In July 2020, as the spread of the Covid-19 pandemic widened its impact over millions of lives globally, uncertain times were looming over niche enterprises like Zenxin Organic, an organic food producer selling fresh and packaged organic produce in Southeast Asia. Although the company had an online store, the bulk of its sales came from retail supermarkets and its brick-and-mortar stores. Given the predicted long-term effects of the pandemic, an effective digital strategy was the need of the hour.
To survive in the existing market, Sengyee Tai, Zenxin’s Executive Director, knew he had to improve his firm’s digital marketing strategy quickly. Market analysts had projected that the e-commerce industry was slated to be the biggest beneficiaries of the pandemic. Penetration rates were expected to increase to 25% by 2025, up from 15% before January 2020. Moreover, by the end of 2021, 73% of e-commerce sales were expected to occur on a mobile device. However, market surveys had observed that most consumers still liked to ‘see and feel’ fresh produce and groceries before purchasing them.
Established in 2001 as an organic farm, Zenxin grew its business gradually in Southeast Asia, using a ‘farm to fork’, supply-based approach to building partnerships with supermarkets and establishing its own brick and mortar retail stores to grow its consumer base. The firm expanded into China in 2010, where it focussed mainly on organic dry food products that it sourced from a select pool of suppliers.
“We use WeChat apps in China. We also use online channels like Chilli.com and Taobao for selling our products in the country. Building a partnership with local grocery supermarkets in China is not easy and entails a very different relationship-building approach,” Sengyee commented. “We, therefore, concentrate more on online channels in the country rather than physical stores.”
In 2018, Zenxin also set up its online organic store with attractive bundled product offerings and convenient home delivery services for end consumers. Zenxin’s brick and mortar retail model flourished and in 2020 the firm became the leading organic fresh producer and supplier in Southeast Asia. It supplied a wide selection of organic produce with over 200 varieties of organic products at affordable price points. But managing sales through various online platforms had its own set of challenges, and the company had experienced slower than expected growth through this channel.
“Logistics issues of selling online can be difficult. Selling fresh produce online has its own set of challenges,” explained Sengyee. “We need to ensure that our supply is fresh when it reaches the end customer because we cannot risk hurting our brand name. Moreover, delivery of fresh produce can be expensive, as consumers mostly order in small batches, and cart size is often small.”
Sengyee felt that the key to building an air-tight digital marketing strategy was to further scrutinise the consumer segments the company was trying to target. Zenxin had created a strong base of over 20,000 loyal customers over the years, primarily through its store visits, farm visits and corporate website visits. Sengyee felt that this data could also prove helpful in improving his firm’s customer segmentation strategies further.
Elaborating, he said, “Online and offline are quite different segments. Those who buy in supermarkets, go to websites like Amazon if they do not have the time in a particular week to go to the brick-and-mortar store. But those who order on Redmart are regulars (order online every week), unlike those who visit Amazon. So there are two categories of online consumers – one who mainly buy offline and switch to online for specific products only, and second are those who buy mainly online for all their grocery needs. We want to target the latter.”
Although Zenxin had invested in a more expansive digital strategy and implemented several new features on its website, it was nowhere close to the sophisticated digital strategies implemented by retail giants like Amazon, and even larger local online retail players like RedMart. What strategies could Sengyee implement to further improve the company’s website and build its brand identity? What could be the key ingredients of Zenxin’s e-commerce and digital marketing strategy?
Set in July 2020, this case explores the challenges faced by organic fresh food producers in building an online presence and creating brand awareness. The case delves into the e-commerce marketing strategies to improve customer acquisition and retention for fresh produce products using a marketing funnel approach and digital marketing strategies and approaches to drive online sales. The case is written by Patricia Lui, Lecturer of Marketing, Singapore Management University (SMU) and Lipika Bhattacharya of the Centre for Management Practice (CMP) at SMU.
To read the case in full, please visit the CMP website by clicking here.