This is the first time I blog about Shopee. Shopee had been very aggressive in Malaysia since it’s launch, and very aggressive. No joining fee, no commission and free shipment for purchases above RM30. Yes, it has one of the best mobile shopping experience, but there is no sustainable revenue model. Understand this is a Market Penetration strategy, which is gain market share from existing competitors. However how long can it last? Shopee finally reveal it’s first card in Malaysia by launching “SHopee My Adds”. last week after hyping it since 2017.
See, there is no free lunch on the world. Why is Shopee doing that? It’s competitor like Lazada are earning thru large sum of commissions from sellers. I always felt that it’s because we are the product! Free stuff like Facebook and Google changed the business model. It’s not about charging up front from user. It is to gather consumer data, manage the data and sell it to Businesses.
Shopee in a way is copying Facebook and Google model. They believed that their innovation is good, and they will be able to attract a lot of customer as long as it is free. Once they had the data, it is time to cash in by selling advertisement.
Well, the success cases are so glaringly available there. Google and Facebook advert do not charge any commission for businesses done on their platform. Now they had gobbled most of the global online advertisement revenue. However, they are not marketplaces like Amazon which charge commission on each sales done. In comparison, marketplaces like Amazon which gained its revenue from seller’s commissions, had insignificant ad revenue by comparison. There are some which claim that Amazon is not profiting yet.
Thus, Shopee positioning at this moment, is to be the free like Facebook/Google with a powerful advertisement features for revenue in as an eCommerce/marketplace platform which focus on B2C business like Amazon / Lazada.
But saying is easier than doing. Let’s make a comparison between Shopee Malaysia with current largest Malaysia market place – the almighty Lazada! After playing around with Shopee for a week, Shopee is much more better than Lazada by a mile in my opinion. However this is only in comparing Shopee’s Myads, to Lazada’s Sponsored Product. Lazada beware!
The Winning Point for Shopee’s My ads
1) Great Introductory Pages for Shopee myads. Lazada’s Sponsored Product only a submenu in the lazada centre.
2. In the adds portal, there is direct link to Introduction, User Manual and Tutorial videos. Lazada had to go to University.
3. Prominent placement for ads. Shopee ads is in 1st 5 listing for desktop. Lazada is only on a product page, bottom right corner for sponsored product. Frankly, I don’t even look at that area when I was doing my shopping in Lazada.
4. Superior Dashboard, with downloadable reports for each product for different dataes, and even in for each keywords! Lazada report basically static, just pay and wait, and the result could not provide much valuable insights.
5) The winning features is the Keywords Bid! Lazada only had keywords info for Premium seller, but Shopee now open for all sellers. Additionally, popularity of keywords is normally confidential info for marketplaces but Shopee share this info! You can know the last 30 days of search for that particular keyword.
There is much of Google adwords and Facebook marketing essence in Shopee. Shopee Facebook pixels is detected as beside. The keyword at the start is only 0.03 has now risen which is as per Google adwords strategy. Thus, my suggestion for pure marketplaces seller, which had no experience in google ads and Facebook marketing, try to pickup some relevant knowledge on this. The objective of your advertisement should be having the best value for your money spend. Don't chase after impression or clicks only.
Some of my other suggestion:
1. Data analysis is a must for seller when using Shopee Ads, else your cost of business will increase for each listing will increased significantly.
2. Keywords bidding strategy. Some of the popular keywords had increase from 0.03 to 1.20 now per click. I guess the popular keyword price will keep increasing due to the bidding war, until it reached a cap. If you are buying more expensive keywords, you need to have better conversion rate / sales to cover the cost of the keywords. Else there might be a lot of clickthrough to your listing, but no sales / conversion. This will increase your cost by a lot.
3. Alternative advertisement. Funneling of target audiences to marketplace is not limited to marketplace ads only. You can have Facebook ads or landing page to divert your target customer to the listing link. It might be cheaper and more effective, depending on the cost of Shopee keywords and the popularity of Shopee myads. Again this need data analysis and split testing on which strategy is more effective.
4. Again, analysis and compare data for Keywords listing and Organic listing. Previous strategy for organic listing might be better also, if the listing is popular and the price can be better without the cost of keywords. However, if it is a new listing, it means you are at the start of a marketing funnel, thus you need reach and awareness, then organic listing might be at your disadvantage and you might want to consider Shopee Keywords.
So now let’s do some basic practical example analysis. One of the member had try for a week and kind enough to allow me to share the result and reports. At start, it is an expensive marketing effort for start. The impression (amount of views) increase and so did the click thru rate. But conversion is very low from click rate at only 0.9% (3 sales over 332 clicks) with high expenses at more than 50% of gross market value.
But this is just overall view and let's not get demotivated when we just started. There is insufficient information for the member to do effective ads. Thus at the start you need to gather data for specific product to understand better in developing future strategy. For this example, the member is selling Iphone 6 Cover. I add on the cost and the Cost per Click, Conversion rate, and Ad Expense / Sales % to the Shopee report for for better analysis.
My suggestion are:
1. It is easily seen is that best performing keywords is “Iphone 6”. For the cost of RM1.3 it generated 2 conversions. Ad cost is 7.3% over Sales. Whether it is reasonable will depend on its gross profit margin. However conversion rate of 7.6% is good compare to Lazada recommendation of 4% conversion rate. Perhaps bidding higher price is possible for this keywords.
2. Iphone 6s and Iphone softcover is popular keywords and generate clicks, but no conversion. Thus bidding up the keyword is not suggested. The member need to search this keywords, and analyze the competition for this listing Perhaps there is a competitor with a lot of sales history and reviews with competitive price. Then the members need to think how the listing can be improve by price or quality to increase the conversion rate. There are many methods to improve a listing.
3. Other keywords impact are too little, but test period was too short. Perhaps after 1 month monitoring, we will have more data and then we will able to remove those low impact keyword to save ad cost as it is also not high volume enough to conduct analysis on the keywords competitor.
4. Test other keywords which had good search volume. Some of the strategy use by marketers in Amazon or Google Adwords is long tail keywords. These keywords is longer and super focus. They don't generate so much search, but each search is target-focus, thus click thru rate and conversion will be more effective which lower down the cost of ad.or example there is different type of housing and "Transparent Iphone 6 Cover" can be a better keyword for consumer which specifically searching for this type of product?
5. Compare the effectiveness of Shopee Ads with Facebook Ads and Landing page and try to allocate more ad resource to the more effective channel.
However, it is new for Shopee ads, and it will take time to mature. So there might be other better strategy which hopefully i can learn and share later. If anybody will like to share their ideas, just let me know! Sharing is Caring !!! haha
Lastly, happy playing with Shopee ads, but please not to spend too much playing. In a month time, we should Start Justifying investment thru effective data analysis.