What does it take for a business to expand globally? How can payments optimize your customer’s experience? And what really is unified commerce? Join us as we go beyond the data to explore the trends shaping APAC’s retail, restaurant, and hospitality sectors. Learn how you can leverage the latest technology and innovation to realize your business ambitions faster.
Charmaine: International expansion has always been a goal for ambitious businesses. Launching into new markets creates plenty of opportunities, whether that’s increasing revenue, staying ahead of the competition, or accessing a new talent pool. And with technology creating a world that’s more interconnected than at any previous time, moving into a new market is more achievable than ever before. However, while technology has made accessing new customers easier than ever, it has also raised the expectations of consumers over the quality and consistency of the service they can expect to receive, regardless of where they are based. For example, 42% of APAC respondents to the Adyen Retail Report say they will only purchase from websites that will let them use their usual payment methods, while 31% will only use sites that convert prices to their local currencies. As we’ll find out in this episode, whether you’re looking to expand within APAC or abroad, brands wanting to succeed need to consider which markets to move into, how products, services, and payments need to adapt to local preferences, and how to retain their unique value proposition when no two markets are the same.
Dione: I think the first big challenge for us when it comes to expanding globally has been to constantly remind ourselves to be very true to our UVP. I think as a brand, it's very easy to sometimes maybe adapt a little too much, modify a little bit too much to fit all these different markets. But you have to be very clear about what end of the day is your unique value proposition. What is your secret recipe and sauce?
Charmaine: Welcome to Behind the Figures, the podcast that goes beyond the stats to explore the trends shaping the retail, restaurant, and hospitality sector, and share expert advice on how to leverage the latest technology and innovation to make the most of it. I’m your host, Charmaine Yee. In this episode, we’re talking to an exciting line-up of APAC brands and industry experts about what companies need to think about when expanding internationally, and especially into Asia Pacific. Home to 4.3 billion people, equal to 60% of the world’s population, and set to be home to the largest consumer class in the world by 2023, it’s no wonder that for merchants based inside and outside Asia Pacific, the region is seen as a serious growth opportunity. But to expand successfully and sustainably across Asia Pacific means having a clear understanding of the region’s differences. And those differences span everything from consumer expectations to regulation, explains Coen Tijhof, Senior Vice President, Product & Operations at Adyen.
Coen: APAC markets present a unique opportunity and also a very unique set of challenges. I've worked in Europe and also in the US and now have the opportunity to work here. And the interesting part about APAC is that every market is very, very different from the point of view of a consumer. The expectations in Singapore are very different than the expectations of consumers in Vietnam, for example, or the consumers a little bit more north, in Japan. So having a really good insight of why are you going into a particular market and are customers familiar with your brand? Or are they looking for a particular type of product? And does your product match with the expectations of your consumers, it's really important to understand specifically here in the APAC region. What is also very unique about this region is that every market has a very certain set of regulations and business environments that you need to take into account. So going into business in Singapore might be easier on some fronts, but a lot more scrutiny is on a different industry, let's say the financial industry, for example, than compared to the Philippines. So knowing what you need to comply with and what the regulations are, that you need as a business are forming the basis of where do you prioritize, if you want to expand into different markets.
Charmaine: So Asia Pacific is as diverse as it is large. This means companies will need a bespoke strategy for each market. While such an approach could feel overwhelming, fortunately May Lam, Asia Pacific Payments Leader at EY, is on hand to share the areas merchants should pay particular attention to when expanding into a new marketplace.
May: The first one is about understanding the regulatory landscape. So depending on the different businesses, they will be under different governance and compliance requirements when it comes to, for example, the data. Secondly, is the licensing and registration. So I think the first hurdle we see is that what will be the markets that are going in is similar to what they have got. So they don't need to pivot too much on their product and their go-to-market strategy. So that's one challenge. And the second challenge is that to get into understanding what is their culture look like of the jurisdiction that they would like to expand. So for example, in Asia Pacific, or ASEAN, markets, the digital wallets and the super app is really penetrated. So to sell into those markets, you really need to understand what is the culture and what is the easiest way and seamless way for your targeted audience, consumer, customer, clients that use your services. So that's a great thing that we like to say payment is great. So we really have to understand what is your strategy when it comes to payment? And how do you embed the payment in your product and services to continue to grow those markets. And then the thirdly, that we see is the customer acquisition. So again, back to the culture perspective, that is different. So what is your strong customer acquisition? Do you have a great big book that you can call sales, upsell? So what is the partnerships, the collaboration, the alliances, the strategy that you have to, to hone into that market and continue to grow.
