Capitalising On Future E-Commerce Opportunities
Tuesday, May 11th, 2021
“COVID-19 has reduced consumers’ psychological and infrastructural barriers for e-commerce and accelerated the online presence of retailers, creating a conducive environment for continued strong growth”—Peh Quan Yao, Research Analyst at Euromonitor International.
By 2025, e-commerce will expand by an additional US$1.4 trillion and account for half the growth in the global retail sector, according to global market research company Euromonitor International.
In its latest webinar, Retail in Transition: Capitalising on Future E-Commerce Opportunities, Euromonitor delves into how the e-commerce market has transformed due to COVID-19, future tech investment areas and countries with unmet e-commerce potential. According to the webinar, 16 percent of goods were bought online last year, double the ratio of 2015, with the growth expected to continue to accelerate in the next 5 years. The US, China and Mexico are forecast to achieve the highest absolute value growth between 2020 – 2025 at US$386 billion, US$361 billion and USD 77 billion respectively.
“One of the most pronounced impacts from the global pandemic is the expanding influence of tech. Retailers and brands are prioritising tech investments, which range from optimising supply chain operations to improving user experience. Companies in Latin America, for example, have been making bigger digital investments, and the region is forecast to reach the highest growth of retail value of all regions by 2025,” comments Michelle Evans, Senior Head of Digital Consumer Research at Euromonitor International.
“However, the rapid digital transformation has brought challenges towards traditional business models and physical stores into greater focus, and it is vital to re-evaluate strategy for businesses to stay competitive in the ever-growing digital sphere,” she expands.
In light of this shift in business models and consumer preferences, APFI magazine spoke to Peh Quan Yao, Research Analyst at Euromonitor International on his thoughts on the burgeoning e-commerce market within Asia.
Q: How has e-commerce grown in Asia specifically?
A: E-Commerce has thrived in Asia, accelerated by COVID-19.
Across the region, consumer demand has shifted online by necessity or discretion, with non-essential stores closed due to lockdowns and concerns about health & safety in crowded areas.
There has been a shift in product category mix towards improving/complementing stay-home lifestyles. Examples of products in demand include electronics products such as desktop monitors for home office use, and home and solitary workout equipment such as dumbbells and yoga mats.
Online shopping festivals have also helped to drive demand in the region by emphasising value and offering consumers a welcome respite from austerity amidst a prudent economic climate. Within Southeast Asia, E-Commerce platforms such as Shopee and Lazada hold regular monthly sales with flash deals, discount vouchers and brand sale collaborations, while Coupang in South Korea launched a 2-day “Global Shopping Day” event in January 2021 that offered steep discounts for imported international products at a time when international travel remains distant on the horizon.
Q: What are some challenges brought on by this growth?
A: In the early stages of the pandemic, the shift to online retail caught many merchants off guard, particularly merchants with a smaller retail footprint that lacked resources and expertise to establish their e-commerce presence.
Some retailers adapted creatively with stop-gap measures to continue sales amidst lockdowns. For example, in Singapore, home appliance retailer Audio House adopted Facebook livestreaming and their salespeople also learned how to use WhatsApp, calls and emails to sell appliances in-lieu of brick-and-mortar store walk-ins.
Merchants were also aided by onboarding onto 3rd party e-commerce or q-commerce platforms, such as Bukalapak and Grab’s GrabMart in Southeast Asia to ensure business continuity and continue to reach consumers.
As consumers stayed home and avoided venturing outside, this created challenges for consumer engagement for brick-and-mortar retailers as in-store physical interactions were difficult to replicate online. Brands and regional e-Commerce platforms have been and will continue to utilise social media tools such as livestreaming, gamification, and online influencers to engage and sell to consumers, at a time when consumers are also turning to their mobile devices to stay in touch with the outside world.
As an example, in October 2020, Chinese e-commerce retailer Suning.com partnered with Douyin (a popular Chinese social media platform) for branded livestreams, where users can make purchases in-application without leaving Douyin.
Q: In the ‘new normal’, will e-commerce continue to grow as rapidly as before?
A: E-commerce growth is expected to taper from the heights experienced during the pandemic but remain strong for a variety of reasons.
As COVID-19 is brought under control and regional countries exit lockdowns, we will see a shift in purchase behaviour as retail shifts outside the home and back into stores once more. Pandemic-induced growth categories, such as work-from-home electronics and furniture and home workout sporting equipment will likely see demand taper.
However, COVID-19 has reduced consumers’ psychological and infrastructural barriers for e-commerce and accelerated the online presence of retailers, creating a conducive environment for continued strong growth. For example, ‘Grocery’ and ‘Premium/Luxury’ product categories have seen an uptake towards online purchase behaviour as consumers are now more comfortable purchasing perishable and higher value items online.
Indonesian e-commerce platform Tokopedia’s “Tokopedia Nyam” campaign touts local branded coffee, Korean food specialties and Japanese mentai rice among the best-selling products, while China’s Alibaba Group introduced its “Luxury New Retail” initiative to lead digitalisation and transform the luxury shopping experience.
We’re currently a quarter of the way through 2021, and it’s shaping up to be a pivotal year already. As e-commerce continues to flourish and businesses adapt to the new normal, it is important to note that tailoring strategies to these emerging consumer trends will empower businesses to endure the unexpected as well as overcome risks and adversities.
In unprecedented times like these, it is important to keep one’s finger on the pulse of consumer behaviour patterns and monitor the shifts, using this knowledge to customise marketing messages and appeal to a wide range of consumer demographics. The business that will survive this pandemic is a flexible one with adaptive strategies, ready to take on the challenges that COVID-19 created, influenced or accelerated.
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