Coty Digital, E-commerce & CRM Director, Southeast Asia Katia Darde tells BW Confidential about how the company aims to build its online business in Southeast Asia and India, and shares her views on the digital landscape in the region
You have opened a number of flagship stores for your brands on online platform Lazada’s LazMall in Southeast Asia. How has your business performed on the platform?
Since Covid there was a massive shift in consumer behavior everywhere, and in Southeast Asia one of these shifts was that consumers began to buy luxury products and fragrance online, which was not happening to a great extent before the pandemic.
It is important to be where the consumer is shopping, and we see an opportunity to grow our e-commerce penetration. We began partnering with Lazada three years ago and the goal was to try to re-create the premium experience that we have offline to the online world. The way we do that is through content. One of the main obstacles for consumers buying fragrance online is that they cannot try the product, which is why content, videos, livestreaming and education about the category is important to grow online adoption. We have also partnered on a lot of exclusive benefits, such as try-and-buy sets, where you can order vials to try them at home and redeem them against a full-size format on the LazMall flagship store.
It is important to be on LazMall, as the platform is not only a place for shopping, but a place where you can reach a broader audience. It’s becoming a major placement platform and a place where consumers are searching and discovering brands or products. So it is also a place where we can showcase the content and the message we want to bring to consumers.
What type of content works best on LazMall, especially for new fragrance launches whose scent consumers have not tried before?
We are trying to leverage all the tools that we have at our disposal on the platform. So for example, one initiative that worked well was for the launch of the Hugo Boss flagship store on LazMall, whereby we had a very strong collaboration with the fashion house. We co-hosted a livestream and the fashion house’s new collection was shown while we explained the fragrance, the notes and the style that goes with the scent; we created a strong link with the fashion house and with the fashion collection.
Before the launch of the official store, we released the try-and-buy sets on the website, so people could buy the set beforehand and discover the scent at home while watching the livestream and hear how the influencer and the host describe the scent, what they would wear with it and on which occasion. This works well, and in some ways is a better experience than in store as you are immersed in the overall environment.
What is the conversion rate when you launch such initiatives?
Unlike in China, where livestreaming is the key moment for sales, in Southeast Asia it’s more about education and content. Of course, sales are generated too, as these events are usually in conjunction with the launch of a new product. We are looking at how to maximize the livestream potential for Southeast Asia without going to the extent of what we see in China, where there is quite a dependency on the person who is doing the livestreaming – we still want to own this moment for the brand and don’t want to make it too commercial. Also, we have luxury brands and don’t do a lot of discounts and promotions, so it’s always about education and how to make people want to at least go and try the fragrance.
It is important to be on LazMall, as the platform is not only a place for shopping, but a place where you can reach a broader audience. It’s becoming a major placement platform and a place where consumers are searching and discovering brands or products.
Coty Digital, E-commerce & CRM Director Southeast Asia Katia Darde
KOLs (Key Opinion Leaders) play an important role in e-commerce. How can you use KOLs, but still retain control of how your brand is conveyed and sold?
Of course, we are leveraging KOLs. For example, for the relaunch of our philosophy brand in Thailand, Singapore and Malaysia last year, we selected KOLs who are also partnering with our retailers. We have what we call our ‘philosophy tribe’ and some of them are also members of the Sephora Squad, so when we do an exclusive partnership with Sephora on philosophy we leverage both tribes together to talk about the brand. I would say we are trying to use KOLs tactically, so that we are sure that the whole ecosystem works with the retailer, with the brand and with the audience.
Is the business you have done on LazMall incremental or has there been a transfer from your store business?
It has been incremental, and in the third quarter of 2023, we won four points of market share in e-commerce. In some markets like Singapore, we are already the number-one group in prestige fragrance on LazMall, and our ambition is to become number one in the region. It has also benefited other retailers, as there is a lot of education and so consumers may show up in different channels. So far, everything is additional.
E-commerce penetration for fragrance in Southeast Asia – in markets such as Singapore, Thailand and Malaysia – is not high, but it’s increasing very fast. We are growing the category together with the whole e-commerce business.
