its payment, logistics, marketing and cloud platforms.

It will do this – and other business can do the same to accelerate expansion – by targeting the ever-growing consumer markets in Southeast Asia. Gowrappan pointed out that Alibaba has about 400 million e-commerce consumers in China and the next few years will see this number increase to 600 million.

Emerging markets such as India and the most of the rest of Asia will bring in about a billion more consumers while developed markets will bring in 400 to 500 million consumers.

“Asia will define the rest of the world in terms of e-commerce,” he said.

Gowrappan concluded his talk by mentioning the electronic World Trade Platform that Alibaba is promoting to ease access to world markets for small and medium enterprises. “The eWTP will make it easier for small businesses, retailers and brands to sell from any market to any market,” he said.

“The only way the world can become connected is through trade and making trade simpler is how we can achieve that.”
 
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