As e-commerce starts to mature in Asia, retailers must rise to new challenges

How to retain customer loyalty amid market fragmentation and increasing demand for ever faster delivery will be the key challenges for all retailers
In the next 20 years, retail will be less about logistics and more about pushing the envelope on personalised discovery and curation

Vaughan Ryan

Published: 9:45pm, 14 Mar 2021

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We have entered the end of the beginning of e-commerce in Asia. Just as Asia has led the retail growth engine over the last decade, it now accounts for over 50 per cent of the world’s e-commerce sales. Today, it is no longer a question of whether people will shop online but rather how frequently they buy and how much they will spend.

E-commerce was always destined to transform retail, but Covid-19, without question, accelerated its trajectory. While the first 25 years brought digital access and tested concepts of superior retail experiences, the last year proved its necessity and viability.

In Thailand, we saw a 58 per cent increase in the number of households buying online while neighbouring countries also saw growth: Singapore with 47 per cent, Hong Kong with 46 per cent, and urban Indonesia with 15 per cent. In countries where movement control orders have been far stricter due to Covid- 19, such as the Philippines, the increase was recorded at 325 per cent.

The frequency of online shopping also rose. As an example, there was an increase of 29 per cent in the number of times consumers shopped online in the last 12 months in South Korea. The even better story is in markets such as Singapore, where not only did trip frequency grew by 11 per cent, but spending online also grew, by 16 per cent.

As a result of e-commerce’s growth, the power dynamics between consumers, brands and retailers have shifted, and digital players such as Alibaba Group Holding (the parent company of the South China Morning Post), JD.com, and Pinduoduo Inc now sit at the top of the retail food chain. Today, livestream retail takes the centre stage in Southeast Asia through Shopee and Lazada, and bonds of consumer loyalty and trust are being strengthened through the networks and communities engaged in social shopping.

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While the rate of change will vary across borders due to each country’s state of digital maturation, what is certain is that almost all the growth in the retailing of fast-moving consumer goods will now come from e-commerce.

The next 20 years will bring movement towards a different character of business and different ways to address problems, where retail becomes less about logistics and more about pushing the envelope on personalised discovery and curation. It means gaining a deeper understanding; more exploration and less guessing: an overhaul in shopper discovery.

In this next phase, trust is solidified, the shift from niche to necessary happens, replacement of the mundane, exploration of new categories and new-use cases that are untapped or even unimaginable occur, and the seamless integration into omnichannel commerce becomes complete.

But the future is not without its faults; there are some unknowns ahead. First, the fragmentation of retailing will only continue to grow. Even under the banner of one retailer, there are many other resellers using their platforms to connect with consumers. The historical “hygiene” factors of quality and having a wide range of goods become even more difficult to manage.

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Second, there is the challenge of divergent realities. The delivery of seamless shopping experiences across platforms and channels has created an exciting playground for consumers. The challenge for bricks-and-mortar retailers is to embrace this technology to create omnichannel experiences.

Third, the role of the physical store will be redefined. Consumers will continue to visit but if retailers want to make people spend more in their stores, or bring in new buyers, they need to go digital and play strongly on their trusted image or the relationship built over the years. Adding experiential and social engagement in the mix can help them beat e-commerce retailers at their own game.

Fourth, the fight for attention will intensify. The next phase will be a more fragmented marketplace with new online platforms, retailers and brands. There are several considerations: Are keywords and advertisements enough to catch and keep shoppers’ attention in the future? How different will the role of price and promotions be? What role will loyalty play in the adopted omnichannel shopper world?

Finally, expectations of even greater convenience and speed in last-mile delivery will only grow. It is no longer about what is feasible but about how to meet and feed the appetite for faster delivery services.

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Those who rest now will sleep through perhaps the most formative time of growth for e-commerce. Asia’s e-commerce success story lies in the deep understanding of the ever-changing consumer behaviour and the quickness in providing innovative ways to make consumer lives easier and better.

It will continue to be the most critical part of any business, especially as consumer needs become more polarised. If you think you know e-commerce in Asia, think again. We stand at the end of the beginning of e-commerce and the best is yet to come.

Vaughan Ryan is managing director of Nielsen’s Consumer Intelligence business in Asia. He holds a master’s degree in international business from Swinburne University, Melbourne, Australia

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