WHILE some pandemic-driven trends like heightened demand for health and hygiene products will be short-lived, the overall shift in consumer behaviour towards e-commerce is likely to last, bolstering strong consumption growth in South-east Asia.
This was the view of speakers at a webinar held on Oct 16, titled "Will consumption in South-east Asia be the same again?"
The webinar was the last in a series called "A SEA of Opportunity" organised by the Singapore Economic Development Board (EDB) and focused on business opportunities in the region.
It featured Santitarn Sathirathai, group chief economist at Sea Group, the parent company of e-commerce platform Shopee; and Candice Ong, chief commercial officer at e-commerce rewards site Shopback, in a panel discussion moderated by Patrick Yip, founding partner of Indonesia-focused venture capital firm Intudo Ventures.
With South-east Asia's growing middle class and youthful population already driving consumption trends in recent years, higher smartphone penetration and social media use are helping to increase consumers' awareness of global trends and brands and keenness to participate in global conversations.
The Covid-19 pandemic has provided a further boost to e-commerce in particular - according to research that Sea conducted with the World Economic Forum, 42 per cent of consumers in South-east Asia have been using e-commerce more than previously, and 72 per cent said they believe the trend of e-commerce buying will be a permanent change.
E-commerce is also broadening the consumer markets to include customers in rural parts of the region, Ms Ong said: "Before the advent of e-commerce, a lot of goods could only be procured in first tier cities. Now a lot of goods can be purchased online, and as consumers develop a taste for global brands and have increased accessibility, this is a tremendous opportunity for companies and brands to reach customers more easily, that they couldn't before."
However, ecosystems around the region are at varying stages of development, posing challenges to doing business with these consumers.
Dr Sathirathai noted that not all areas have good Internet access, logistics infrastructure may be underdeveloped and digital payment options differ from country to country.
Still, investments by governments and private sector players have helped improve these ecosystems.
On their own, some consumers have devised interesting solutions to these problems; for instance, a village might designate one person to make purchases and consolidate deliveries for their neighbours, improving access for those who are less digitally literate too, Dr Sathirathai said.
To overcome some of these challenges, Ms Ong suggested that companies could adopt a hub-and-spoke model, in which they build central warehouses in areas that they are looking to grow in order to reach customers more effectively.
They could also partner with regional e-commerce players to better access more consumers and win their trust.
As more purchases are made via e-commerce and mobile commerce, platforms and sellers will need to cater to consumers' desire for a more engaging online shopping experience.
This goes beyond convenience in finding and purchasing products, to include aspects of socialising and entertainment, said Dr Sathirathai.
"People want the experience of discovering what they want," he said. "This is where mini games come into play, and livestreaming, whether it's true entertainment or user-generated with sellers doing their own livestreams, connecting directly with consumers. These are critically important in driving purchase decisions and informing consumers about what they want to buy."
The overall success of such experiential retail will depend on the e-commerce ecosystem, which must include features that enable customers to click and buy easily from the game or video, provide payment methods that cater to the preferences of different regions and offer reliable, trackable delivery through strong partnerships with logistics firms.
Ms Ong noted that another opportunity businesses should not neglect is the growing popularity of shopping festivals like Singles' Day on Nov 11.
Although it started out as a marketing campaign modelled after Black Friday by Alibaba to drive awareness of its T-Mall marketplace, it has overtaken Black Friday in popularity and spawned other festivals like 9.9, 10.10 and 12.12 to kick-start the holiday shopping season as early as September.
"Consumers look forward to these events because they believe they can get tremendous deals. That behaviour has made shopping into an exciting activity, almost like a game of 'Can I get the best deal?'," said Ms Ong. "That's pretty interesting for e-commerce business, (to look at how) to better uncover the best value for consumers who are particularly value-centric, or in certain cases, price-elastic as well."
© 2020 Singapore Press Holdings
This article was written by Leila Lai from The Singapore Business Times and was legally licensed through the Industry Dive publisher network. Please direct all licensing questions to legal@industrydive.com.