Charmaine: Some really useful advice from May there on the general considerations companies need to think about as they expand across APAC. We’ve established that it’s important to take into account the differences between markets. But it’s equally important to keep in mind what makes your brand unique and stand out from the competition. The success of your company comes from its distinct brand identity, special approach to products and services, and the relationship you have built with your customer base. These are things you will want to retain as you grow, which means you’ll need an international strategy that works for the particular demands of your business. When Southeast Asian womenswear brand Love, Bonito was looking to grow beyond its home market of Singapore, it took a gradual approach, explains Dione Song.
Dione: We're across three key regions, the first region Southeast Asia, the second region, East Asia, and in the third region as well expanding outside Asia, right with a key market in the US. And how did we really think about sort of our global expansion across these three regions, right, which are all pretty different. And I'll walk through in bits. So for Southeast Asia, for us, it's just where we've been operating for the longest of times and really expanding as well by proximity in Singapore first, then expanding into Malaysia, Indonesia, and then now as well, really seeing great growth in markets like the Philippines for us. So when we think about expansion as a brand, what we try to do is always expand first online because having an online.com today, actually, it's really beneficial, right? You can expand the net super wide without actually having to invest a lot of fixed costs, or capex or upfront costs in these markets. So how we think about expansion, really opening first a website, having an international website, and then we start seeing, hey, in which markets do we see good traction coming up, which for us demonstrates actually that first inkling of product market fit. The moment you start seeing that, we start increasing our marketing presence and activity. We start doing more social media, we start doing more PR, we start doing more influencer seeding, we start also actually now investing in paid marketing. And that's where we see more traction the moment after we see that then we start going omni right because omnichannel also takes a little bit more effort and it means that you need to start really recruiting as well teams on ground. We start doing this in a sort of low risk approach first with pop up stores. This, for us, is also just to understand the market better, to understand the catchment areas a little bit better, really test and learn and really get also operations excellence really tight and then the moment we start seeing that moving, that's when we start expanding and really diving into these markets with a full blown omnichannel experience which means online, having our stores, having a team on ground, and potentially to improve the customer experience even more, having as well a local fulfillment. Be it our own warehouse fulfilling, or a three PL, so fulfillment through a three PL. And this is exactly, this has been how we've expanded into a market like Singapore first, then Malaysia, Indonesia and most recently Hong Kong as well. And when we think about expansion across all of these markets, for us, it's really about seeing that traction. It's not just about markets in Asia. So quite interestingly, based on the same methodology, we had our international website a couple of years ago, we started seeing a really good audience coming in from markets like Australia, and the US, and then realize that wow, right, I think there is a huge potential in these markets because there is a huge Asian diaspora market, Asian expats. And there aren't that many brands that are really catering to them. And this gave us even more insights to expand into these markets even further. In the US, for us, is a big bet market for Love, Bonito. And of course, we've been able to do that actually quite fast, an accelerated manner over the last couple of years. Of course, also, because we've raised funding, or CVC, led by Openspace, right, and then most recently, our Series C round, that we closed, just the end of 2021, led by Primavera Group.
Charmaine: Even for a brand like Love, Bonito, which targets Asian shoppers with a feminine gender expression, there are obstacles to overcome when moving into new APAC markets. This included the need to strike a balance between staying true to its unique approach to fashion while also catering to the needs of consumers in different markets.
