Five winning e-commerce plays for baby care brands in South East Asia

The growth of online baby product sales is one of the most compelling e-commerce trends in South East Asia so far in 2017. Baby care items such as diapers and baby foods are now one of the region’s fastest growing online categories, after electronics, fashion and health and beauty.

As more parents embrace the convenience of shopping online, leading baby care brands are devising creative marketing campaigns to capture a greater market share. Here are five key strategies to consider as the competition intensifies:

The demand for baby products is rising as shoppers become more accustomed to e-commerce. In South East Asia, 19% of consumers have already purchased diapers online, and 17% have clicked to buy baby foods. Baby product sales on major online marketplaces, such as Lazada, are achieving average year-on-year growth of 200-300%. Meanwhile, the combined sales of baby-oriented online retailers grew at an average annual rate of 230% over the past three years.

Demographic factors suggest the opportunities for brands should multiply. The largest buying group is households with children aged 0-5 years, and Malaysia, Laos, Cambodia and the Philippines all ranked in the top 100 countries globally with the highest birth rates in 2016.

However, many baby products brands have only recently started selling directly to consumers by setting up e-stores and utilizing new online retail channels. This is causing a shift in the online brand share from early movers, such as wholesalers and resellers that leverage e-commerce marketplaces as a trade channel, to brands that are selling directly to consumers.

Pricing is a tricky issue, particularly in countries such as Indonesia, Malaysia and Thailand, where the local currencies have depreciated against key global currencies over the past five years. This has increased the relative cost of imported products. It has also impacted consumer spending, and caused parents to reconsider the costs of key items, such as baby foods, diapers and childcare.

The prevalence of price-sensitive shopping is highlighted by e-commerce, which tends to create greater price transparency. By comparing products and prices online, shrewd shoppers can easily find the best deal. However, aggressive price discounting can result in brand dilution.

Although cost remains an important factor for online shoppers, successful brands are thinking more creatively.

Offering extra purchasing incentives, such as improved warranties and easy refund and exchange policies, helps retain brand loyalty even among cost-conscious consumers.

One of the biggest myths in online retailing is that e-commerce operations are simpler and cheaper to manage. However, the baby products category does challenge some established conventions, particularly with regard to inventory management and e-fulfillment.

Research proves that parents who shop online tend to invest larger sums to stock up on staple and bulky products, such as diapers and milk formula. Tactical promotions combined with free shipping offer the chance to tap into this trend.

The result may be that order volumes surge in an unpredictable manner, especially during cyber sales and festive periods. High-profile online shopping events, such as Singles Day, Black Friday and the Online Revolution, can generate up to 40% of annual revenues for major e-commerce sites.

It is therefore important for brand stores to plan ahead by pre-packing key SKUs prior to peak seasons and investing in critical infrastructure.

Strategically selecting the right logistics partner will optimize delivery times, while being ready to recruit new staff and automating routine tasks enhances operational efficiency.

The growth of niche digital communities, such as social media parenting groups, enables parents across South East Asia to share childcare information, and increase their knowledge about relevant products and services available online.

This diversifying demand for new information challenges brands to be proactive in engaging with consumers, rather than relying on organic traffic to generate online sales growth. Investing in digital content marketing capabilities can deliver real value for consumers by enabling them to make more informed purchasing choices regarding their child’s health and wellbeing.

Beyond pricing, baby brands should refine their e-commerce value proposition for smart shoppers. Online resellers have already clarified their niche appeal, such as product personalization and customization, which so far brand manufacturers have been unable to match.

For instance, virtual bundling and offering various options for free gifts, product types or colors, create a dynamic online purchasing experience for consumers. Interactive real-time service support using chat apps is also proving popular. For fulfillment and delivery, many resellers provide pick-up options for shoppers who want to save on shipping fees, while exclusive gifts with a purchase make consumers feel valued.

Additionally, brands can focus on delivering value by offering fresh products, such as baby foods. Guaranteeing product authenticity will also assuage parental concerns regarding crucial items such as baby formula following previous scandals in Asia.

Overall, providing a seamless customer experience, with quick last-mile delivery and best-in-class packaging, can make the difference in keeping customers happy and willing to repurchase in future.

Across South East Asia, online demand for baby products is expected to continue growing. Competition for customers is becoming fierce, however, and brands must think imaginatively and plan flexibly.

From consumer experience mapping and reassessing pricing strategies to investing in technical systems and resource capabilities, tapping into South East Asia’s baby products boom requires a 360-degree strategy.

Has your brand considered the above in developing an e-commerce strategy for 2018?