CEO Message : July 2015
Look through adversity to the future beyond, and go forth with humility and fierce resolve
If you remember only one thing from this month’s message it’s this: that e-commerce will continue to grow. Today, mobile shopping touches us all. For instance, most working couples in their 30s buy diapers for their children online. Yet, twenty years ago when my wife and I were raising our child, we had to drive the car down to the nearby retail outlet and fill the trunk with diapers. And that’s not to mention all the other bulky household items we had to make sure to remember to buy. Yet, today, that situation’s changed and you can now get a discount and home delivery on a weekly basis through online purchases. You do not need to buy tons of bulky items like packs of water or toilet paper and then stack them up at home.
Our mass beauty products, such as shampoo and toothpaste, are openly sold on online shopping sites such as G-Market and Auction. Indeed, we have a plan in place to enhance our online sales group. It is not overstating it to say that our future depends on how we prepare ourselves for the age of e-commerce and how efficiently we connect with customers both online and offline.
Now, let’s talk a little more about the growth of the online market. I remember reading in a recent news article how most large Western companies are now floundering in China. One household item maker had sustained growth for over 30 years, but is this year seeing a 20% fall in sales. And then there’s the world-famous instant coffee brand which has had to incinerate three months’ worth of inventory because of below-target sales. Other Europe-based retail giants are also staggering and some had to their business in China.
Other Europe-based retail giants are also struggling in China and some even had to withdraw their business. One factor behind all their downfalls is proliferation of the smartphone. Ultimately, the competitiveness of household item makers and food companies always comes from their in-store positioning on the shelf, while large retail outlets get their competitiveness from economies of scale, i.e. having large stores.
Meanwhile, Alibaba, a Chinese e-commerce company began to provide the next-day delivery service in 50 cities across China. Now, 42% of Chinese customers already have an experience of purchasing skincare products on their mobile. In terms of this market’s potential, the number of mobile shopping users has already reached 460 million people, or 1/3 of China’s population. When children and the elderly are excluded, this market represents half of China’s population. China has overtaken the U.S. to become the largest e-commerce market worldwide. Although, positioning on the shelf matters for offline competitiveness, it means nothing for the e-commerce market. As mentioned above, Western companies have failed to respond to the online market in China and, as a result, suffered a backlog of unsold inventory and dwindling sales. Dumping the products only served to push down the price, leading to a self-perpetuating vicious circle. That is, their one-time strength became their undoing. Have no doubt: we are now living in the age of e-commerce. And, to succeed in this new era, we need to work together to find the winning formula.
Opening an A/S (after sales) service center exclusively for e-commerce customers is a great idea. We must organize a group capable of responding to the online market. Since a good offline experience leads to repeat online purchases, we need to build a good connection between online and offline.
Dear Asian Beauty Creators,
What do you think we have to do in order to survive amid such intense competition? You may remember the halcyon days of Nokia and Sony, which seemed to go on forever. Did they fall into trouble because they didn’t work hard enough? I’m sure that they both no doubt worked harder than anyone else. But, let’s pause and go back to 100 years ago, when the most thriving businesses companies were in the automobile industry. There were around 4,000 auto makers in the U.S. and Europe. Back then, Ford was akin to the Microsoft and Google of today. With the rise of Ford, almost 1,900 auto makers folded. However, it did not take too long for Ford to come down from its seemingly unstoppable rise. About fifteen auto makers under threat of bankruptcy were merged into one general auto company, which was named General Motors. Its success was a bit of a dark horse. General Motors adopted the conveyor system, which was the source of Ford's competitiveness and, at the same time, it implemented a differentiation strategy through a number of its own brands. Cadillac was designed to appeal to people rich enough to afford it, while Buick was marketed to those who want a big family car. Plus, it launched Chevrolet for young people and Oldsmobile for middle-aged individuals, both of which generated a big sales increase. In short, GM was able to seize a better, more favorable position in the market through the way it went about mounting a new challenge. Ford, by contrast, concentrated solely on what they were familiar with, rather than acting in response to GM’s new strategy. Ford sought to advance on the basis of the conveyor system in order to increase its yield per minute. Yet, it was unable to maintain its dominant position because it failed to respond to the demands of the age.
