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Why Brands Should Look to Affiliate for Global Growth in APAC
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Why Brands Should Look to Affiliate for Global Growth in APAC

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Chris Bass, senior content strategist at CJ Affiliate by Conversant runs through three key affiliate strategies to get your brand noticed in the APAC region.

With a total population of 3.1 billion people, the Asia Pacific (APAC) region represents the largest opportunity for digital expansion in the world. E-commerce sales in the region are forecasted to make up 25.4% of total retail sales by 2021, indicating an opportunity for companies to expand their customer base globally.

For brands looking to capitalize on this opportunity, affiliate marketing – a.k.a. performance marketing – is an effective channel for driving global brand growth. Affiliate provides increased transparency and visibility into the customer purchase path, a single, holistic view of each customer, and worldwide scale, all while driving incremental return on ad spend. As a result, investment in performance marketing has grown in recent years. According to marketing firm Custora, affiliate marketing now drives “…as many e-commerce orders as email. Both channels currently account for 16% of U.S. e-commerce orders. This makes affiliate marketing one of the four largest sources of e-commerce orders, outperforming social commerce and display advertising.”

When it comes to the APAC region, there’s a significant opportunity for brands to leverage the affiliate channel for growth, particularly in India and Japan.

Why India and Japan?

With massive investment in digital initiatives and a growing digital literacy among their populations, India and Japan are prime global expansion targets for offshore brands. Within each country, the opportunity is unique. Japan is further along in its digital transformation and brands may see a quicker return on investment, while growth in India may take time but will be just as impactful 5-10 years from now. It’s important to do your research to understand these nuances and get oriented on local consumer buying habits in order to make a more seamless and successful expansion into each market. Remember: it’s a marathon, not a sprint.

India

E-commerce revenue in India reached $24 billion in 2017, which represents just 2% of total retail sales for the entire year. To say there’s a growth opportunity here is an understatement. India is becoming a hot spot for digital innovation. Prime Minister Narendra Modi’s digital initiative has spurred trillions of dollars in domestic and international investment, encompassing everything from start-ups, to key governmental digitization and infrastructure.

There are still some challenges to digital expansion in India to be mindful of. Roughly half of the population uses Cash on Delivery (COD) and return rates tend to be high. On the other hand, India is adding more than 100 million smartphone users each year, and is very close to launching Aadhaar-compliant devices, which are biometrically authenticated and rely on individuals’ unique biological characteristics to verify that they are who they say they are. In short, Aadhaar will unite banking, identification and device, ultimately creating a cardless system that makes it easier than ever for consumers to make digital payments.

As the population’s digital maturity takes hold, roadblocks such as COD and shipping will fall away. India’s affiliate revenue grew 40% in 2017, spurred by a growing number of Indian consumers making purchases through the affiliate channel. Brands have a clear opportunity to grow in India through a variety of affiliate distribution models, such as Coupon/Deal (sites that offer exclusive discounts to shoppers), Loyalty/Incentive (sites that offer shoppers cash back or other types of rewards), etc.

Japan    

Japan represents a different type of opportunity. While the amount of digital consumers in Japan is among the highest in the world, their shopping habits have remained primarily confined to Japanese brands, echoing a long and storied “pride of place” within Japanese culture. For example, only a single-digit percentage of Japanese consumers are making cross-border purchases. This, combined with consumers’ concern over shipping costs, can be an obstacle for offshore brands.  

Yet, brands should not be deterred from pursuing expansion in Japan. In 2017, year-over-year growth of affiliate revenue in Japan jumped to 21%, compared to an average of 8% in 2016. The 163% year-over-year affiliate growth rate dwarfs the single-digit CAGR (compound annual growth rate) that overall e-commerce sales are forecasted to reach in Japan. This indicates that Japanese consumers are beginning to warm to companies that cater to their unique, cultural preferences and needs, such as providing a Japanese language translation.

In addition, companies are beginning to streamline delivery logistics, by either investing in distribution centres located in favourable markets or looking to partner with companies, like Borderfree, which facilitates cross-border shipping.

Three ways to grow globally through affiliate

The affiliate channel provides brands with the agility and performance structure needed to reach potential buyers at scale in India and Japan (and APAC at large), in a cost-efficient manner.

Below are some ways in which your brand can take action to grow via affiliate in the APAC region.

1. Partner with indigenous publishers  

Understanding the nuances of APAC shoppers is a critical step to acquiring new customers in the region.  Indigenous publishers understand the market intimately and are familiar with the customs of local shoppers. Many of these publishers are networks in their own right, with audience reach into the millions. By establishing relationships with Indian and Japanese publishers through affiliate, a brand’s acquisition efforts will benefit from their “boots on the ground” knowledge.

For example, after experiencing lacklustre results in Japan, a multi-national software corporation began working with Interspace, our Japanese affiliate partner. By introducing new scale, taking on communication responsibilities, and identifying desirable products, the software company drove an exponential lift in Japanese revenue and “new-to-file” consumers.

2. Customise your online business to reflect local culture

Companies such as Payoneer, which offers convenient payment solutions in 150 currencies to local publishers in over 200 countries, enable brands to do business in global markets and provide additional reach. If a brand wants to expand in Japan, they can integrate with the business and pay all off their online partners and publishers in the right currency. Beyond these types of partnerships, brands should also provide language options and offer relevant, alternative payment methods specific to the APAC region. These efforts can go a long way toward making consumers comfortable with their first (and subsequent) purchases from your brand.      

3. Cater to local shopping habits through specific publisher models

Indian and Japanese consumers are embracing popular affiliate publisher models, as demonstrated by high year-over-year revenue growth in models such as Coupon/Deal and Loyalty/Incentive. In Japan, the Loyalty model ranks the highest for revenue, due to a culture that embraces the use of credit cards. In India, the Deal/Coupon model ranks highest for revenue, due to a population that’s very price-conscious. Apparel retailers and margin-flexible businesses, in particular, should prioritize relationships with the publisher models that best match the attitudes and behaviour of local consumers

While India and Japan differ in digital penetration, economics, politics and culture, the underlying commonality is that their populations understand and use the affiliate channel to shop and buy. Regardless of how sophisticated these countries are from a digital standpoint, there’s a large appetite for affiliate: Indian and Japanese consumers are looking for deals and discounts online, seeking points and incentives for dollars they’re spending anyway, and heeding recommendations from price comparison engines. As brands use the affiliate marketing to normalize cross-border consumerism, they will capitalize on scalable new audiences, enhance their reach, drive revenue growth, and open the doorway to global growth at large.

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Chris Bass

Chris Bass

Chris Bass has extensive affiliate marketing experience with CJ Affiliate, where he has held positions in Client Development and Content Strategy. Chris enjoys implementing strategy and developing thought provoking content that aligns with brand vision and grows business. 

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