Presentation

APAC RESEARCH UPDATE
HONG KONG | JUNE 16, 2016
BENCHMARKING DIGITAL PERFORMANCE
RESEARCH
BENCHMARKING
EDUCATION
2
UPCOMING RESEARCH
June
July
August
Intelligence Report:
Digital IQ Index®:
Digital IQ Index®:
MOBILE
HAIR CARE
& COLOR
PERSONAL
CARE: CHINA
WECHAT
Intelligence Report:
Intelligence Report:
Digital IQ Index:
TMALL &
BEAUTY
SOCIAL
PLATFORMS
Digital IQ Index®:
Digital IQ Index®:
GLOBAL
DEPARTMENT
STORES
FASHION
Intelligence Report:
SPECIALTY
RETAIL
3
UPCOMING EVENTS
BRIEFING
CLINIC
BRIEFING
APAC
RESEARCH UPDATE
DIGITAL
LEADERSHIP
ACADEMY
DIGITAL IQ INDEX:
BEAUTY CHINA
New York
September TBD
Shanghai
June
17th
HONG KONG
July 13th and 14th
4
APAC RESEARCH BRIEFING
THE RISE OF LUXURY
E-COMMERCE?
DIGITAL AD SPENDING HAS EXPLODED
Digital Share of Luxury Goods Ad Spending in Select Countries
2015
2015 vs. 2017
15%
26%
2017
27%
45%
16%
Source: Zenith
7%
32%
7%
40%
57%
6
E-COMMERCE NOT AS MUCH
Luxury China: China Domestic Luxury Market
Sales (In USD Billion ), 2010-2015
Luxury E-Commerce
Luxury Goods Sales
$20.7
$21.9
$21.9
$22.5
$18.1
$13.4
$0.1
$0.2
$0.5
$0.8
$1.0
$1.2
2010
2011
2012
2013
2014
2015
Online sales account for only 5 percent of the Chinese domestic luxury market,
but drove over 90 percent of annual growth last year.
Source: Euromonitor, 2016
7
RAMPING UP E-COMMERCE
Luxury China: DTC Site & Tmall Store Adoption 2014 vs. 2016
April 2016 ◼ 2014 ◼ 2016
DTC Site
Tmall Store
30%
20%
19%
16%
12%
12%
14%
6%
Fashion (n=50)
Watches & Jewelry (n=43)
Fashion (n=50)
Watches & Jewelry (n=43)
Source: L2 Digital IQ Index®: Luxury China 2016.
8
VALENTINO
Launched Ad Supported, DTC E-Commerce
TOD’S
Launched Responsive, DTC E-Commerce China Site & WeChat
…AND SITE FEATURES
Luxury China: Site Features Adoption 2014 vs. 2016
2016 Adoption, n=59 Brands, % Δ: 2014 vs 2016, n=50 Brands in Both Studies
%Δ
Product Page
Display Product Price
Cross-Sell
Live Chat
Gift Finder
Store
Locator
+140%
8%
+150%
5%
+200%
10%
+25%
8%
+200%
75%
List International Locations
66%
List Product/Service in Store Results
Source: L2 Digital IQ Index®: Luxury China 2016.
+63%
22%
Chinese Store Locator
Reservation For In-Store Appointment
+45%
27%
Inventory Status
Video
+100%
39%
Store Locator on Product Page
WeChat Sharing
Service
53%
31%
7%
+9%
+10%
+23%
+200%
11
MCQUEEN GOES OMNICHANNEL
① Alexander McQueen product pages allow customers to check in-store availability for a
specific product and size, and reserve the item online
② Cross-sells with matching products to complete a look, such as sneakers and jackets for a
dress
③ Products featured in the look book can be directly added to the shopping cart
12
FROM CONTENT TO COMMERCE
① Burberry features “buy” button under the latest fashion show video and allow viewers to pre②
order products featured in the show, with personalization options such as adding monogram of
name abbreviation.
Zegna features model looks appeared in video commercial with a link to product page.
