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Seven Trends Impacting Southeast Asia E-Commerce In 2017

As many of the online retail markets around the world continue to mature, research from Euromonitor, indicates that only around 1% of retail sales value is being sold online in Southeast Asia. Because of this extremely low penetration, there is ample opportunity for Southeast Asia to stand out as a major new frontier for e-Commerce, resulting in the potential for a “gold rush” in the region. Given the market potential, we have studied and summed up seven e-Commerce trends that will possibly shape the growth of online retail in Southeast Asia in 2017.

 

 
1.   Omnichannel: Merging Commerce with e-Commerce

Being immersive is one of the main appeals omnichannel brings to consumers. However, the real challenge to successfully building an omnichannel is to differentiate the experience between offline and online, and for each of the channels to strengthen their individual brand strategies, and make sure they don't end up competing.
One Southeast Asian e-Commerce company that has strived hard to achieve this is Challenger, a Singaporean electronics retailer with 50 stores across the country. When consumers buy products from Challenger, they can either go and collect from one of the company's physical stores or alternatively get them delivered to their home address. This merging of the online and offline stores is an example of a traditional brick-and-mortar retailer that has modernized its business to remain relevant in today’s changing retail environment.
Another example is Singpost. This leading e-Commerce logistics provider based in Singapore is set to open its e-Commerce “stall” in mid-2017. The aim being to make it easier for shoppers to arrange for home delivery of purchases once they’ve completed their in-store browsing, thereby saving retailers the cost of having to construct in-store inventory space.

 

2.     Amazon and Alibaba Battle Begins

As Amazon enlarges its presence in the region, 2017 is set to host one of the biggest e-Commerce battles in Southeast Asia. The U.S. retail giant has now focused its attention on Singapore, and according to TechCrunch, the company is secretly acquiring assets, and hiring new staff as part of this initiative.

 

 

 

Alibaba, on the other hand, invested one billion dollars in Lazada in 2016. It has also partnered up with payments company, Ascend Money, and delivery firm, SingPost.
As these two giants of e-Commerce head into Southeast Asia, there's no denying that there is likely to be a fight for the number one position in the market. This battle between the U.S. retail giant and one of China’s largest retail companies will pose significant concerns for smaller retailers in the region, as they face stiff competition from these two major players as they attempt to dominate and take control of the marketplace.

 
3.     Click & Collect and Same Day Delivery 

A survey carried out by Dotcom Distribution revealed that when it came to delivery, speed is a more important factor than price. Customers are generally willing to pay more to get same day delivery, especially if the purchase is something the customer needs urgently.

 

 

Skootar, a delivery company based in Bangkok, uses motorbikes to deliver almost anything, from packages to documents, just so long as the package can fit on a bike. All that needs to be done is to download and open the app, call up the messenger closest to your location, pay online, and track your order.
Another delivery company that is working hard towards meeting this same day delivery trend is Lazada Malaysia. Their new delivery service, known as High Speed delivery, comes with some limitations, one of them being the order must be placed before 1pm. The service is currently available for customers based in the Klang Valley. The service costs an extra RM15 for a delivery within six hours.

 

4.     Marketing Automation

Marketing automation is the key strength of an e-Commerce retailer when compared with a traditional bricks and mortar shop: as double the amount of sales does not typically require perhaps up to double the workforce. Highly beneficial snowball effects can be generated in any retailing sector because of marketing automation. Additionally, it requires little effort to get started.
Decathlon, a retail sport giant, has successfully applied marketing automation to their online store. According to Clarence Chew (Head of Marketing at Decathlon S.A), while their online store enjoyed a high volume of traffic, they experienced low conversion rates and high cart abandonment. Automated marketing has changed all that. The integrated marketing platform provides them with a single view of every customer and allows Decathlon to design a unique customer experience. On top of recovering lost revenue, they have also captured a wealth of customer behavioral and transactional data, doubled their database, and significantly increased conversion rates. Since they deployed the technology, this global sport retailer has seen a marked increase sales of 18 per cent.

