Not only the Gen X, Y and Zs but also people who have just (re)discovered the joys of digital commerce!
Southeast Asia’s e-commerce sector has been tracking massive growth, with research earlier last year projecting that it will grow at a compound annual rate of 13.4% from 2020 to 2024. This can be attributed to a combination of factors, including the region’s economic growth, the heavy investments into its digital economies, as well as changing consumer habits—all of which have led to an increasing adoption of online and mobile shopping by consumers.
Not only have established platforms in the region reported growth in recent months; smaller local platforms in Indonesia and Vietnam have also seen sales skyrocketing.
As digitalization continues to be the priority for businesses across SE Asia, and retailers will need to invest throughout 2021 to find new ways of connecting with customers:
- Replicating physical commerce digitally
Stores have been focused on making digital shopping as convenient as possible, and to help build trust and loyalty in some countries, this has led to options for free returns and exclusive access.
The next step for retailers is to enable consumers to experience the benefits of being in the store, from the comfort of their home. Technology including augmented reality (AR) and AI can be used to achieve this and create more ‘physical’ experiences at home and online.
For instance, AI is already used to power customer chatbots. Moving forward, there will be more sophisticated use of AI to help to optimize everything, from customer engagement to business intelligence and process automation. The full potential of AI, when realized, will give tech-savvy retailers a significant boost amidst a competitive landscape.
AR-powered features will in future offer ‘try-before-you-buy’ experiences, or may be used to gamify the retail experience through in-app games as customers play, explore, and shop with friends online. Once a nice-to-have feature, AR and AI are quickly becoming essential for retailers.
- Redefining physical stores
Physical retail still has a place alongside digital stores, but shops need to adapt and ‘pivot’ to become ‘destination stores’ that focus on the customer experience, offering highly-personalized service.
Payments have always been a pain point of the in-store shopping experience, so the next-gen store will offer ‘scan and go’ convenience through the use of mobile apps. There can also the option for stores to use ‘pay by link’, and this involves a salesperson sending a URL or shopper code to the customer’s phone to finalize payment.
Other innovations to consider include ‘just walk out’ technology where items in a shopper’s cart are automatically detected as they are taken off the shelves. Payment is then made when the shop sends the receipt to the customer’s account. Such cashier-less stores had been trialed without success previously, but the pandemic may just provide the right impetus for greater traction this year.
- Leveraging social shopping
Before the pandemic, it was mainly the younger generations driving social shopping, but the pandemic has pushed social media to all generations. Over 50% of global shoppers are now likely to buy on social. Our Generation Pay report has found that for Gen Z, Gen Y and Gen X, more than half have purchased something through social media.
Such platforms are no longer just a marketing tool for retailers, they are now a transactional tool as well. The old ‘buy’ buttons that re-direct the customer to the retailer’s website, are no longer what customers are looking for: these buttons slow the shopping process down and do not provide the best user experience. Instead social media companies are providing in-app shoppable features that enable payments without leaving the experience.
Apart from China’s WeChat and Facebook Shops that have been rolled out in certain Asian markets, more technology providers will work with payment experts to upload product catalogs and take payments from customers from within any social platform without needing to exit the app, making the social shopping process seamless and frictionless.
- Offer flexible instalment plans
Since the beginning of the pandemic, ‘Buy Now Pay Later’ (BNPL) interest-free instalment payment options have been growing in popularity. It is already the fastest growing payment method globally, with over 70% of shoppers already using or considering using it.
Retailers are now noticing that BNPL helps increase the customer’s average basket size, making it crucial for them to add this to their payment strategies. Currently the most popular BNPL methods in Southeast Asia are Atome, Hoolah and Rely, and these platforms have prioritized the user experience, making it clean and simple for shoppers to pay. Similarly, a product called ‘PayLater’ allows users to shop for products listed by third party merchants, and payment is then made in four instalments through the shopping app.
As BNPL gains traction in the region, both global and local payment providers should see SE Asia’s fast-growing digital economy as a new market to capture.
- Gain loyalty through subscriptions
More businesses in SE Asia are offering subscription-based purchasing as their main business model. Apart from digital media and food, other areas of retail—from fashion to cleaning products—now allow consumers to reduce the hassle of making repeat orders.
Such subscription models can act as a discovery channel, allowing customers to find new products and get them delivered regularly. Businesses that collaborate with other complementary products or services as part of a curated offering can also benefit by being able to drive loyalty and expand their customer base.
However, such subscription models need to be personalized and easily adjusted as needs evolve, in order not to frustrate subscribers.
Businesses will now have to merge the physical aspects of the industry with the digital as the two become more and more entwined. E-commerce has the ability to support, not replace, the retail store, and it is now time for businesses to re-imagine retail and bring the immersive shopping experiences of the future into the present.