The online marketplace in Southeast Asia is very fragmented. How are you building your online strategy given this fragmented environment?
Yes, the online environment is very fragmented in Southeast Asia. There are the big regional players such as LazMall and Shopee and there is some overlap in their audiences. There is also Zalora, which is a player in fashion, but also has beauty. I would say that we aim to [leverage] the specificities of the platform to make sure that there is a difference and that we are not cannibalizing [the business]. Today, with our fragrance brands we are only on LazMall because it has a luxury environment. On Shopee, we are very successful with our consumer beauty brands. But we are also ready to address any shift in the platforms in terms of audience profile or opportunity.
Shopping festivals, such as 11.11, are extremely promotional. How can you preserve your brand equity during these promotional events?
Yes, 11.11 is very promotional and consumers wait for this moment to get the best deals of the year; consumers expect that. But what’s important for us is to try to build the value through services and exclusive experiences that are tailor-made for this special event. So, for example, on LazMall we recently launched an engraving service for our fragrances. It is quite an exclusive service, as for some of the brands you cannot find this engraving service all year long in other stores. We are also partnering with LazMall to develop gifting further and to build differentiating services so that the customers will come because they have additional value and not for the promotions alone. In addition to engraving, we also have gift wrapping and personalized gift cards. These services add value for the customer. I would be happy to be a pioneer in saying that we want to build services, the consumer experience and add value, and not just add more and more promotions every year.
Festivals such as 11.11 remain a key shopping period, so you can’t miss it. But we are trying not be dependent on promotions and mega campaigns, which is why our services will be available all year long. We want to have shoppers come to buy on the stores for any gifting moments, not only for the end of the year.
There are so many different promotional events, but the big ones such as the 11.11 festival will remain a major event – for some sellers here, around 30% of their annual new revenue is done in just three days. But perhaps some of the other smaller events will become less relevant. Also, brands cannot grow by driving so many promotions.
Since Covid, festivals are more promotional, as [during the pandemic] there was an increase in e-commerce and companies needed to grow year-on-year and so added promotions. However, you cannot build on that because at the end of the day you also need to be profitable. It may be just a matter of time for companies to adjust to the post-Covid effect, and then promotions may slow a bit.
What are your ambitions for India and how do you see the online environment in India changing?
India is a huge opportunity for beauty offline and online. Online, India is the fastest-growing market in the region and e-commerce penetration for beauty and personal care will reach almost 35% very soon. This is partly due to deeper penetration into tier-two and tier-three cities as logistics expand.
We are looking to build India and are putting a lot of resources and efforts in place and now have a dedicated team there based in Mumbai. We have a very ambitious target to double our e-commerce revenue in India this fiscal year. The way we will do this is through education, so on our make-up brands through shade finders, online consultations and these kinds of services, and on brand building.
We will also be very flexible because in India the environment, the players and the e-commerce channels are changing a lot. Everyone wants to be part of this, so there has been a lot of investment to develop platforms and logistics. Big players like Tata Cliq, Tira [from retail group Reliance] and Amazon are investing a lot, and everyone wants to be the biggest. Some players are successful, some less so, and there is a lot of consolidation of the market.
We need to be prepared for any changes in the market because the channels and partners we were betting on maybe three years ago are not the same today, and we need to be very fast. As with Southeast Asia we are working to build a differentiation with all of our partners. So for some brands, we will partner to launch with Myntra and others with Nykaa. We are trying to leverage every partner and give some very interesting content and events to our brands in India. More brands from Coty will come to India in the coming months.
Which players do you think will win in the online market in India – the large legacy companies getting deeper into beauty e-commerce or the new emerging players?
It is difficult to say. But for now, there is room for everyone as India is so big. For consumers, it is also interesting because they have a choice about where to shop – depending on where they are of course. What is positive in this dynamic is that as everyone wants to stand out, they are very creative in terms of trying to bring experience or partnering with influencers. There are quite a lot of creative and interesting initiatives from India that we would like also to implement for Southeast Asia.
How do you see the level of consumer spend for beauty online in India?
When you take the average, it is lower than in some other markets. However, given the size of India, there is a big target audience that has the purchasing power to buy our premium fragrances.