Dione: The first big challenge for us, when it comes to expanding globally has been to constantly remind ourselves to be very true to our UVP. I think as a brand, it's very easy to sometimes maybe adapt a little too much, modify a little bit too much to fit all these different markets. But you have to be very clear about: "Hey, what is your unique value proposition? What is your secret recipe and sauce?" So for us, it's very clear that we are in the market today and are relevant, because we're very Asian-centric, very female-centric when it comes to our product offering, when it comes to our marketing or communications or content. We're also very accessible and we think about value for money. We believe in democratizing fashion, because we believe that every woman should be able to afford a good piece of Love, Bonito clothing. As we expand, we have questions about hey, do you want to perhaps expand into a men's line or hey, why only speak to the Asian woman even in global markets, for example. And it's not because we do not want to be inclusive, we just want to be very clear that hey, sometimes speaking to everyone, you end up speaking to no one, there has to be something that differentiates you. And of course, we open our doors to everyone in our stores, you will see a very diverse group of customers. But we're very clear around where we tailor our approach to. And there are actually key fundamental differences: height, proportions, skin tones, and so on, which is what makes also our products very unique. And when you think about the fashion space, even 10 years ago, was extremely competitive landscape where it was already pretty much highly saturated. There was a key reason why we entered the market. We've been successful and are thriving today. So for us, really that first challenge is to always ensure that we're true to our UVP. We're always rooted in our purpose, always rooted in our mission. And we stick very disciplined to that approach, even as we expand. So that's really that first challenge. I think for challenge two, as we think about expansion, one of the key areas would be when it comes to product market fit, end of the day. Yes, there are differences as well between markets, where consumers are diverse, shopping behaviors change. And I think that challenge there as well as to ensure that we're expanding, we're catering to these markets, but we're also balancing and ensuring that we're expanding with economies of scale. Because what you don't want to do as a brand is to really diverse, localize, and customize everything too much right to a point that there is no economies of scale, and there is no synergies. So for us, I think what we like to think about instead of product market fit, we try to think about also market to product fit. So an example of that would be, we've grown a lot in Singapore. And when we thought about which key markets would make sense to be expanding into, it's not just about looking at all these different key metrics that investors would commonly talk about. It's also about thinking about hey, I think where do markets have very similar similarities actually, and behaviors to your current core market. For example, when we think about the Asian fit, one of the key areas and of course, we're very cognizant that not all Asians are built the same right and Asians are very diverse. But we started also identifying markets where women had very similar height, weight, BMI as well to the Singapore customer, because this means that our product would be able to fit her to a tee, right? Pardon the pun, right to a tee and without having to change up the entire range. So these are things that we think about, if we think about let's say, catering to markets like Malaysia, Indonesia, there are creative ways as well to reach out to these markets. You need a strong or you need quite a decent modest assortment. We try to think about it in a more creative way. Can we create silhouettes of dresses, same core silhouette, but we're extending the sleeve length, right? We're increasing the neckline so it's still relevant for the modest consumers in market and we show them example images as well as how do you style it. You can wear an inner piece underneath the dress right? And then it becomes a more fashionable, modest-friendly outfit for example, instead of having and introducing a very different modest line, which would not be giving us good economies of scale, across all of the markets. I think that's really challenge two: how can you expand catering to all these markets without incurring too much cost too much burn.
Charmaine: So our brands need to localize, they also need to remain true to their core principles, something Dione feels can often get forgotten in the rush to grow.
Dione: I think many brands and founders typically make the mistake of localizing or tweaking and modifying business models or collections a little too early as they're starting their journey, which adds a lot of complexity to the entire scale of operations. And we've done that as well, in the early days. And what we've learned over time is that it's not so much about identifying, hey, there's just a next big market and then modifying and tweaking everything for that market. If you take, for example, Indonesia, which was one of the most and still is, right, one of the very attractive market to VCs, to investors, because of the size of the market. But if you think about it, does it make sense for every single brand to be expanding there? Not really, because the actual addressable market is not that big, really depending on your price points and where you're playing. If you're not a mass brand, it is a very, very different market potential actually. And if you think about the similarities between that market perhaps and your home market, and for us in Singapore, it's also quite different, because we really want to reach out to majority of the market. When it comes to fashion, for example, you have to play a very heavy mortars game, just given of course, the market. For us, it's really about flipping the whole narrative on its head, not so much about that product market fit. But really thinking about where the markets have a good fit as well to what we're currently strong at, to our current core product. We're gonna find women that have very similar characteristics, maybe, very similar shopping behavior, patterns to the Singapore customer. So for us, this meant, where can we demonstrate the Asian fit. And then, we can actually show the quality and really demonstrate our product superiority. We started looking at also, hey, which markets have very similar characteristics to Singapore, i.e., it's dense, you have shopping malls, so that when you think about omnichannel, our store formats also work, versus a city that maybe does not have such strong shopping malls, with street stores, because it's a very different store build. So we started thinking about things like that as well. And we started thinking about things like marketing channels, and where do consumers prefer shopping? For example, I'm just here to share very openly, one of the key considerations then when we thought about market expansion was also hey, should we expand to China, and this was also pre-CVC. And we know it's an expensive market. But if you think about the market dynamics as well on channels is very different. The website infrastructure is different. For example, you can't access a website from China here without VPN, and the marketing stacks are different, you're using WeChat, you're using Xiaohongshu, it's very different from using Facebook, Instagram, and so on, and all these channels that are predominant over here. What does it mean? It means that to cater to these markets, either you need to build a very different marketing team, you need to have a very different knowledge, what your team is strong at today would not easily translate to these markets. So we started taking into all these different considerations. These are just some basic examples. But these are really the questions we think about when it comes to scaling. Because for us, and perhaps a slightly different, different strokes for different folks, right, but for us, it's really about how can we scale in a sustainable manner and still build an enduring business that is profitable in the long run. Abnd for us that was important, hence, the amount of cash burn thinking about your cash flow efficiency, that was also some very key considerations.