13
RELIANT ON RETAILERS
Luxury China: Fashion E-Commerce Channel Penetration
April 2016
Accessible Luxury (n=25)
Pure Luxury (n=34)
71%
64%
56%
48%
40%
36%
32%
36%
28%
26%
9%
3%
Yoox
Shopbop
Source: L2 Digital IQ Index®: Luxury China 201.6
China DTC Site
Tmall
NAP
JD Store
14
TMALL: LOCAL PLAYERS WIN
Luxury China: Tmall Brand Store Metrics
Average of Brands with Tmall Stores
March 2016 ◼ Fashion (n=13) ◼ Watches & Jewelry (n=8) •●=Store Followers
# of Product Reviews
250,000
200,000
Chow Tai Fook
150,000
100,000
Chow Sang Sang
50,000
Samsonite
0
90%
Calvin Klein
Lacoste
Ports 1961
Emphasis
91%
92%
93%
94%
95%
Citizen
96%
97%
Source: L2 Digital IQ Index®: Luxury China 2016.
Avg. Percentage of 5-star Ratings
15
STILL OVERRUN WITH RESELLERS
Luxury China: Fashion % of Brand Owned Real Estate on Tmall
n=12 Brands with Official Tmall Brand Stores, 1st page search results for brand query
March 2016 ◼ Brands Control More Than 80% ◼ Brands Control Less Than 80%
Ports 1961
98%
Burberry
95%
Tommy Hilfiger
90%
Calvin Klein
83%
Tumi
82%
Rimowa
78%
Lacoste
58%
Samsonite
38%
Stuart Weitzman
18%
Coach
12%
Hugo Boss
0%
Armani
0%
Source: L2 Digital IQ Index®: Luxury China 2016.
16
FROM E-TAILERS TO BRAND STORE
①
Citizen’s customers can pick up Tmall orders at five O2O stores nationwide. Online and instore purchases enjoy the same engraving and maintenance services. In these stores,
customers can also check out with Alipay and order from Tmall.
②
Hugo Boss provides free in-store tailoring service for Tmall customers. Store appointments
can be made via Tmall’s homegrown messaging tool AliWangWang.
17
APAC RESEARCH BRIEFING
MESSAGING & PAYMENTS
THE RISE OF MOBILE MESSAGING
Global Monthly Active User Growth
2011-2015
Source: Kleiner Perkins
19
WHAT HAS NOT WORKED….
Skincare: Wechat Percentage of Posts by View Count
January – April 2016, n=4,541 total posts
51.9%
28.1%
15.5%
4.1%
0.4%
0-5,000
5,000-10,000
10,000-50,000
50,000-100,000
100,000+
Number of Views
20
WHAT HAS NOT WORKED…
Skincare China: % of WeChat Posts with More Than 20,000 Views
By Brand
January – April 2016, n= Total Number of Brand Posts
96%
78% 75%
52%
44% 43%
30% 29%
26%
11%
7%
3%
3%
2%
1%
1%
21
AND IN LUXURY….
Luxury China: Average Likes vs. Average Views Per Post
By Brand WeChat Account
Average Likes Per Post
November 2015 – February 2016, n=55 WeChat Accounts
300
Tod’s
250
Chanel
200
Ralph
Lauren
R² = 0.4213
Burberry
150
Coach
Louis
Vuitton
100
Dior
50
Gucci
Michael
Kors
0
0
10,000
20,000
30,000
40,000
50,000
60,000
Average Views Per Post
Source: L2 Digital IQ Index®: Luxury China 2016
22
EXPAND REACH WITH WECHAT ADS
Calvin Klein used
celebrities to leverage its
#myCalvins# campaign
Coach used H5 to
promote their Mother’s
Day campaign
#MYFIRSTCOACH#
Piaget used H5 to
introduce product
features and new
collections
Jaeger-LeCoultre used
video to promote brand
awareness and educate
brand heritage
23
ENHANCE LOYALTY FEATURES
Coach incentivizes users to
bind cell phone on WeChat
through a monthly lottery
for new users
Chow Tai Fook’s WeChat
loyalty section enables
checking for loyalty points,
coupons, orders, and
activity registration
Lacoste Loyalty program
members can check loyalty
points directly in WeChat, a
feature that is not available
on it’s website
24
WECHAT COUPONS
Coach’s 5.20 interactive program invited viewers to submit a love message to Coach, in return
viewers will automatically receive a 520RMB Wechat Coupon. Viewers are further encouraged to
share with his/her friend circle for an opportunity to win Wechat cash red envelope.
