In this article, UpBase will outline the 5 challenges of the D2C model on Lazada and Shopee for businesses and readers. Alongside these difficulties, UpBase provides specific solutions. Please read the article for more details.
Evaluating the D2C Model in the Southeast Asian Market
The D2C (Direct-to-Consumer) model is simply the method of selling products directly from the seller to the buyer without involving intermediaries.
The online shopping habits of Southeast Asian consumers are increasing. With 95% of the population having internet access and over 380 million shoppers in Southeast Asia, online selling (e-commerce) is currently considered the best option.
For sellers on Lazada and Shopee, direct distribution of products allows businesses to own the entire customer value chain, including research and development, design, production, marketing, and distribution.
5 Challenges of the D2C Model on Lazada and Shopee that Businesses Face
Challenge 1: Buyers Have Countless Choices
The environment on e-commerce platforms is open, with a single product category potentially having thousands of competitors. Consumers are becoming increasingly savvy and have more options than ever. They can easily compare prices, features, and even choose the nearest location for faster shipping.
The competition is fierce. In addition to manufacturers and resellers, the marketplace itself can also become a competitor, as it may sell similar products.
Solution to Competition: Optimize Product Listings
When selling on e-commerce platforms, the importance of using highly searched keywords in product listings cannot be overstated. Even if a business has the best and most outstanding products, if they don't use the right keywords, descriptive images, and attractive categories, and only do so in a superficial manner, their products will be overshadowed by those who do it better.
Every element—such as the title, bullet points, images, and description—plays a crucial role in helping shoppers discover the product and ultimately complete the purchase.
Challenge 2: Inventory Management Issues
Good news: Business is growing.
Bad news: Each time an order comes in, businesses may feel stressed not knowing if the stock is available.
What good is it to have a surge in customer interest if your inventory and processes can't keep up? Businesses should aim to grow and stabilize without becoming chaotic. An efficient and streamlined inventory management system is essential.
Inventory Management Solution: Embrace Technology
Stop relying on manual processes and start implementing automation. Businesses need to incorporate technological elements into inventory management. Even with just 50-100 transactions, manual record-keeping is inefficient, slows down progress, and may lead to errors.
Streamlining inventory management with automation helps minimize risks and maintain accuracy, simplifies documentation, and saves time. Additionally, it allows businesses to be environmentally friendly by reducing paper use.
Learn more: Effective Ways to Handle Excess Inventory in 2022
Challenge 3: Brand Recognition Difficulties
Everyone knows that despite having a huge customer base, one of the major challenges businesses face in the market is a lack of brand recognition. If someone asks where a customer bought a product, the immediate response might be, "I bought this product from Shopee/Lazada."
Building brand recognition in the market is a challenge. If a brand already has a poor image, changing it can be very difficult. Consequently, businesses will have fewer opportunities to reinforce their brand with customers.
Additionally, it’s important for businesses to understand the difference between branding and marketing. Branding is the "why" behind the business, while marketing is how you reach out to customers.
Solution: Strengthen Brand on Traditional Channels
Leverage traditional channels to build your brand and sell excess inventory.
For example, e-commerce websites like Shell are effectively directing their purchase links to Lazada and Shopee. By doing so, they avoid concerns about fulfillment, return processes, refunds, or even customer service.
See more: Evaluate the growth potential of TikTok Shop in Vietnam
Challenge 4: Slow Shipping Process
One of the limitations of the D2C model on Lazada and Shopee is delivery time. According to a survey, 69% of customers will not shop from a store again if their product is not delivered on time.
Fast shipping ensures customer satisfaction. If customers have a poor experience with your company's order fulfillment, they will leave negative reviews and low ratings for your store. Unfortunately, this is beyond the seller’s control.
Solution: Optimize the Warehouse Process
The best way to speed up your shipping process is to ensure that the packing process (including the area) is well-organized.
Review your procedures, packing, and shipping processes to identify potential optimizations. If possible, invest in automating the packing process. Ask staff to scan labels and barcodes to upload shipment information instead of writing it out manually.
Additionally, make an effort to communicate with customers if there are delays in shipping. There is nothing more frustrating than wondering where their package is without any updates. Meanwhile, allow customers to choose by offering options like picking up the package at a nearby post office (if available) or requesting a refund.
This approach will help customers feel more at ease because they have control over the situation. By taking these actions, you can demonstrate to customers that they are genuinely valued and cared for.
See more: Lazada’s Multi-Warehouse Management Feature – Should Sellers Try It?
Challenge 5: Low Traffic Source – D2C Model
It sounds counterintuitive. E-commerce platforms are booming, with millions of visitors daily. So why is low traffic a concern?
The answer is that nothing comes naturally. Simply listing products and setting up a store doesn’t guarantee customers will come. Businesses need to engage in marketing activities to drive traffic to their store.
Solution: Utilize Multiple Traffic Sources
- Leverage Existing Customer Base: Encourage existing customers to refer products in exchange for something valuable to them, such as gift vouchers, discount coupons, or free shipping.
- Use Advertising to Drive Traffic: Employ paid ads to increase product awareness and convert interactions into sales. This is effective if the business targets the right audience and optimizes its store well.
- Affiliate Marketing: In this advertising model, businesses pay third-party publishers to drive traffic to their store. Each affiliate marketer can share the store's link with their community and earn a commission on sales generated through their affiliate links.
See also: Affiliate Marketing on Shopee – High Profits with the Right Approach
Social Media: Not only is it perfect for affiliate marketing, but it also enhances engagement with current customers. Social media is highly effective for reaching audiences across all demographics.
Conclusion
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