We recently caught up with Jo Bjordal, CMO of Zalora, to learn about how the pandemic has affected e-commerce and what the future looks like for the industry as a whole.
Bjordal has risen through the ranks at Zalora, starting out as the Head of Marketing in Indonesia nearly 6 years ago. In 2019, he made the move to Kuala Lumpur and was promoted to Director of Growth. He was appointed CMO earlier this year.
In our conversation, he discusses this year’s changing e-commerce landscape as well as the use of data analytics in the industry and Zalora’s sustainability efforts.
COVID-19 has pushed a lot of people – and more importantly, communications – online. Being connected to the internet has, as a result, become quite noisy, and breaking through that noise as a brand has become much harder. Customers are not triggered as easily by each individual Customer Relationship Management communication, so we as marketers are required to think more creatively and be cleverer and more interesting in our messaging to attract the users’ attention and avoid spamming customers with too many interactions. We focus on the quality of interactions.
We have spent the last eight months building a best-in-class marketing technology stack and customer data platform, which enables us to seamlessly orchestrate user audience between our CRM and paid channels. This ensures that we can more effectively reach users with paid channels only when we are no longer able to reach them through free channels. This has resulted in significant improvements in the cost of retaining and reactivating customers and in turn high growth in customer reactivation.
Media asset prices have also fluctuated a lot because of advertisers reducing spend primarily offline and moving more digital. We are constantly optimizing our media investments by efficiency Key Performance Indicators and have, as a result, been very active in reallocating spend to the most lucrative channels. COVID-19 has also contributed to the surge of new online users and new e-commerce customers, which requires us to explore new channels to ensure we can reach these users. In summary, the need to be more creative and dynamic in our approach remains to be our main strategy.
“We invested heavily in enhancing customer experience to meet the new needs during COVID-19.”
More importantly, as more interactions are happening virtually, online users also expect brands to communicate more emphatically and be sensitive to what is happening around us. As such, we always find balance in our messaging and have used our platform to help our partners and our communities.
Online retail has remained positive for the retail sector amidst the economic slowdown, and there have been research groups who are seeing strong double-digit growth for online retail in the region. Zalora enjoys strong partnerships with over 3,000 brands, and we recognize the challenges that they are facing during this time. To help them navigate this period of uncertainty, we are working with them to not only expand their assortment of relevant and essential products but also focus our efforts to ensure that orders are being delivered and fulfilled on time.
For example, we recognize the increasing importance of data to obtain a more accurate picture of the evolving consumer landscape. To that end, we launched TRENDER, a data-solutions service, in April this year, enabling brand partners to tap on our trade data and secure insights on movements in consumer trends and behaviors. We help them by giving them easy and digestible access to trends and insights, along with benchmarks at geography and category/sub-category levels for various consumer segments and related purchasing behavior.
“We also see the need to support brands in digitizing and hence, we are supporting them on fast track onboarding and training.”
In view of the pandemic, we also released a specific COVID-19 Dashboard to help brands better understand the movements in retail trends during this period. For example, with this dashboard, brands can gain insights into changing shopping behavior pre- and post-pandemic by age, group, category, price points, and discount propensity. To date, TRENDER already has over 1233 brands subscribing to it.
We are seeing many brands wake to the power of digital but are struggling to fulfill the sudden surge of orders on their brand sites. To this end, we introduced our One Stock Solution, a modular multi-channel e-commerce fulfillment service, that allows brand partners to consolidate their stocks in Zalora’s e-fulfillment centers and take advantage of our extensive logistics infrastructure for all their digital channels. This will enable them to provide a consistent shopping experience for their customers, regardless of whether they are selling on the Zalora website, their own e-shop, or via other e-commerce platforms.
We also see the need to support brands in digitizing and hence, we are supporting them on fast track onboarding and training. For example, we are working with the Malaysian government to help drive business digitalization amidst the current shift to e-commerce, under the PENJANA Economic Recovery Plan’s “Micro and SMEs E-commerce Campaign”. We are also working with various government bodies in our markets in their efforts to help local SMEs digitize their business.
In recognizing that consumers have become more aware of the impact their shopping habits have on the environment, we too have doubled down on our sustainability efforts by taking accountability for our own impact and inspiring our customers to shop in a more conscious way.
As part of our sustainability initiatives, we introduced a Pre-loved category in partnership with Style Tribute, a second-hand specialist partner, rolled out sustainable tagging and filters under our recently launched Earth Edit, and launched our first collection from sustainable materials under the Zalora Basics label in collaboration with TENCEL™ fibers. This was welcomed by our shoppers, with the collection recording a very high sell-through rate. We are also releasing our first-year report on sustainability in Q1 next year, as part of our commitment to be transparent in our actions and share our progress in embracing sustainability as one of our key priorities as a company.