This case reminds us of the theory of Red Queen competition. Red Queen is a fictional character in Through the Looking-Glass by British author Lewis Carroll. In this novel, which is the sequel to Alice’s Adventures in Wonderland, the Red Queen takes the hand of Alice and runs into the forest. But, Alice feels like she is not moving forward at all and asks the Queen what’s going on. The Queen answers with suspicion in her eyes, "it takes all the running you can do just to stay in the same place. If you want to get somewhere else, you must run at least twice as fast." Alice realizes that in this world, the Red Queen and everything surrounding them always move forward at the same pace. No matter how hard Alice runs, she will remain in the same spot.
This lesson from the Red Queen is later developed into an evolutionary hypothesis dubbed the Red Queen Effect by American evolutionary biologist Leigh Van Valen, which posits that the quarry is slower than the predator in nature. By implication, in order to survive in the dog-eat-dog world, the quarry must combine acquired learning and effort with innate character in order to run faster. This thesis can be applied to the business world, where everyone is engaged in what is popularly called the rat race. No matter how fast a company runs, it is the same as falling behind if it cannot overtake its competitors. By extension, innovation can represent a huge threat to competitors. If the company can strengthen itself and evolve, it can maintain its competitive advantage over its competitors. Nokia succeeded in the mass production of mobile phones on a global scale, but ultimately yielded the top position in the market to Apple due to the many successful innovations it introduced, such as PC features embedded on a mobile device. If we neglect changes, rather than accepting them, we will inevitably fail to keep up with the times. If we stick to our old, outmoded ways, regardless of whether we take first place, we cannot help but become a lazy monopolist. We have seen many companies that rose once, but fell again because they gave up on self-innovation and got trapped themselves. The company must devote greater effort into innovation by continually maintaining a crisis mindset so that we can stay on the fast track to success.
Dear Asian Beauty Creators,
Now that we are interacting with people all around the world, rather than just within Asia, what do we do when our main customer base - Chinese customers - stop buying our products? Our Cushion and sleeping pack enjoy tremendous popularity among Chinese customers, but there is always the possibility that Chinese companies introduce market-moving innovations or bring out a new groundbreaking product. Though we now maintain a better image than Chinese companies in the department store channel, with time their image and capabilities can improve. Chinese companies will continue to make rapid progress. Samsung Galaxy is being pursued by the Chinese firm Xiaomi, while the Hyundai Santa Fe is under assault from the Haval by Great Wall Motors. Historically, such was China’s fame as a manufacturing powerhouse that ceramics are still called chinaware today. Back then, ceramics were the result of technological integration and there were only two countries that knew how to fire ceramics: China’s Song Dynasty and Korea’s Goryeo. Plus, Chinese silk was known as the best of its kind and the high quality of China’s tea speaks for itself. I believe that the potential of China as a manufacturing powerhouse will shine soon enough, bringing with it a great wave of change.
We must continue to innovate in order to win amid Red Queen competition and it was for this reason that I mentioned earlier this year that the approach to take was test and learning. We must take on new challenges when things are going well and smooth. We must strengthen our offline programs to enhance the value and presence of each brand, while, at the same time, reorganizing and making our counters in department stores and ARITAUM shops clean. We must inspect and change any counters that are not in compliance with our guidelines, while also providing customers with new special experiences through our flagship stores. We must remember to combine taking on a new approach while still sticking to the basics in product development and innovation, ads and visual communications.
