Southeast Asia’s growing middle class presents a significant opportunity for Australian and New Zealand brands in the agricultural, food and beverage, and health and wellness sectors, but cultural differences and language barriers are key challenges to connecting with this market. As head of marketing at Alibaba Group, Australia and New Zealand, Kit Yau has a solid understanding of what consumers in these markets are looking for from Australian and New Zealand brands. With AliExpo 2024
o 2024 on the horizon, she shared her thoughts on how Australian businesses can tap into the vibrant Southeast Asian market.
According to her, the expo’s business-matching service plays a crucial role in supporting Australian SMEs looking for opportunities in international markets such as Southeast Asia and China.
“Many SMEs in Australia may struggle to navigate the complexities of entering new markets and establishing the right networks. Our service addresses this challenge by providing a curated selection of potential partners tailored to each business’ specific needs and capabilities,” she told Inside Retail.
She went on to say that this personalised approach streamlines the process of market entry, ensuring that SMEs have the support and guidance they need to succeed in overseas markets.
Key points
Yau said that Australian businesses should be aware of the growing middle class in Southeast Asia, which presents a significant opportunity for consumer goods and services.
“There is also a growing appetite for natural and genuine products, which is totally resonating with Australian and New Zealand merchants. Understanding local preferences and purchasing behaviour is key, as well as navigating regulatory environments and logistics challenges,” she added.
One example has been Alibaba’s collaboration with Chemist Warehouse which has propelled its rapid success in Southeast Asia since October 2020, primarily through the Lazada e-commerce platform.
“Leveraging our network and technology, Chemist Warehouse efficiently navigated market complexities, establishing a strong presence in Lazada Malaysia, Singapore, and the Philippines,” she noted.
The partnership resulted in double-digit sales growth annually, and it underscored Chemist Warehouse’s appeal to Southeast Asian consumers. Yau said this synergy exemplifies the potency of digital platforms and strategic alliances.
The challenges and fixes
“Australian businesses may face challenges such as cultural differences, language barriers, and competition from local brands. To overcome these challenges, businesses should invest in market research, establish strong local partnerships, and adapt their products and services to meet local needs,” she pointed out.
This is where the company’s business-matching service comes in handy. According to Yau, the service connects Australian businesses with potential partners, distributors, and buyers in Southeast Asia and China.
“This personalised matchmaking helps to establish valuable business relationships and accelerate market entry. We are also providing market briefing sessions for the brands to understand the 101 of the Southeast Asia and China markets,” she elaborated.
Yau went on to say that Australian industries in agriculture, food and beverage, and health and wellness are well-positioned to capitalise on opportunities in Southeast Asia. She said these sectors align with the region’s growing demand for high-quality Australian products.
The role of technology
When it comes to technology, Yau said AI is also playing a key role in facilitating the business-matching model by streamlining the process of entering new markets like Southeast Asia and China.
“This personalised approach streamlines the process of market entry, ensuring that SMEs have the support and guidance they need to succeed in overseas markets. While technology plays a role in facilitating these connections, the emphasis is on providing practical solutions that meet the unique needs of Australian businesses,” she said.
When it comes to consumer behaviour in Southeast Asia, Yau said that there is a preference for mobile shopping, social commerce, and personalised experiences.
This is why she believes that Australian businesses must tailor their promotional activities by leveraging data analytics and consumer insights to create targeted marketing campaigns and offerings.
The bigger picture
According to CNBC, Alibaba Group is putting more emphasis on its overseas business as domestic consumption growth is lagging.
The company’s latest earnings report highlighted a 44 per cent year-on-year increase in revenue to $4 billion in the Alibaba International Digital Commerce Group (AIDC), which includes platforms like AliExpress, Lazada, Daraz and Trendyol.
The strong performance was driven by solid growth across all of AIDC’s retail platforms, especially from the cross-border AliExpress Choice business.
The company said its cross-border businesses exhibited rapid year-on-year growth in response to increasing global demand for high-quality products at attractive prices.
To sustain this momentum and provide differentiated services to customers, AIDC increased investments during this quarter and will continue to invest in further growth.
During the quarter, AliExpress delivered over 60 per cent year-on-year order growth, driven by Choice, which provides an enhanced experience to consumers by combining better product selection, price and quality with speed of logistics and great customer support.
Choice represented about half of AliExpress’ total orders in January 2024 and continues to deliver rapid order growth. During the quarter, Trendyol continued its robust double-digit order growth.
While maintaining its leading e-commerce position in Turkey, Trendyol has further extended its operations into the Middle East with a wide range of merchandise as well as speedy and reliable logistics experience.
Lazada continues to focus on optimising its operating efficiency. With further increased monetisation and decreased logistics costs, Lazada’s loss per order continued to narrow year-on-year during the quarter.