Fashion as a category is impacted by the lockdowns brought about by COVID-19, as people tend to demand less fashion products when there are fewer occasions to dress up. However, as previously mentioned, we saw that the demand has pivoted from the traditionally strong apparel category to emerging categories like sports and athleisure, and loungewear.
Looking at data, we saw an opportunity to introduce new categories in our offering by curating brands in beauty, kids, luxury, and lifestyle categories as well as complementing our current offering that caters to a more discerning customer base, given our fashion vertical roots.
“Brands can no longer consider online presence an optional component in their business strategy – e-commerce is here to stay, so establishing a unified and effective approach that coalesces offline and online retail will be key to determining a company’s success in acquiring and retaining customers.”
Having said that, it is only a matter of time before we return to a more normal state where people are likely to catch up on travel and festive occasions, thus reigniting fashion demand. Meanwhile, most brick-and-mortar brands and retailers are looking to diversify their risk profile by moving more sales online, and Zalora is the most well-positioned partner to support brands in growing their online share of sales.
Brands can no longer consider online presence an optional component in their business strategy – e-commerce is here to stay, so establishing a unified and effective approach that coalesces offline and online retail will be key to determining a company’s success in acquiring and retaining customers. Most consumer surveys forecast that the rising adoption is not temporary, and a large portion of customers globally are likely to continue using digital channels even after the crisis.
Big data analytics can help us better understand customers’ purchasing behavior in the context of current market trends. In turn, we can tailor marketing efforts directly to customer preferences, create new products that meet customer needs and ensure that employees provide the level of service customers expect. As such, big data benefits consumers too.
“We also choose our partners that advocate for the privacy and security of customer information, and we strive to be as transparent as we can on our privacy policies.”
We recognize that there are some concerns on how data is used and as digital marketers, we are responsible for using the data we have collected in a way that will not exploit the vulnerabilities of our customers.
For example, we mainly use aggregated data and create algorithms based on that data to identify patterns and make decisions based on groups rather than individuals. We also choose our partners that advocate for the privacy and security of customer information, and we strive to be as transparent as we can on our privacy policies. We take the responsibility to keep our customers’ data safe seriously and enforce cybersecurity best practices across the company, so as to prevent data breaches and cyber-attacks.
As part of a publicly listed company, we constantly review current business practices to ensure compliance with General Data Protection Regulation principles and locally imposed best-practices.
For Zalora, we have seen a strong growth trend across our markets, especially after the severe first lockdown period that led to high panic and restrictions in some markets on warehousing operations. Unsurprisingly, the biggest surge is in new user adoption – for instance, we had more than two million users downloading the Zalora app in Q2 2020, and the share of new customers’ contribution to revenues has increased by more than 200%. One thing to note is that the demand for fashion is still there, but the consumption patterns for product categories have shifted dramatically.
In light of this, we added new categories and changed our assortment to support the immediate needs of our consumers at the height of the COVID-19 crisis as they stayed more at home. For example, we introduced the Lifestyle category where we added home and living, hobbies and toys, sports equipment, and essential items as well.
We strengthened our assortment in the Beauty and Kids categories, and also strengthened our Luxury assortment by launching a special segment dedicated to it on our app and website. Luxury items are still selling well – in fact, in our latest 10.10 and 11.11 sales, we saw our Luxury category achieving triple-digit growth. Further, in response to the increasing popularity of wellness, we continued to expand our sports and athleisure assortment to meet the evolving shift in demand and have since seen a 110% category growth for Sports in the last 10.10 sales shopping event.
While the shifts in consumer trends and preferences happened quickly, it is our strong fulfillment network that has also allowed us to continue serving our customers on time. We had to rely on innovative technology to optimize our fulfillment processes to cater to the increased number of orders, without compromising the customer shopping experience.
More importantly, we invested heavily in enhancing customer experience to meet the new needs during COVID-19. I would like to highlight four consumer technology features and changes in our customer experience processes that we introduced in the last six months, notably:
As the market continues to grow and evolve, we will continue to work closely with all our stakeholders, to ensure that we can provide our customers with the best-in-class shopping experience possible.
One of the more recent campaigns that impressed me was Nike’s “You Can’t Stop Us” ad, as it was both inspirational and impressive.
Nike took around 4,000 hours of sports footage to create the ad and it resonated well with most people around the world. Relevant, moving and a driver of the brand message, the ad’s organic social reach was a testament to how much it was loved across the globe.
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