Moreover, we must put extra effort into strengthening our e-commerce channel. It is vital that we combine sites of brands like IOPE and HERA
ข้อความจากประธานบริหาร: 2015 กรกฎาคมมองผ่านความทุกข์ยากการอื่น ๆ ในอนาคต และไปออกกับบทและแก้ไขรุนแรงหากคุณจำสิ่งหนึ่งเท่านั้นจากข้อความของเดือนนี้ มันนี่: e-commerce นั้นจะยังคงเติบโต วันนี้ มือถือคำสัมผัสเราทั้งหมด ตัวอย่าง ทำงานคู่รักที่สุดใน 30s ของซื้อผ้าอ้อมสำหรับเด็กออนไลน์ ยัง ยี่สิบปีที่ผ่านมาเมื่อผมและภรรยาได้เลี้ยงดูเด็กของเรา เราได้ขับรถไปยังร้านค้าปลีกใกล้เคียง และเติมลำต้น ด้วยผ้าอ้อม และที่จะไม่พูดถึงทั้งหมดขนาดใหญ่ในครัวเรือนสินค้าอื่น ๆ เรามีเพื่อให้แน่ใจว่าจะซื้อ ยัง วันนี้ สถานการณ์ที่เปลี่ยนแปลง และคุณสามารถได้รับส่วนลดและบ้านส่งประจำสัปดาห์ผ่านซื้อออนไลน์ ต้อง การซื้อตันของสินค้าขนาดใหญ่เช่นชุดน้ำหรือกระดาษชำระแล้ว กองไว้ขึ้นที่บ้าน โดยรวมผลิตภัณฑ์เพื่อความงาม แชมพูและยาสีฟัน มีจำหน่ายอย่างเปิดเผยบนเว็บไซต์ช้อปปิ้งออนไลน์ G-ตลาดและประมูล แน่นอน เรามีแผนในการเพิ่มกลุ่มการขายของออนไลน์ มันไม่มี overstating ให้กล่าวว่า อนาคตของเราขึ้นอยู่กับว่าเราเตรียมตัวเองสำหรับอายุของอีคอมเมิร์ซและประสิทธิภาพเราเชื่อมต่อกับลูกค้าทั้งออนไลน์ และออฟไลน์ ตอนนี้ พูดคุยเพิ่มเติมเกี่ยวกับการเจริญเติบโตของตลาดออนไลน์ ผมจำได้ว่า อ่านในบทความข่าวสารล่าสุดบริษัทตะวันตกขนาดใหญ่ส่วนใหญ่ว่าขณะนี้มี floundering ในประเทศจีน ผู้ผลิตสินค้าในครัวเรือนหนึ่งมียั่งยืนเติบโตกว่า 30 ปี แต่ปีนี้จะเห็นการลดลง 20% ในการขาย แล้ว มีแบรนด์กาแฟชื่อดังของโลกที่มีการ incinerate สามเดือนมูลค่าของสินค้าคงคลังเนื่องจากการขายต่ำกว่าเป้าหมาย ยังมียักษ์ใหญ่จากยุโรปขายปลีกอื่น ๆ ส่ายและมีธุรกิจในจีนอื่น ๆ จากยุโรปขายปลีกยักษ์ก็กำลังดิ้นรนในประเทศจีนและบางส่วนได้ถอนธุรกิจของพวกเขาได้ ปัจจัยหนึ่งที่อยู่เบื้องหลัง downfalls ของพวกเขาทั้งหมดเป็นของสมาร์ทโฟน สุด ศักยภาพการแข่งขันของผู้ผลิตสินค้าในครัวเรือนและบริษัทอาหารเสมอมาของพวกเขาในร้านวางบนชั้น ในขณะที่ร้านค้าปลีกขนาดใหญ่รับการแข่งขันจากเศรษฐกิจของขนาด มีร้านค้าขนาดใหญ่เช่นกัน Meanwhile, Alibaba, a Chinese e-commerce company began to provide the next-day delivery service in 50 cities across China. Now, 42% of Chinese customers already have an experience of purchasing skincare products on their mobile. In terms of this market’s potential, the number of mobile shopping users has already reached 460 million people, or 1/3 of China’s population. When children and the elderly are excluded, this market represents half of China’s population. China has overtaken the U.S. to become the largest e-commerce market worldwide. Although, positioning on the shelf matters for offline competitiveness, it means nothing for the e-commerce market. As mentioned above, Western companies have failed to respond to the online market in China and, as a result, suffered a backlog of unsold inventory and dwindling sales. Dumping the products only served to push down the price, leading to a self-perpetuating vicious circle. That is, their one-time strength became their undoing. Have no doubt: we are now living in the age of e-commerce. And, to succeed in this new era, we need to work together to find the winning formula. Opening an A/S (after sales) service center exclusively for e-commerce customers is a great idea. We must organize a group capable of responding to the online market. Since a good offline experience leads to repeat online purchases, we need to build a good connection between online and offline. ผู้สร้างรักความงาม What do you think we have to do in order to survive amid such intense competition? You may remember the halcyon days of Nokia and Sony, which seemed to go on forever. Did they fall into trouble because they didn’t work hard enough? I’m sure that they both no doubt worked harder than anyone else. But, let’s pause and go back to 100 years ago, when the most thriving businesses companies were in the automobile industry. There were around 4,000 auto makers in the U.S. and Europe. Back then, Ford was akin to the Microsoft and Google of today. With the rise of Ford, almost 1,900 auto makers folded. However, it did not take too long for Ford to come down from its seemingly unstoppable rise. About fifteen auto makers under threat of bankruptcy were merged into one general auto company, which was named General Motors. Its success was a bit of a dark horse. General Motors adopted the conveyor system, which was the source of Ford's competitiveness and, at the same time, it implemented a differentiation strategy through a number of its own brands. Cadillac was designed to appeal to people rich enough to afford it, while Buick was marketed to those who want a big family car. Plus, it launched Chevrolet for young people and Oldsmobile for middle-aged individuals, both of which generated a big sales increase. In short, GM was able to seize a better, more favorable position in the market through the way it went about mounting a new challenge. Ford, by contrast, concentrated solely on what they were familiar with, rather