Big in Japan: Ecostore talks Amazon.co.jp
New Zealand plant-based cleaning and skincare product Ecostore has been selling into Amazon Japan via a distributor, Mash Holdings, since 2015. Mash is predominantly across high-end womenswear labels such as Snidel and Gelato Pique, but became interested in Ecostore as part of its portfolio of natural skincare products during 2014.
The two companies worked together to create an Amazon Marketplace store on Amazon’s Japanese website.
“It was always our intention to form a joint venture,” Ecostore chief executive Pablo Kraus says of the partnership.
Through Mash’s distribution, Amazon became one of Ecostore’s first points of entry to Japan. A separate joint venture company, Ecostore Japan, has since been set up in May 2017.
Kraus says Mash saw Ecostore’s Amazon store as a way to test the market and get feedback on the products before launching them more widely into Japan. He’s comfortable with how it’s gone – “They’re great products, so we’ve had great feedback,” – but says operating at one remove from the customer means that negative feedback about things like stock shortages can sting.
Ecostore’s Amazon presence in Japan built credibility which allowed it to pick up supplier agreements with other retailers. Quite quickly, Kraus says, Mash was confident enough to invest in opening the first bricks and mortar Ecostore shop outside New Zealand in April 2016.
Augmenting ecommerce activity with a bricks and mortar presence is essential for a company like Ecostore, Kraus says. Ecostore has around 100 staff, with its head office in Auckland’s Parnell and a manufacturing plant in Pakuranga.
“For our consumer, we’ve always known it’s really important for them to pick [products] up, touch and feel and smell.”
Kraus refers to research saying consumers are “dying for pop-up stores”, and says it’s important for retailers to realise how important tangible experiences are to the modern shopper.
However, pop-ups and being stocked in bricks and mortar stores remain a key part of Ecostore’s strategy. Kraus says he expects to ultimately see both approaches grow.
“To be credible, you need to have both, and I don’t see bricks and mortar ever disappearing.”
“There’s always going to be that need to walk to the store and get some body wash.”
Amazon isn’t Ecostore’s only online presence in Asia. It’s also branched out into Chinese ecommerce marketplaces Tmall, Kaola, JD and VIP. These ventures are successful, says Kraus – on the November 11 Chinese ‘Singles’ Day’ shopping holiday, Ecostore earned over $1.1 million in 24 hours through Alibaba and Tmall.
Globally, ecommerce represents over 10 percent of Ecostore’s business.
“It is a really big focus of our business, and we don’t take it lightly,” Kraus says. “Amazon will be part of our future.”
“With the launch of Amazon in Australia, I can certainly see us wanting to be a part of that in the short to long term.”
Kraus doesn’t see Ecostore having any problems balancing retailing on Amazon with existing distribution agreements. Ecostore is, at least in part, a vertical retailer which manufactures and sells its products D2C as well as supplying other retailers.
“Given that we’re a consumer goods, FMCG product, we’re probably not going to have the same issues as, say, technology.”
Supermarkets are important to Ecostore’s sales, and Kraus acknowledges Amazon may pose a threat to Kiwi and Australian grocery brands with its Amazon Fresh and Wholefoods offerings. However, he says Amazon is just one competitor among many, citing My Food Bag as another challenger.
“For Ecostore, it’s very important for consumers to be able to walk down an aisle to pick up a package and read the back.”
Kraus says he intends to support both supermarkets and Amazon: “I certainly see it as a two-pronged approach.”
Besides additional sales, Kraus says the main side benefit Ecostore sees from selling through global marketplaces is access to enhanced data and analytics. When Ecostore sells through its own website, it gets access to every data point involved in the transaction, but on a platform like Amazon, it has the benefit of being sold alongside other brands. This means Ecostore has a clearer view of where it sits in the market, what products are bought alongside its own, and which products resonate with particular kinds of consumers.
For Kiwi retailers intending to launch their own Amazon presence, Kraus says a high level of confidence in their product is necessary: “Make sure if you’re selling through Amazon or any of these online retailers that you have a really high-quality product, because… if there’s a problem with it, you’ll find out about it and it could hurt your brand.”
“We’re on the world stage and we need to be delivering a product that’s as good or better than those of our competitors.”
Kraus won’t share the specifics of Ecostore’s growth, but says over the last five years, it’s seen double-digit growth each year. Its Chinese operations, which are wholly online, have grown in the triple digits for the last three years.
“We’ve come from being a humble New Zealand company with big global aspirations,” Kraus says. “New Zealand gives us the credibility in a lot of our export markets.”