Most of the people would have know that there are 5 key types of sellers on South East Asia Ecommerce Marketplace platforms like Lazada and Shopee. However, if you work in Ecommerce, understanding the dynamics of seller types can be critical to brand success and they aren’t always obvious or straightforward.
Read on below for our opinions 👇👇
What Drives the Consumer?
From a shopper perspective, purchasing decisions are typically based on
- Relevancy of the product he/she is searching for
- Count of Reviews and average rating (Social Proof)
- Vouchers! Vouchers! Vouchers! (Ecommerce marketplace vouchers such as coins and free shipping, Seller initiated vouchers such as follow prizes, shop and product based vouchers)
- Price (Duh! This is probably a key one but it’s not always the lowest price that gets the buyer)
- Ship Timing (Days taken to reach the buyer. Whether shipped locally or Overseas)
As long as they fulfil the criteria mentioned above, shoppers don’t really care who the seller is. With the maturing platform security, escrow process and efficient cross border fulfilment process, shoppers are increasingly assured buying larger ticket items on the platform.
5 Types of Ecommerce Sellers on Southeast Asia’s Marketplace Platforms
To help explain the seller ecosystem, we’ve grouped them into 5 main types:
- Manufacturer & Direct To Consumer (DTC) Brands
- Private Label Brands
- Factory Brands
- Resellers
- Aggregators
How Do Each of These Sellers Thrive in a Highly Competitive Environment and Enjoy Sustained Growth and Profitability?
Let’s cycle through each of them:
- DTC & Manufacturer Brands
These brands sell direct and the margins typically reserved for third parties or offline retail are channeled into marketing and platform fees. To succeed, they need to spend time and money to create unique branding and promote their products.
- Private Label Brands
Private Labels have more control over their brand without having to invest on production. However, it can take time to create consumer engagement and loyalty. Being successful means higher product quality and tight inventory management.
- Factory Brands & Overseas Suppliers
This group typically don’t spend much on branding and focus on lowest price to acquire customers. Often found in fashion and low involvement products.
To succeed, they need large assortment, adapt fast to trends and low fulfilment costs.
- Aggregators
This group will be more visible in South East Asia as they roll up brands to manage on marketplaces similar to what aggregators like @thrasio is doing in the US. A great breakdown of the local scene with details can be found here:
Aggregators tap into distribution scale, specialist labour, strong processes and skills, technology to enjoy efficiencies of scale.
- Resellers
Resellers range from small time stockists and dropshippers to distributors and wholesalers who have advantage securing lower prices vs. competition.
To succeed, a good assortment, strong brand and deep supplier relationships makes a lot of difference.
The Usual Struggles that Most Ecommerce Seller Groups Encountered
While each seller group has its own unique set of challenges and opportunities, common challenges facing them include
1. Mastering the Ecommerce Marketplaces Features
The platforms like Lazada, Shopee and Tokopedia are constantly evolving to improve on their features, offering more content and new programs, launching new iterations of the interface and having a myriad of campaigns and ways to engage with customers. Staying on top of these requires a dedicated team
2. Tapping and Finding Specialized Talents
The barriers to entry into Ecommerce is low, but the mastery of it’s many aspects is broad and deep. As such, a lot of new sellers typically rush headlong into the space expecting shallow waters and easy swims only to find steep dips and undercurrents that can deter them if they don’t have enough stamina to develop the different skillsets required to thrive sustainably.
Among the many skillsets that are highly important include Ecommerce promotion planning, EStore operations, creative strategy and development, Media Buying specialists familiar with the Ad solutions inside and outside marketplaces such as Lazada and Shopee.
3. Handling Backend Operations and Finances
Store Operations includes a lot of day to day management, good product knowledge, customer support, order processing, handling returns and refunds and having visibility on finance reports and breakdowns. We find that a lot of sellers often have disjointed teams such as trade marketing, Ecommerce, marketing all operating in silos and no one has a true understanding of their real margins.
4. Managing Supply, Logistics and Procurement
Ensuring there’s stock to sell, utilizing platforms to manage inventory across platform, making sure you don’t end up holding too much or too little stock, and keeping track of different platforms’ stock movements are very important to avoid unexpected OOS (out of stock) situations. Finding and utilizing 3rd party software these are the day to day operational requirements to make sure a smooth transaction is achievable if the it was well-planned and strategically executed
Final Thoughts
With Eommerce sales in Southeast Asia tipped to hit US$172 billion by 2025, this is only the beginning for e-commerce brands. If you would like to have a chat how to scale and grow your Ecommerce operations in South East Asia, drop us a note at contact@commerceplus.asia or visit us at www.commerceplus.asia