25
DRIVE ONLINE TRAFFIC OFFLINE
Chaumet offers appointment booking on
WeChat for boutique service in China (a
feature not available on its website); also offers
geo-location
Michael Kors loyalty program encourages
fans to interact with WeChat account
(through binding, taking customer surveys
etc.) to win gifts and in-store coupons
26
TOMMY HILFIGER: MORE SERVICES
① Tommy Hilfiger’s WeChat account features live chat seven days a week
② Users can track online orders placed through Tommy Hilfiger’s website, mobile app, or JD
store, and inquire about offline orders
③ Link to interactive sizing chart that recommends clothing size based on user inputs
27
PAYMENT STILL RAMPING
China: Mobile Payment Transaction Share
Q3 2015
ALIPAY
TENCENT TENPAY
OTHER
12%
16%
72%
Source: Ipsos
28
PAYMENT STILL RAMPING
Types of Mobile Payments Made via Alipay vs. WeChat Pay
March 2016
WeChat Pay
Alipay
46%
P2P Transfer
31%
24%
Offline (QR Code at Retail
Location)
Online to Offline (Food Delivery,
Group Buying, Taxi)
Bill Payment
Source: Ipsos
49%
21%
54%
17%
60%
29
....BUT INCREDIBLE ENGAGMENT
Estimated Monthly Payment Transactions per User
WeChat Payment
USA Debit Card
AliPay
USA Credit Card
0
20
Source: Federal Reserve Payments Study and Hillhouse Capital estimates.
40
60
30
TRANSLATING OUTSIDE OF CHINA
Popularity of Business Contact Channels
Percentage of Centers Reporting Most Popular Contact Channels, by Generation
2016
Generation
Internet / Web
Chat
Generation Y
(born 1981 – 1999)
(1st
Generation X
(born 1961 – 1980)
21%
(3rd choice)
Baby Boomers
(born 1945 – 1960)
(3rd
Silent Generation
(born before 1944)
2%
(3rd choice)
Source: KPCB Internet Trends 2016.
24%
choice)
7%
choice)
Social Media
(1st
24%
choice)
12%
(4th choice)
(5th
2%
choice)
1%
(4th choice)
Electronic
Messaging
(e.g. email,
SMS)
(3rd
21%
choice)
28%
(2nd choice)
24%
choice)
Smartphone
App
(4th
19%
choice)
11%
(5th choice)
3%
choice)
(2nd
(4th
6%
(2nd choice)
1%
(5th choice)
Telephone
(5th
12%
choice)
29%
(1st choice)
(1st
64%
choice)
90%
(1st choice)
Q: Which channels are most popular with your age-profiled customers? (% of contact centers)
31
PERSONALIZED MESSAGING
Using chatbots on Kik, H&M and Sephora offer 1:1 messaging, giving personalized product
recommendations and replicating the experience of interacting with a salesperson.
Source: SapientNitro.
32
BEST-IN-CLASS: LIVE CHAT
SITE
POP UP
CHAT BOX
Estée Lauder offers Live Chat in persistent navigation (20%), question filtering
(Beauty Advice vs. Order/Technical Questions), hours of operation, and information on
Beauty Advisor as well as the option to upload photo
33
NEW NOTIONS OF SERVICE
Everlane is leveraging
Facebook Messenger to
engage with consumers
on a more personal level.
34
TRAVEL TESTS MESSAGING
In-stay requests
through Whatsapp
Customer service and reservations
through Facebook Messenger
Request, track and pay for Uber
rides through Facebook Messenger
APAC RESEARCH BRIEFING
BEAUTY GOES VERTICAL
“The fastest-growing brands such as M.A.C. or Jo Malone or La Mer
or Bobbi Brown are not advertised the traditional way.”
