Brand categories are each suffering the pandemic's impact differently – and the way back to normal will be unique to each sector. GroupM’s Jon Thurlow explains his analysis of the situation.
The past few weeks have demonstrated quite starkly that the impact of Covid-19 is not going to disappear quickly. From Tokyo to Beijing, Hong Kong to Melbourne, the resurgence of the virus in new waves of infection has shown that consumer behaviour will, at least until a vaccine is available, be curtailed when it comes to broader social activities, including offline shopping.
Where does this leave brand owners?
If you were fortunate enough to have already built an e-commerce channel strategy based on pre-existing demand for online purchasing options, then you may well have prospered during the pandemic, but are now considering how to optimise and sustain the performance. On the other hand, if you are new to e-commerce and/or operate in a category where demand has dampened, you are probably wondering how to move forward with limited sales channels available. We have produced research and guidance that provides insight into where different categories may fall, and what might be the appropriate actions to take based on your situation.
However, regardless of which end of the spectrum your brand sits, you will need to revisit your marketing approach to cater for the initial ‘post-lockdown sales bump’, fuelled by pent up demand. This will include a rebalancing and/or integration of online and offline activities, and nuanced approaches to online experiences, optimizing towards a profitable and sustainable strategy.
Working with agency teams across South East Asian markets, we have developed a series of best practices that offer a path for brands to navigate the months ahead. As different categories have been impacted differently by the pandemic, we have classified them into four buckets relating to their state of consumer demand for e-commerce:
• Lowered demand
• Accelerated demand
• Dampened demand
• Sudden demand
We call this the ‘LADS Demand State’.
Broadly speaking, we see three key pillars to focus on.
Management of marketing investment
It might be easy to believe, from the ‘hype’ in newsfeeds, that switching from an offline to online business will guarantee success. Not surprisingly, this rarely holds true. However, using data from Shopalyst, Lazada and our own proprietary Consumer Eye research, we can identify several best practices.
Advertisers should leverage the opportunities to advertise on e-commerce platforms – recent research from the United States, conducted in May 2020 by Duke University among chief marketing officers, suggests that marketing as a percentage of revenue and budget has actually increased during the crisis. More specific to Asia, the most successful brands during the Covid-19 period (March – May 2020) increased investment on-platform 2.4x compared to before, and made use of various ‘sub-channels’ to address awareness, consideration and conversion funnel challenges.
Brands should maintain investment off-platform – this may seem counterintuitive, but our own Consumer Eye work shows that 41% of consumers were influenced offline before purchasing online. This is also reflected in other studies.
And they should start or continue to invest in always-on – while there has been a focus on ‘mega-day’ sales for online activity, we believe that the pandemic has conditioned consumers to ‘always-on’ brand activities. We see key benefits here with reducing pressure on premium inventory and de-risking for the brand with more balanced sales generation.
Operational excellence in e-commerce
Despite the increase in time spent online during the pandemic, we have seen engagement levels vary significantly across brand sites and ‘brand shop-in-shop’ as consumers become more discerning in their expectation of online experiences. We observe four key areas that deliver a higher chance of success:
• Shop-in-shop/brand.com design – selection, design and overall layout
• On-site excellence – images, titles, descriptions and tagging
• Commercial excellence – pricing and promotional activities
• Performance excellence – shipping, product availability and on-platform chat
In this pillar, the relationship and ‘solutions’ to these criteria will vary significantly according to the brand’s ‘LADS’ state.
Development of omnichannel approaches
With a new reality where consumers’ physical interactions with brands in-store are being reshaped, marketers need to review omnichannel planning (creating a unified experience for customers so what they see in one channel directly influences the experience and choices in another).
Our own research reinforces this need, with 44% of consumers indicating that they ‘browsed in [physical] stores before making online purchases.‘
The digital nature of online represents a significant business growth opportunity for many brands. Even if your brand is ‘new’ to online, the lower cost of entry of digital versus physical, and the enablement infrastructure in place (enablers and platforms) mean that you can effectively and efficiently create new users. For existing e-commerce experienced brands, moving on to the next phase of development requires a more sophisticated use and mix of digital assets and omnichannel approaches.
Jon Thurlow is the chief operating officer for Asia Pacific at GroupM.