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How FMCG Brands Can Sustain eCommerce Growth in 2022

Next to Zoom meetings, fast-moving consumer goods (FMCG) was a big winner of the COVID-19 pandemic. According to Kantar, it’s the fastest-growing segment in eCommerce at nearly 30%, and of all the shopping channels in Southeast Asia, online brought in the greatest number of new users during the first half of 2021.

But sustaining that momentum into 2022 will prove difficult, expensive, or both. For brands, competition for online shoppers has risen by an order of magnitude. Both eCommerce early adopters and newcomers are struggling to stand out and win over new customers, retain existing ones, and deliver a personalised, seamless experience.

This article looks at the three biggest pain points FMCG brands in Southeast Asia will face in growing the eCommerce pie this year as well as how marketers can turn those problem sets into opportunities.

1. Poor Sales Conversions

Since the start of pandemic, FMCG brands have poured massive marketing resources into driving traffic to their eCommerce stores on online marketplaces and Brand.com – but those efforts don’t always translate to sales. What’s missing is accurate audience targeting and the use of data and analytics. As customer journeys become increasingly unpredictable, the old practice of defining a target audience based on broad assumptions about customer personas is like throwing darts in the dark.

Solution:
By tapping into customer data, FMCG marketers can find the right segments to activate. Brands already have a slew of useful data from past campaigns and transactions that can be mined to discover the following about customers:

  • What do they like to buy?
  • When do they usually shop?
  • Are they deal chasers?
  • Are they returning customers?
  • Do they buy these products for themselves or others?

Those data-powered insights will not only help marketers find high-potential audience segments, but they could also unearth the trigger points that will make customers hit “check out”. Brands can turn to artificial intelligence-enabled tools such as ADA’s Consumer Insights Explorer (CIE) to build target audiences or to frameworks like Smart Targeting.

2. Limited In-Store Visits 

With cosmetics, product testing and “try before you buy” are critical elements of the customer journey. Customers like to see how a certain colour pigment fits with their skin, for instance. But in the wake of COVID-19, many Southeast Asian countries restricted most, if not all, in-store cosmetics testing. That policy remains in effect, so even as footfall in shopping malls recovers, customers are still denied the full experience. And because eCommerce stores can’t let online shoppers try on products either, consumers were forced to reach out to customer service agents and ask for recommendations for their skin tone and preference. But live chat recommendations provided by human agents on a one-to-one basis are neither cost-effective nor scalable.

Solution:
As a Shopee-certified eCommerce enabler, ADA helped clients implement exclusive features on their Shopee stores such as BeautyCam – a tool that allows consumers to test out cosmetics online. By clicking “TRY THIS SHADE” on BeautyCam via a mobile device, an online shopper can virtually apply a chosen shade on their lips, eyes, and cheeks. Moreover, ADA leveraged its end-to-end digital marketing capabilities to drive high-intent traffic to those stores, which improved sales conversions even as live chat queries fell.

3. Weak Logistics Capacity 

Before the pandemic, FMCG brands tended to carry fewer inventories for eCommerce as their physical outlets were the primary source of revenues. So when demand for online shopping shot up amid COVID-19, most brands were caught off guard. They either didn’t have the inventory to meet demand or lacked the means to fulfill orders at the speed of digital, resulting in significant lost sales. Shoppers who were less loyal could easily turn to vendors that had stock or that could guarantee fast delivery, especially given the heightened uncertainty caused by the lockdowns. Worse, the pandemic has permanently increased customer expectations for on-demand delivery, putting further strain on eCommerce logistics for years to come.

Solution:
A quick win is to work with eCommerce enablers that can provide full-service supply chain and fulfillment services, from orders through to last-mile delivery. A big win would be to invest in warehouses or outsource them to third parties – a trend that has seen rapid adoption among consumer businesses since 2020 – to ensure the bulk of inventory is on standby. For FMCG brands, the benefits of investing in warehousing include:

  • Higher storage capacity: Brands can scale up inventories in line with demand and without additional fixed costs
  • Efficient fulfillment: Brands don’t need to invest in additional manpower to fulfill orders
  • Cross-border shipping: Brands can move goods quickly across borders through an established
    fulfillment process
  • Last-mile delivery: Brands can obtain real-time visibility throughout the delivery process, including proof of pick-up
  • Returns management: Brands can manage product returns and exchanges, improving the customer experience

Eye of the Tiger

Although lockdowns and pandemic-related restrictions across the world are gradually easing, eCommerce looks to be anything but. Consumers’ habit formation around online shopping is poised to become entrenched thanks to the added convenience and value of digital. FMCG brands should build on the eCommerce growth they experienced during COVID-19 and endeavour to sustain it in 2022.

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Sherry Tan

Regional Head of eCommerce

Sherry Tan

With an extensive experience in retail, both online and offline, Sherry is an eCommerce specialist, previously the Head of Tesco MY private labels and one of the pioneer of Tesco Grocery Online’s launching. Prior to joining ADA, she was the Chief Business Officer of Lazada Malaysia, responsible for the growth of Lazmall while also managing multiple categories, namely FMCG and Mobile.
 
She is now the Regional Head of eCommerce for ADA, leading and managing the design, planning, strategy, and execution of eCommerce solutions and products for brands.
 
A believer of retail therapy, her passion is travelling and of course, shopping!
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