– Fabrizio Freda, Estée Lauder
1991
INNOVATION TODAY
39
FEB 2016: LOYALTY PROGRAM LAUNCH
1 Complimentary Express
Makeup Application
2 Complimentary Full
Makeup Applications
40
MAINTAINING RELEVANCE
FOLLOWING SUIT
CHARLOTTE TILBURY
COVENT GARDEN
KIKO MILANO
BOBBI BROWN
3INA
MAC COSMETICS
CLINIQUE
THE BODY SHOP
CHANEL
DIOR BEAUTY
BURBERRY
L’OCCITANE
URBAN DECAY
NARS
JO MALONE
CRABTREE & EVELYN
AESOP
THE FIRST COPYCATS
LEADS TO GROWTH IN CHINA
Skin Care: Baidu Index
January 2016 vs. May 2016 ( Previous 30 Days Average)
May 2016
11,019
7,122
8,340
5,529
4,714
3,479
3,209
Innisfree
4,624
Herborist
Data Source: L2
Clinique
Estee
Lauder
4,193
5,336
Shiseido
Chando
Sulwhasoo
Lancôme
3,124
2,117
Inoherb
Biotherm
Laneíge
3,170
Proya
Pechoin
2,142
Olay
4,131
L'Oréal
Paris
1,279
Aupres
44
AND EARNED MEDIA….
Skincare: Sina Weibo Share of Interactions vs. Mentions
May 2016, n=16 Active Brands
Share of Interactions
Share of Mentions
Laneíge
2%
Innisfree
3%
Sulwhasoo
4%
L'Oréal Paris
9%
Other
8%
Other
15%
Estee Lauder
20%
Biotherm
5%
Chando
6%
Clinique
1%
Lancôme
11%
Lancôme
7%
Biotherm
5%
Proya
6%
Innisfree
9%
Pechoin
6%
Proya
16%
Laneíge
6%
L'Oréal Paris
14%
Aupres
Shiseido
4%
6%
Estee Lauder
7%
Olay
16%
Clinique SulWhaSoo
6%
8%
Data Source: L2
Amore Pacific
ELC
Fashion
Indie
LG
L’Oréal Group
LVMH
P&G
Shiseido
45
Unilever
APAC RESEARCH UPDATE
THE IMPORTANCIE OF
CELEBRITY
BURBERRY WINNING ON WEIBO
Luxury China: Weibo Share of Voice
Brands by Share of Posts & Interaction
November 2015 - February 2016, n=4,905 Posts Across 54 Brands
Share of Posts
Ralph Lauren
2%
Dior
Calvin Klein 2%
Gucci 2%
2%
Share of Interactions
Michael Kors
Tory Burch
Michael Kors
2% Louis Vuitton
Tory Burch
0.4%
1%
Coach
2%
6% Hermès
Coach
Ralph Lauren
2%
1% Louis Vuitton
0.6%
0.2%
1%
Dior
13%
Valentino
3%
Other
37%
Burberry
5%
Calvin Klein
1%
Gucci
4%
Other
79%
Valentino
2%
Burberry
33%
Source: L2 Digital IQ Index®: Luxury China 2016.
47
RELYING ON CELEBRITY INFLUENCE
Luxury China: Top 10 Most Popular Fashion Weibo Posts
By Total Engagement (Forwards + Comments + Likes)
November 2015 – February 2016, n=5,895 posts
Celebrity
DIOR
BURBERRY
BURBERRY
BURBERRY
BURBERRY
59,817 Total
Engagement
55,921 Total
Engagement
48,339 Total
Engagement
45,140 Total
Engagement
43,299 Total
Engagement
BURBERRY
BURBERRY
BURBERRY
BURBERRY
BURBERRY
38,906 Total
Engagement
36,107 Total
Engagement
30,649 Total
Engagement
30,062 Total
Engagement
28,526 Total
Engagement
Source: L2 Digital IQ Index®: Luxury China 2016
48
BURBERRY X SUPERSTAR WU YIFAN
BURBERRY
BURBERRY
WU YIFAN
38.9K Total Engagement
36.1K Total Engagement
895K Total Engagement
Burberry enlisted Chinese superstar Wu Yifan as a model for its 2016 Fall/Winter Menswear fashion
show. In addition to creating a series of brand posts featuring Wu YiFan before, Wu Yifan also posted
on his personal channel, generating huge spikes in social engagement and invaluable earned media.
