30/09/2022
Let's talk about Shopee
First, let's establish how Ecom business models generate money:
Profitability:
There are basically 4 ways to maximize revenue in Ecom: increasing the number of customers, increasing average transaction size (AOV-average order value), increasing the frequency of transactions per customer (CLTV - Customer Lifetime Value), and raising your prices (usually applied to best selling items: let's say you increase 2 pesos on a best seller with 100k monthly average orders, that's 200k pesos in revenue already, now imagine if you have 20 best sellers😶. In short, even if you're not acquiring new customers, you can still generate profits thru your existing customers. These are the tasks of Marketing and Sales depts.
Sustainability:
Maintaining a positive revenue stream is primarily done thru Ops and CS depts. There are many ways to do this. In digital marketing, it's about maintaining positive online reputation and loyalty strategies.
The Shopee Dilemma:
The company is facing two problems right now; one is its internal downsizing and two is its online reputation. I was expecting to see more or Toni's ads or at least see changes on their banners and stories/reels/shorts etc., but as of the moment their socials have not done so. The 15th and 30th of the month as we all know are sweldo days in PH - for Ecom businesses, it's a BIG day - height of ads, promotions and announcements.
Issues were raised on the reason why the company downsized their employees relating to the endorser's talent fee. But this is not true. They've been hit by inflation months ago which made them close their Latin America offices (https://www.techinasia.com/sea-group-shopee-close...). They're focusing now on Southeast Asia and Taiwan markets since they're profitable.
Operationally, their off-shore offices are supported by teams in various countries like Singapore and the Philippines - thus why some employees have to be let go. Toni's contract did not happen overnight of course, this was already part of their marketing plan weeks or even months ahead. A contract as big as that needs thorough research and planning. I'm not sure if the backlash was unprecedented on their end but there might be some loopholes in their market research prior to ex*****on.
The Market:
The trending topic first started on Twitter - the platform is known for having middle-class and above users, it's also the paradise of complaints. Usually used for emerging trends in strategic planning, Twitter is the fifth most popular platform in PH. The most popular social media platform in the Philippines is Facebook (99%), followed by YouTube (57%), TikTok (17%), Instagram (14%), and Twitter (8%). (https://datareportal.com/reports/digital-2022-philippines)
8% might seem small but that's equivalent to 10.50 million users in the Philippines between 18-34 years old majority in early 2022. This figure means that Twitter’s ad reach in the Philippines was equivalent to 9.4 percent of our population from past data. From 2021 data, 76% of Twitter users in PH are females. (https://www.statista.com/.../philippines-advertising.../).
Market Match:
This is where knowing intimately your Target and Current Customers is important in conducting market research.
So the question is, who are the customers of Shopee?
Who are the frequent purchasers?
Where are they on socials?
What are their challenges and motivations?
Basic questions with complex answers. Our answers today might be wrong tomorrow because real-time data changes all the time. Customers are driven by external factors such as their culture, beliefs, and even political leanings. Methods to answer these questions involve data analysis, social listening, and contextual analysis among others. When analyzing data, we need to go beyond the numbers.
Deep Dive:
Merely looking at the numbers, we can see that males are slightly above females in Shopee users. Top categories are mostly tech related products. So we might assume that males are the main market who are buying tech products. But this is not so.
Deeper questions have to be probed:
In the Philippine household, who decides what to buy?
Do the users consult other people before they purchase?
Do they buy the product once only?
How long is the next purchase for that product?
What are our upsells and cross-sells related to the product?
You'll be surprised to know that small purchase items like face masks, make-up/skincare, humidifiers, diapers are some of the hot selling items of Shopee 2022 (https://ginee.com/.../top-selling-products-in-shopee.../). Shopee generates income thru commission fees on each item. Volume and frequency are the most important.
From here on, you can do the math.
Final Thoughts:
Less assumptions, more data. Dig deep and always consider context and external factors. Huwag puro chismis or haka haka, tandaan ang mga bituin ay gabay lamang.
I checked both Shopee and Lazada's websites and I noticed Shopee's pop-up promo for new customers. Lazada doesn't have the new customer promo pop-up. I also looked into their vouchers and Shopee has more and bigger vouchers currently compared to Lazada.
