The "Full-funnel Value of E-Commerce in Asia

WRITTEN BY: JEREMY WEBB, VICE PRESIDENT, CUSTOMER ENGAGEMENT & COMMERCE, OGILVY ASIA

Capturing the value of the “other 90%” – i.e, shoppers that don’t buy then or there Consumer businesses are missing an opportunity by investing in and measuring direct e-commerce channels with only the immediate conversion in mind.

When considering investment and strategies on direct channels, such as owned websites and apps, or semi-direct channels, such as brand-operated stores on marketplaces, consumer businesses of all types should think beyond the checkout. The value to the brand of d2c commerce represents only the tip of the iceberg. Setting up and optimizing e-commerce experiences should be done in a way that adds value throughout the full funnel; similarly, the full-funnel value of e-commerce should be considered when considering an investment in a direct-to-consumer presence.

Indirect revenue (sales on other channels) should be calculated, as consumers encounter brands for the first time and build consideration through D2C e-commerce content and experiences, but eventually buy on other channels. This could be for a sale made shortly after; it could be for a sale made weeks or months later.

Store conversion rates for many consumer categories is 1-10% -- i.e. up to one in ten people who visit a store actually buy something during their visit. If that’s the case, then, what about the remaining nine visitors? Has their experience been positive enough to make that sale elsewhere, or at a later stage, more likely?

Furthermore, has the brand collected data in a way that allows them to reach out to them in a more

relevant, more direct, or more efficient way? With D2C – an owned website or app – this could be the collection of first party data or a placement of a pixel; on a marketplace such as Shopee or Tmall it could be as simple as a store follow.

#1 DIRECT REVENUE – THE IMMEDIATE SALE

Growth in e-commerce during COVID, coupled with evolving consumer habits, is transforming the D2C market. According to PwC data, D2C currently represents roughly 15% of e-commerce penetration globally. In southeast Asia this is set to grow rapidly. While online purchasing in the region has been slower to catch on, new technologies, new platforms, and changing consumer expectations are accelerating the process. Internet penetration, digital payment and consumer trust in e-commerce all rose

significantly in 2020. The region’s online industry is poised to triple to $309 billion in gross merchandise value by 2025.

#2 INDIRECT REVENUE – A SALES ELSEWHERE OR AT A LATER DATE

The above-mentioned direct revenue, currently small for many brands, represents only the tip of the iceberg in terms of potential value generated. This is because consumers, especially those in southeast Asia, take different routes to arrive at the point of purchase. Webrooming often plays a role, for example: Oftentimes an experience on an e-commerce platform might simply be building upper- funnel awareness or mid-funnel consideration for a purchase made on another channel – perhaps offline or on an online supermarket.