49
SPONSORSHIP DRIVES SPIKES
Descendants of The Sun x Laneíge
30,000
Weibo Index: Laneíge
show ends
20,000
show airs
10,000
0
1/1/16
3/1/16
5/1/16
Hit Korean drama ‘Descendants of the Sun’ 2B+ views on iQiyi
① “Same Products from Descendants of the Sun” section on the Laneíge
Tmall store, welcomed fans to shop products that show star and brand
ambassador, Song Hye-Kyo, used in the show.
② Discussions of Laneíge on Weibo spiked during the airing of the
overwhelmingly popular TV show.
③ Sales of Laneíge’s lipstick doubled and then tripled after the show
began airing in February.
50
THE AMPLICATION EFFECT
China: Celebrity Amplification of Engagement vs. Brand Mentions
May 2015 – May 2016, n=36 Brand Mentions By Celebrities on Weibo
# of Celebrity Followers
# of Brand Mentions By Celebrity
8
Liu Wen - Estée Lauder
7
6
Liu Wen - Vidal Sassoon
5
Jing Boran - L'Oréal Men
4
Yao Chen - Chando
3
Peng Yuyan - Biotherm
Li Yifeng - Olay
2
1
0
0
20
40
60
80
100
120
140
160
180
Engagement Amplification (Celebrity vs Brand)
51
WHEN CELERBRITY GOES RIGHT…
Interactive H5 post on WeChat featured singer
and actor Luhan, incorporated UGC, and
connected directly to commerce via Lancôme's
mobile site
The same campaign on Weibo received 26x the
average engagement and led the user to an
interview with Luhan and directly to the product
page
Campaign-related posts received 61% more
views and 52% more likes than the average
brand post
52
52
WHEN CELEBRITY GOES WRONG
1.
2.
3.
Lancôme was set to sponsor a concert in HK ft. Denise Ho – Lancôme later cancels the event and
disavows Ho as an ambassador generating a huge uproar
June 5th: search and conversations on Weibo surge during the controversy – extending to sister
brand L’Oréal Paris and competitor Esteé Lauder
Lancôme boycott called for in response to the cancellation & competitor Esteé Lauder is
encouraged
53
APAC RESEARCH BRIEFING
THE WAR FOR TALENT
88%
of companies report
undergoing a digital
transformation
55
14%
of companies think they
are moving fast enough
56
DIFFERENT STRATEGIES
Digital & E-commerce Team Size, Centralization, External Hires
Linkedin, May 2015
Size of Team
% of Employees at HQ
60%
Centralized / Hire
Externally
Centralized / Promote
from Within
50%
40%
30%
20%
10%
Global / Promote
from Within
Global / Hire
Externally
0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
% of Employees Promoted From Within
57
BRAIN DRAIN
# of Individuals Moving from Brands to Technology Platforms
Global, December 2015, Linkedin
Google
Facebook
Amazon
360
316
228
194
165
148
54
41
17
P&G
L'Oreal
17 8
Unilever
30
Estee Lauder
22
4
18
LVMH
9
0
5
Richemont
1
0
2
Kering
58
BRAIN DRAIN
# of Individuals Moving from Technology Platforms to Brand
Global, December 2015, Linkedin
Google
Facebook
-715
-377
7
7
1
P&G
10
6
Amazon
-382
9
-51
-40
8
0
1
L'Oreal
Unilever
1
1
2
Estee Lauder
1
0
-10
3
LVMH
3
0
-2
1
Richemont
0
1
0
Kering
59
Loss: 35
Gain: 548
NET: 513
Loss: 3,000
Gain: 476
NET: -2,524
THE UBER OPPORTUNITY
Annualized Global On-Demand Transportation Trip Volume by Region
Q1 2013-Q1 2016
■ China ■ North America ■ EMEA ■ India ■ SE Asia ■ ROW
Q1 2013
25M
Q1 2014
750M
30x Y/Y
Source: Hillhouse Capital estimates.