Charmaine: As we heard, Love, Bonito has adopted a very targeted approach when expanding into new markets, which fits in with its business model and priorities. However, for platform businesses being available in as many markets as possible, is a core part of their business model. This is important when you consider that only 28% of consumers in APAC have made a purchase from a retailer based in another country in the past 6 months. Since launching in Australia in 2009, Freelancer, a global freelancing and crowdsourcing marketplace, has developed 50 country-specific websites. Adam Byrnes, Vice President of Product and Growth at Freelancer, is here to talk us through the company's decision-making process for international expansion.
Adam: Our business is global by nature, we match freelancers typically located in emerging markets with SMEs and startups who are typically located in established markets and are looking to get services done. We match the two together so that they can transact however, we did make a conscious effort to internationalize our product offering in response to that global nature of our business. And we did that by adopting local languages, local currencies, payment methods, and so on and so forth. Now, in terms of how do we go about like prioritizing that expansion? Well, the first thing is obviously just ease, so what I mean by this is, obviously we're an Australian business and so the first thing we thought about was well, what are just some really similar markets that we can enter easily, where we had a naturally large presence, right? So things like the US, the UK, New Zealand, Canada, countries like these, where that where there's a really strong cultural match, and then language match, and all the other issues we then have left actually are in the payments space. The sort of culture and language thing tends to be very minor differences. We then started thinking about okay, well, more generally, when we think about expansion, we think about, you know, where are the clients, because we tend to have a lot more freelancers than we do clients. And so, you know, from on there as well, okay, where are the clients likely to be based what we just thought about, you know, what's the spending power in in countries and what's the spending languages? Which led to us sort of really focusing on Spanish as, as I would say, the next kind of major market, obviously, there's a lot of Spanish-speaking people around the globe, in Spain, in Latin America, and even in the US, where there's a huge Hispanic population. By catering to them, we actually got a potentially very broad range of clients. And then we looked at some of the more traditional languages in countries that have very established economies. So countries like France, Germany, and basically went on from there using that same decision-making process over and over again, to work out where do we go next was really a factor of how big is the market for us? And how easy is it for us to enter that market? How much do we have to change about the experience? How difficult is that? How much of a cultural mismatch is there from ourselves and to that culture and so on.
Charmaine: But getting their expansion right was more than just identifying which countries offer the best opportunities. A critical factor in Freelancer's successful growth has been understanding and adapting to the payments landscape of different countries.
Adam: Payments, in particular vary wildly country by country. Standard assumptions that Australians make about their financial system simply just don't hold true in other countries. Things like single digit inflation, widespread adoption of banking and credit cards, et cetera. A really good example is Argentina, inflation is typically in the double digit ranges there. And this means that the locals much prefer to earn in US dollars versus their native currency. And many are unbanked or widely banked. A lot of them keep large quantities of cash under the bed so to speak, there are multiple FX rates, you know, there's the ones advertised by the government, obviously, but then there's also those offered on the black market. And there's actually various shades of grey in between, sort of contrasting example is Indonesia. Indonesia is a huge market with an extremely rapidly growing population, really closely located to Australia as well, obviously. It's quite different, I'd say. The sort of big trends, there's the adoption of the mobile phone is much higher than in say, like Australia or the US. Typically, most things are done on there, most sort of transactions are done on their phone. And the living standards are rapidly rising, but maybe not as high as you would find in other countries. And that has a direct impact as well. The regulatory framework is a bit more stable, but the legal system is often quite different to that that you would find inside the US or the UK. And so all these kind of differences, these cultural differences, these customer differences, payments differences, et cetera. They all have a direct impact on how customers use your product and your global expansion strategy. So everything from what currencies do they want to transact in, you might think it's the local currency, but actually, sometimes they would actually much prefer to transact in US dollars or a more stable currency, especially if they're an inflation-heavy area. If you're primarily using your phone, your payment methods tend to be very different to those used when you're more using the internet through a more traditional desktop, or laptop experience, and so on. So again, it really varies wildly country by country. And so you know, some of these differences can be absolutely critical in the success of your international expansion.