than acting in response to GM’s new strategy. Ford sought to advance on the basis of the conveyor system in order to increase its yield per minute. Yet, it was unable to maintain its dominant position because it failed to respond to the demands of the age. This case reminds us of the theory of Red Queen competition. Red Queen is a fictional character in Through the Looking-Glass by British author Lewis Carroll. In this novel, which is the sequel to Alice’s Adventures in Wonderland, the Red Queen takes the hand of Alice and runs into the forest. But, Alice feels like she is not moving forward at all and asks the Queen what’s going on. The Queen answers with suspicion in her eyes, "it takes all the running you can do just to stay in the same place. If you want to get somewhere else, you must run at least twice as fast." Alice realizes that in this world, the Red Queen and everything surrounding them always move forward at the same pace. No matter how hard Alice runs, she will remain in the same spot. This lesson from the Red Queen is later developed into an evolutionary hypothesis dubbed the Red Queen Effect by American evolutionary biologist Leigh Van Valen, which posits that the quarry is slower than the predator in nature. By implication, in order to survive in the dog-eat-dog world, the quarry must combine acquired learning and effort with innate character in order to run faster. This thesis can be applied to the business world, where everyone is engaged in what is popularly called the rat race. No matter how fast a company runs, it is the same as falling behind if it cannot overtake its competitors. By extension, innovation can represent a huge threat to competitors. If the company can strengthen itself and evolve, it can maintain its competitive advantage over its competitors. Nokia succeeded in the mass production of mobile phones on a global scale, but ultimately yielded the top position in the market to Apple due to the many successful innovations it introduced, such as PC features embedded on a mobile device. If we neglect changes, rather than accepting them, we will inevitably fail to keep up with the times. If we stick to our old, outmoded ways, regardless of whether we take first place, we cannot help but become a lazy monopolist. We have seen many companies that rose once, but fell again because they gave up on self-innovation and got trapped themselves. The company must devote greater effort into innovation by continually maintaining a crisis mindset so that we can stay on the fast track to success.
Dear Asian Beauty Creators,
Now that we are interacting with people all around the world, rather than just within Asia, what do we do when our main customer base - Chinese customers - stop buying our products? Our Cushion and sleeping pack enjoy tremendous popularity among Chinese customers, but there is always the possibility that Chinese companies introduce market-moving innovations or bring out a new groundbreaking product. Though we now maintain a better image than Chinese companies in the department store channel, with time their image and capabilities can improve. Chinese companies will continue to make rapid progress. Samsung Galaxy is being pursued by the Chinese firm Xiaomi, while the Hyundai Santa Fe is under assault from the Haval by Great Wall Motors. Historically, such was China’s fame as a manufacturing powerhouse that ceramics are still called chinaware today. Back then, ceramics were the result of technological integration and there were only two countries that knew how to fire ceramics: China’s Song Dynasty and Korea’s Goryeo. Plus, Chinese silk was known as the best of its kind and the high quality of China’s tea speaks for itself. I believe that the potential of China as a manufacturing powerhouse will shine soon enough, bringing with it a great wave of change.
We must continue to innovate in order to win amid Red Queen competition and it was for this reason that I mentioned earlier this year that the approach to take was test and learning. We must take on new challenges when things are going well and smooth. We must strengthen our offline programs to enhance the value and presence of each brand, while, at the same time, reorganizing and making our counters in department stores and ARITAUM shops clean. We must inspect and change any counters that are not in compliance with our guidelines, while also providing customers with new special experiences through our flagship stores. We must remember to combine taking on a new approach while still sticking to the basics in product development and innovation, ads and visual communications.
Moreover, we must put extra effort into strengthening our e-commerce channel. It is vital that we combine sites of brands like IOPE and HERA
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