Q1 2015
1.7B
2.3x Y/Y
Q1 2016
6.3B
3.7x Y/Y
64
APAC RESEARCH BRIEFING
TWO COMPANIES OWN
THE FUTURE OF MEDIA
AD SUPPORTED MEDIA
Year-Over-Year Revenue Growth
Most Recent Fiscal Year
Average: 29%
Average: 0%
43.8%
13.6%
3.9%
Facebook
Google
Source: Company Filings
IAC
2.8%
Bertelsmann
AG
1.0%
0.3%
IPG
Lagardère
NYTimes
Omnicom
YuMe
Viacom*
-0.6%
-1.2%
-2.5%
-3.7%
TWO COMPANIES OWN THE FUTURE
Net Mobile Internet Ad Revenue Share Worldwide, by Company
% of Total Mobile Internet Ad Spending Worldwide, 2015
34%
49%
17%
Source: eMarketer, September 2015
AT THE LOCAL LEVEL
Australian Ad Spend, by Medium
■ Internet ■ Television ■ Newspapers ■ Magazines ■ Radio ■ Outdoors
1970-2020E
Forecast
Source: Morgan Stanley Research Estimates.
68
DOWN “UNDER”
YoY Revenue Growth
2015
Australian Traditional Media
(TV, Radio, Newspapers)
Australian Operations of Global
Media/Technology Companies
Source: SMI, Morgan Stanley Research.
69
DOWN “UNDER”
Australia Media Ad Spend
■ Collected by Global Media/Tech Companies ■ Left for Domestic Media Companies
TOTAL CAGR +3%
CAGR +18%
CAGR -7%
Source: CEASA, Morgan Stanley Research Estimates.
70
EMERGING DUOPOLY
Global Internet Market Leaders
Rank
Company
Region
33%Current Market Value
Q1 ’16 Cash ($B)
2015 Revenue ($B)
($B)
1
Apple
USA
$547
$233
$235
2
Google/Alphabet
USA
510
79
75%
75
3
Amazon
USA
341
16
107
4
Facebook
USA
340
21
18
5
Tencent
China
206
14
16
6
Alibaba
China
205
18
15
7
Priceline
USA
63
11
9
8
Uber
USA
63
--
--
9
Baidu
China
62
11
10
10
Ant Financial
China
60
--
--
11
Salesforce.com
USA
57
4
7
12
Xioami
China
46
--
--
13
Paypal
USA
46
6
9
14
Netflix
USA
44
2
7
15
Yahoo!
USA
36
10
5
16
JD.com
China
34
5
28
17
eBay
USA
28
11
9
18
Airbnb
USA
26
--
--
19
Yahoo! Japan
Japan
26
5
5
20
Didi Kuaidi
China
25
--
--
$2,752
$447
$554
Total
Source: Cataline Marketing.
71
THE FUTURE…
China Top 7 Retailers by Revenue
U.S. Top 7 Retailers by Revenue
In USD Billions, 2015
In USD Billions, 2015
Alibaba
Wal-Mart
JD.com
CVS
China Resources
Kroger
Sunins
Walgreens
GOME
Amazon
Wal-Mart
Target
Auchan Group
Costco
0
Source:
50
100
150
0
100
200
300
400
72
APAC RESEARCH BRIEFING
CONCLUSIONS
MANY THINGS HAVE NOT CHANGED:
•
Differentiated Product
•
Great Merchandising
•
Growth Channels
•
Multichannel
BUT SOME HAVE:
•
A Crisis Is A Terrible Thing To Waste
•
Reduce Customer Acquisition Costs Via Data /
Personalization
•
Traditional Media Without Great Digital = Death Sentence
•
Hope In Omnichannel End Game But….
•
Competitors Are Not Who They Seem