Charmaine: So whether you're a platform business like Freelancer, where international expansion is a must, or you're taking a more targeted approach, how can you be successful? Whether it's payment options, languages, or product offerings, what unites the best companies is that they put the customer at the heart of their strategy, explains Adyen's Coen.
Coen: One of the most important things is that you listen to your customers. Customers in different markets expect different things. As an international company, there is no one size fits all, there is a certain set that you need to diversify. One of the things that that we hear back from successful companies is that they actually experiment with different strategies of how to design their websites, how to experiment with checkout experiences, how to tailor particular in-store experiences, and that can be by offering mobile checkouts or counter service, creating different refund policies. There's a lot of things that you can do that is in line or beyond what's normal, and what's expected in different countries. And then a good example is actually here in APAC. We're very familiar with the use of QR codes, as you will. We use QR codes for everything to promote particular services, to redirect on the menu, but also for payments. In my time in the US, and I've heard this now as well, is that the introduction of QR codes is not well-received. Most shoppers don't like QR codes, it's cumbersome in their experience because they need to pull out their phone. While here in APAC, I think it's a well-accepted. And actually, it is being pushed by governments and by other forms of identification, so becomes almost a way of life. And so as a company, you need to take this into account that if you're an American company, and not familiar with how do you use QR codes in a good way, you might miss out on opportunities, and you might miss out on an opportunity to really engage with your customers. Also use them in the right way to, for example, validate your customers in a frictionless way.
Charmaine: As we heard, putting the customer first means understanding their different demands, and then finding the solutions that will deliver the service or product. But how do merchants find the time and resources to understand the nuances of each market? As a business, you cannot be expected to do everything yourself, which is why it's important to work with reliable partners who can support your ambitions and help you avoid pitfalls.
Coen: It's crucial to find the right partners that help you, not only expanding into different markets, to tell you what is possible, but also be really honest about, hey, these are the things that you should be thinking about. So from our perspective, from a payments perspective, we want to be really relevant to the partners that we work with. So all of our customers when they come to us, they say, "What do I expect? And what should I be expecting if I'm going to be operating into the APAC region?" So what we talk about is what is relevant for you, what is your target audience, we really want to understand what is their strategy so far. And we will challenge that: Have you thought about this? Have you thought about that? And why do you want to offer this particular service? Why you should be thinking about that. So we do this from a payments perspective, but we will also challenge our customers from a technical perspective of how have you implemented your backend systems. And can we help you with making the right choices as far as we can. So we do this from a payments perspective. But I will advice any company to do this also, from, I would say, their online perspective. But also from their logistics perspective, if they are, for example, a retailer or an online retailer, is to really find those partners that will help you in your strategy. Specifically, when you have a multi-country strategy, you would want to find partners that can help you expand or have a network to actually execute on your strategy, and that can deliver on the promise that you want. And I'll give you an example, when I spent 5 years in the United States, I'm used to the Amazon effect, which is basically next-day delivery, or even same-day delivery in a country the size of the US. That is very impressive of what they have built. That same promise in APAC, if you're ordering from, let's say Singapore, but the product has to come from Hong Kong, is a very challenging promise to make. So finding partners that can help you deliver on the promise of "I want to deliver my package within 3 business days", that is a promise that you have to your clients, if you want that, but it requires finding the right partners because building an infrastructure yourself is quite a big feat. The other parts on your technical side is making a really distinct choice whether you want to build everything in-house, or find the right strategic partners that can help you also in delivering that in the different markets is something that is of strategic importance. And it sounds a bit obvious. But we've seen too many examples where fragmented choices of how to implement a strategic IT infrastructure has led to more silos rather than unification.
Charmaine: As we've heard today, when expanding your brand abroad, it's important to consider the differences of each new market and how your business needs to adapt. At the same time, don't lose sight of what makes your product or service unique in the first place. And remember, you're not alone. It's important to find partners who can help you in your journey and support you across markets. I hope you've enjoyed this episode of Behind the figures. Don't forget to check out our other episodes covering topics including the importance of creating more sustainable businesses and how customer experience is changing.