 
5.     Bringing Luxury to the masses 

Nowadays, the consumer often walks into a designer boutique, browses the products available, and perhaps also tries out specific items. Then, they leave the store and go online to purchase their desired products at a better price. This trend is now forcing luxury brick-and- mortar stores to expand their business to encompass an online presence, thus potentially making luxury items more affordable for middle-income consumers.
One retailer in Southeast Asia, driving this phenomenon is Reebonz. With a current membership of around 4.5 million members, Reebonz has come a long way in bringing luxury to the masses. Offering more than a hundred thousand unique products, this retailer offers curated products on their marketplace platform from merchants around the globe, making it easier for shoppers to buy and sell to one another.

 

 

Asia’s leading purveyor of luxury fashion, Club21 has also joined this trend with the opening of their online store in September 2016. The store, implemented by SmartOSC, is packed with the latest user experience features. The global site curates more than 150 designer women’s, men’s, kids and lifestyle brands, across a diverse range of price points, and offers a seamless and varied experience for the discerning fashion shopper anytime, anywhere.

 

6.     Social Commerce In Southeast Asia

Social commerce is thriving in Southeast Asia. The growing consumer population within the region has a relatively young age profile, as a result, consumers have been very fast in adopting the use of social network sites. Facebook, along with its sister company, Instagram, are in an excellent position to court SMBs (small and medium-sized businesses) in Southeast Asia to move their products online.

 

  

 

According to the consulting firm Bain & Co., 150 million people in the region purchase products online, with Facebook and Instagram accounting for 30% of digital sales. Southeast Asia has around a hundred and seventy-five million social media users, more than in the United States. The number is expected to grow as millions of new users from emerging markets such as Myanmar, Vietnam, and Indonesia. will join social media sites.

 

7.     Cash On Delivery and Local Payment Method

Most of Southeast Asia’s population do not possess a credit card, and even those consumers who have credit cards are very reluctant when it comes to using them. Consumers generally prefer to pay cash on delivery.
With the slow growth in taking up of credit cards, and COD seemingly presenting a lot of cost and logistical challenges to retailers, many alternative payment methods are now gaining ground in Southeast Asia. These alternative payment methods which include e-wallets and prepaid cards are proving to be popular, especially among those purchasing products via their mobile devices. Payments methods such as Samsung Pay which was developed by South Korea's Samsung Electronics is planning soon to launch in Malaysia and Thailand, is one firm that is intending to grow its overall share in the Asian mobile market.

 

 

Additionally, other local payment firms are starting to emerge. An example is the PayMaya Philippines, formerly known as Smart eMoney; which is intending to extend its services to other ASEAN countries. Using PayMaya, consumers can pay for goods and services without the need to use credit cards.

 

The rise of new e-Commerce channels in Southeast Asia has provided online retail with some key improvements. However, one cannot discount the tenacity and staying power of traditional retail channels. As the marketplace continues to evolve and change shape, new doors are beginning to open, with new as well as existing players being granted the opportunity to change the face of consumers’ retail experience in 2017.

 

Sources:

  1. https://www.dbsinsights.com/wp-content/uploads/2016/07/151103_insights_e_commerce_in_asia_bracing_for_digital_disruption.pdf
  2. http://www.singpost.com/about-us/news-releases/singpost-develop-singapores-first-shopping-mall-ecommerce-logistics-services
  3. http://www.straitstimes.com/singapore/retail-sector-urged-to-shop-for-ideas
  4. https://www.bloomberg.com/news/articles/2016-04-12/alibaba-to-pay-1-billion-for-control-of-lazada-e-commerce-site
  5. https://techcrunch.com/2016/11/01/amazon-southeast-asia/
  6. https://www.techinasia.com/dtac-thai-startups-at-tia-sg-2016
  7. http://www.stuff.tv/my/news/lazada-now-offers-same-day-6-hour-delivery
  8. https://e27.co/b2c-marketing-cloud-provider-emarsys-bags-us33m-grow-asia-presence-20150916/
  9. http://www.straitstimes.com/business/companies-markets/bringing-luxury-to-the-masses
  10. http://www.fashionone.com/news/2016/09/03/luxury-fashion-retailer-club-21-launches-an-all-new-online-shopping-experience/
  11. http://www.bain.com/Images/BAIN_BRIEF_Can_Southeast_Asia_Live_Up_to_Ecommerce_potential.pdf
  12. https://www.thailand-business-news.com/asean/55331-cashing-in-on-credit.html