With the COVID19 pandemic hitting, retail spaces around the globe have had to shut their doors and a lot of folks who preferred to shop local and in-person have been driven to experience the power of e-commerce. While brick and mortar business is suffering, online sales have been touching all new heights. More people are now experiencing the internet in a whole new way, with instant access to products, from the most brilliant to the most obscure, available with just the touch of a button.
According to a report by Google and other collaborators, over 40 million new people across Singapore, Malaysia, Indonesia, the Philippines, Vietnam, and Thailand have come online for the first time in 2020.
Rising income levels, geopolitical shifts, and digital inter-connectedness will create tremendous opportunities in the region to advance inclusive and responsible consumption for decades to come.
Over the next few years, with a rise in better internet speeds and access, growing affluence, and expanding choices, online spend is set to grow further, particularly in Southeast Asia, which is home to the highest number of internet users in the world.
Here’s a look at some of the key trends one can expect to emerge from the region’s e-commerce space in 2021:
- The rise of purchasing power of the consumers and the digital shift
In the last 5-7 years, SEA has been one of the most economically vibrant regions of the globe, and consumption has been growing at lightning speed. As of 2019, Southeast Asia’s online economy was set to exceed $100 billion, and triple by 2025. Though this may see a slight slowdown in momentum due to the pandemic, the numbers will only go upwards given that the region has a young population and people are quickly getting very comfortable with using their smartphones for everything.
- Growth to be driven by the middle class
Many significant changes in consumption are coming from the middle class. With the increased adoption of e-wallets, regular usage of food delivery apps, and now even everyday grocery shopping, the average person is no longer afraid of having their financial footprint online.
While the top 2% will be contributing to value, the volume will be driven by the huge chunk of the middle class across countries.
- Push for luxury and discretionary spending
According to a study by the iPrice Group, Louis Vuitton’s searches increased by an astounding 555% between Jan 2020 to June 2020. This was followed by another French luxury fashion house, Yves Saint Laurent, with an increase of 306%. Lastly, Chanel came in at a third place, with a 274% increase.
Due to the expensive real-estate and operating costs of luxury business, a lot of brick-and-mortar stores are shutting physical shops, but as trends indicate the demand for these products is on the rise and will move from the physical space to online platforms.
It will be up to the brands to embrace this trend, invest in their online presence, and keep themselves looking and feeling luxurious even online.
- Social commerce will become more dominant
In 2019, SEA had about 63% penetration of social media amongst internet users and this will increase with the improvement in tech infrastructure and better internet.
It is widely acknowledged that customers turn to social media for help with purchase decision making and brands with strong reputations and credibility will take the lead here because of the trust factor.
With Facebook aggressively investing in its e-commerce capabilities, a majority of transactions will end up taking place on social sites such as Facebook and Instagram, without the customer even having to navigate out of their social networks.
- Digital payments will go hand-in-hand with digital commerce
Digital payments are not only convenient for brands, but they also speed up the purchase process and reduce the rate of returns/exchanges for all involved, and hence they are being heavily promoted and incentivized by e-commerce portals.
Businesses should be geared to offer their customers various transaction methodologies.
- Omnichannel customer experiences are becoming commonplace
We’ve been hearing this term ‘Omnichannel’ for quite a while now, but finally, we seem to be living it. The consumer journey is no longer a simple or linear one. Customers now gather information for all sources available before making any major purchase decision. More and more brands are now focused on creating a uniform, memorable and interconnected experience for their customers across platforms and touchpoints, in turn creating a powerful and authentic customer experience at scale.
- AI is leading the charge in improving customer retention and loyalty
At the end of the day there is nothing like a personalized experience for a customer.
Keeping this in mind more and more businesses are embracing AI for convenience and a competitive edge.
Technology integration for personalization and automation a key focus. Leveraging data to identify patterns and insights from a consumer or browser’s actions will help brands create a hyper-personalized experience. This will make a business more visible to their target audience and will also help them reduce the risk of losing that distinct brand experience.
This is an extremely exciting and interesting time for both e-commerce players and consumers. Considering the all-out battle for eyeballs and wallet share, businesses will need to reinvent themselves constantly or else they can expect to find their online stores relegated to pages 3, 4, and more of consumer’s online searches. All of this bodes well for customers across the SEA region, who can expect better choices, better value, and better convenience for their money.