Southeast Asia’s largest online Korean beauty site Althea has partnered with global payments company Adyen to provide its customers a frictionless payment experience.
“We recognize that the checkout and payment process is often the most important stage in the customer journey. The journey rarely ends when the ‘buy’ button is clicked,” said Jae Kim, Co-Founder and Chief Financial Officer of Althea. “We strongly believe in having a consistent and trusted payment system across all our markets to build customer loyalty and encourage repeat purchases.”
He cited that one of the pertinent issues in e-commerce is the abandoned card epidemic, which is usually a result of a rejection of the payment process.
The beauty site is currently working with Adyen to enable customers in Indonesia, Malaysia, Philippines, Singapore and Thailand to pay via their desired payment method, from online banking to payments at a convenience store and ATMs.
“With the region’s rising middle class and increasing spending power, e-commerce in Southeast Asia is a growing phenomenon. However, retailers looking to target the region need to note that when it comes to payments, there is no one preferred payment method and consumer preferences are still highly fragmented,” said Warren Hayashi, President of Adyen Asia-Pacific.
Despite market-specific differences, the most important thing for retailers is building deep engagement with their consumers. To gain insight on payment preferences, Adyen provides Althea with daily reports on ongoing transactions. Thus, it is able to optimize authorization rates as needed to reduce payment rejection and identify other potential friction points.
“K-beauty in Southeast Asia is already a multi-billion-dollar market, and the ongoing development of the region, especially in e-commerce, will only fuel the market’s growth going forward,” said Kim.
K-beauty on the rise
Founded in 2015 by former senior executives from Ticketmonster, Groupon, and Memebox, Althea strives to bring the best of Korean beauty to consumers in Southeast Asia, a region where there was a huge demand for K-beauty products.
“K-beauty is a phenomenon that has gained in both popularity and credibility in the global beauty market. The popularity of Korean pop culture such as K-pop and K-dramas has helped shed some light on Korean beauty brands such as Laneige, Innisfree, and Tony Moly, but the rise of K-beauty has been in the works for decades,” Kim explained.
The highly discerning and engaged consumer culture has also driven beauty brands to continue to try to innovate and develop new products, and such efforts have ultimately transformed the industry into a global beauty powerhouse.
“Now the consensus among cosmetics experts is that the country is home to the most innovative, high-tech skincare approaches and technologies in the world. We, at Althea, strive to introduce the latest and greatest K-beauty products and regimens to the rest of the world,” Kim added.
Thus, the company, which is backed by a range of investors including 500 Startups, Mirae Asset Ventures, POSCO Ventures, and Tekton Ventures, has quickly grown to become the largest K-beauty e-commerce company in the region.
“Through our cross-border distribution model from a centralized warehouse location in Korea, we help all Southeast Asian consumers gain access to the latest trendy Korean beauty brands and products,” Kim said, adding that the plan is to expand aggressively into more markets in 2017.
Payment matters
Payments play a crucial role in any e-commerce merchant’s growth strategy, especially for companies like Althea who have a big shopper base located across the Southeast Asia region.
“We’ve found that regardless of where the shopper is from, everyone expects a frictionless payment experience. From offering the right payment method to enabling return transactions, the focus should be on creating an experience that moves a shopper towards building a relationship with the merchant based on trust. When brands deliver that, they can expect to build a long-lasting engagement with their customers,” Warren said.
Besides offering a variety of payment methods, Adyen also helps Althea offer to their customers in Indonesia, Malaysia, Philippines, Singapore and Thailand, the payment method they most trust and feel comfortable with.
“For example, customers in Singapore are happy to use credit cards for their online transactions but customers in the rest of Southeast Asia are more comfortable with a range of online banking and convenience store/ATM options such as Mandiri Clickpay, Gcash, and Maybank2u,” he explained. “With Adyen in place, Althea can offer seamless payment experiences that remove payment barriers to the sales.”
The Adyen executive noted that some of the most innovative payment technologies revolve around making transactions faster and seamless for such shoppers.An example would be the zero-click transaction, which takes place in the background, without any action required by the customer. This kind of frictionless connectivity brings businesses closer to their customers and allows them to easily build a wider customer base.
“The blurring of lines between online and in-store payments is another promising segment,” he said. “Now, shoppers can make a purchase in the store without having to provide their full data, based on information stored from a previous transaction online or via their mobile. This ensures a smooth recurring payment experience for repeat customers.”
E-commerce and beyond
As e-commerce gain traction in the region, with Cyber Monday and Black Friday in the US and Single’s Day shopping festival in Asia, Warren said there is a need for merchants to keep up.
“First, merchants must optimize their websites for mobile. This means adapting the experience for a smaller screen and minimizing the number of clicks and swipes needed to complete a purchase. We have found this to be extremely helpful during these periods as shoppers are in a hurry to complete the time-sensitive deals within the timeframe,” he explained.
“We have also seen many shoppers scoping out a site before the retail festivities begin. These customers appreciate a retailer that enables one-click or single-tap payments for returning shoppers. This helps them save valuable time and expedites their checkout process,” he added.
Cyber Monday and Singles’ Day also comes with a higher risk of failed credit card transactions. He said on average about 5 percent of transactions globally are declined for no other reason than a glitch in the system. This can amount to significant lost revenue during these two peak days of retail activity.
“To minimize this, retailers must prioritize the use the right payment data to measure performance, track trends and drive conversions. This ensures their payment technology suits the unique preferences of the banks they work with and maximizes their chance of transaction approval during this busy period,” he suggested.