Are tech players hitting mute on marketing mega sales festivals?

By now we are all used to the mega sales brought about by 9.9, 10.10, 11.11 and so forth by major eCommerce marketplace players. However, with all the news about these tech companies struggling to keep headcount and optimise operating efficiency, the celebrations this year seem somewhat muted.

Shopee, for example, has cut employees from its Singapore office, impacting its marketing, regional operations, product and engineering and HR teams. Its Indonesia market also saw 3% of its Indonesia employees being dismissed amidst a series of job cuts. Shopee’s sister company, Garena, also saw several job cuts as ongoing projects were being shut down. 

Meanwhile, eCommerce firm Pomelo hasn't had it easy as well, having to downsize 8% of its headcount, which amounts to 55 employees, as part of efforts to "streamline its processes to move toward more sustainable growth".

In a conversation with MARKETING-INTERACTIVE, Ranga Somanathan, co-founder and curator, RSquared Global Ventures, said that with all the news around tech company making headcount cuts, most tech companies have recalibrated their ambitions from “growth at any cost” to profitable growth”. 

“There is a correlation but not causation here,” he said adding that the investors have given a clear message that there is no more appetite for “loss leader” growth strategies. “This has resulted in tightening of belts, in talent cost, marketing cost and overall operational costs. The marketing efforts that you see in 2022 in SEA, which is at a lower intensity than 2021, is a function of this rationalisation,” said Somanathan.

In tandem, there has been a shift in consumer sentiment with regards to shopping, especially on eCommerce platforms. “The inflationary headwinds as well as access to retail stores have slowed down the digital commerce transactions,” explained Somanathan.

Adding to the view, Richard Bleasdale, CEO of Construct Digital, shared that there are a lot of consumers who are already fatigued by the idea of these “manufactured” shopping festivals. This year, the promotional festivals are likely to be impacted even further with wider economic/recession concerns and the easing of COVID-19 restrictions.

“This means people have lots more options in terms of spending their time and their discretionary dollars,” he said. The real test will be on Single’s Day on 11.11 which has traditionally has been Asia’s biggest online shopping day.  However, the muted celebrations this year also presents smart marketers with the ability to transform how marketing can add value to the lives of consumers, explained Bleasdale, who said:

There is huge potential here for enlightened marketers who are keen to make real change.

Shoppers will probably be more discerning about the brand and quality of what they are buying this time around, said Alva Chew, founder of regional SEO agency Stridec. This comes due to the uncertainties present in the current economy and many people are already filling the pinch in their pockets due to layoffs happening across the region.

Chew added that brands are also cutting back on marketing expenditure due to inflation and rising operational costs – and this began as early as the lead up to the Mid-Autumn festival. “We already saw brands cutting back marketing spend on what is traditionally a peak buying season,” Chew explained.

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Will the muted marketing impact consumer purchase?

“I have always held the opinion that marketing will be an essential arsenal in growth of any brand. As such a muted marketing environment will lead to a softening of consumption,” said RSquared Global Ventures’ Somanathan. However, even as these companies have muted top of the funnel marketing support, it would be surprising if they have dropped the ball on the bottom of the funnel conversion measures, he added.

This strategy will give a short-term reprieve but will have long term impact on brand salience and result in future off-take challenges. 

He added that these promotional sale festivals have “become table stakes” for companies that wish to sell their wares to their customers. As festive marketing becomes more ‘comparative-advantage’, companies need to innovate to bring back the excitement through more emotional engagement and brand building initiatives, he added. 

Meanwhile, Stridec’s Chew added that most shoppers have, over the years, been conditioned to expect sales and promotions during festive seasons so it has become a ritual.

“I don't think that will go away anytime soon. Given where we are in the economy right now I think people would still want to get better deals with their purchases, so sales gimmicks during festive season could still have some effect,” Chew added.

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