The COVID-19 pandemic has impacted all aspects of people’s lives, disrupting both short-term plans and long-term prospects. Around the world, people have had to adapt their day-to-day routines, adopting new “normal” behaviours that require a thorough re-evaluation of the way they spend their time, energy, and money.
This is especially true in Southeast Asian economies, where the use of innovative devices, platforms, and services has allowed new consumption patterns to emerge despite overall economic slowdown. And as consumers’ needs, habits, priorities, and preferences evolve, so do the market dynamics that they drive.
What are some of the key trends observed in the region? And how can businesses leverage this knowledge to stay ahead of competitors?
To answer these questions, Blackbox Research, Toluna, and Archetype have published Into The Light, an in-depth study that reveals the emerging patterns, trends, and dynamics across six key ASEAN markets – Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam.
This article is the fifth in a series of blog posts devoted to examining some of the major findings and implications of the study. It focuses on how the COVID-19 crisis has accelerated e-commerce adoption, and highlights some of the gaps and pain points that customers are experiencing.
Click here to read the first instalment on consumers’ rising preference for local brands; here to read the second article on consumers’ growing appetite for fun, uplifting entertainment across social channels; here to read the third article on how consumers are actively prioritising safety when making purchasing decisions; and here to read the fourth article on the future of work and it’s implications for B2B marketing.
Necessity and convenience
The pandemic has forced consumers and businesses to utilise online channels more often and more regularly, leading to unprecedented activity and profits for e-commerce platforms. From movement-restricting measures during the lockdown to inadequate stocks in physical stores, shoppers moved almost instantaneously from bricks to clicks.
A key question emerges for both brick-and-mortar business-owners and e-commerce operators: is this a temporary shift or will e-commerce remain consumers’ main mode of purchasing once things get back to as normal as they can?
For 85% of ASEAN consumers, the change to digital platforms has been a comfortable shift compared to more occasional online purchases before the crisis. Interestingly, we are seeing the rapid uptake of these services amongst the Baby Boomer generation as well. 85% of Boomers state they are now more comfortable with this shift.
These findings are supported by data from GlobalWebIndex, which shows that mobile payment usage amongst baby boomers in Asia-Pacific increased by 5 percentage points year-on-year, nearly thrice the rate of the general population.
Who is winning the e-commerce war?
While all e-commerce players grew considerably during the COVID-19 crisis, not everyone experienced equal growth across the board.
Overall, Shopee takes the lead, with the highest proportion of ASEAN consumers (71%) since the start of COVID-19. Its usage is strongest in Malaysia (83%) and Indonesia (76%), but lower in Singapore (52%).
Shopee’s popularity has been attributed to its focus on localisation – by creating market-specific
customisations, Shopee taps into the purchase motivations and behavioural ticks of consumers across markets. Investing heavily in celebrity endorsements (Cristiano Ronaldo was Shopee’s regional ambassador for their online shopping season last year) also seems to have paid off.
The second biggest eCommerce player is Lazada, with 48% of regional users. It is used the most in Thailand (62%), Malaysia (60%), and the Philippines (59%).
Strategies to stay ahead
The above findings point to several key implications for businesses.
First, the fact that increased usage does not automatically mean increased satisfaction. Indeed, brands such as Shopee and Grab rank higher on the satisfaction scale overall, while Lazada surprisingly ranks relatively lower. Two aspects of the user experience that all brands can endeavour to fix are the delivery process and the reliability and quality of reviews – two issues consistently cited across all markets as a major concern.
Second, the fact that eight out of 10 Boomers are comfortable shopping online means that e-commerce businesses have a golden opportunity to tap into the silver dollar, which is a USD3.3 trillion market in the Asia-Pacific region alone. It also means that specific strategies need to be developed to cater to user experience requirements of this particular audience (importance of larger screens and fonts, importance of product warranties and instructions, etc.).
Third, the rise of online commerce will not kill the physical store. We will examine this in the next post in this series, where some other study data points show that “digital living” has reached a saturation point amongst certain generations. Given the uncertainties around lockdowns, businesses that have an omnichannel model need to have the flexibility to pivot their campaigns, and shift their priorities whenever an abrupt change occurs due to COVID-19 case numbers spiking. For marketers and communicators, this means that your campaign investments and plans need to be flexible enough to support these shifts too.
Looking ahead: Opportunities for growth
While the pandemic has catalysed exponential growth across the region, there is still huge room for expansion. In a joint study by Google and Temasek, Southeast Asia’s internet economy is slated to be worth more than USD240 billion by 2025, with e-commerce making up more than 40% of that number.
With numerous opportunities, the path to growth lies first and foremost with understanding the post pandemic consumer. What has changed in his or her mind? What are his or her priorities, given the uncertainty and possibly anxiety generated by COVID-19? What are the aspects or elements of retail which he or she misses, and how can those be replicated online?
Answering all these questions will take time (and research!), but ultimately, there will be a massive pay-off for players who manage to get it right.
This blog post is co-authored by Blackbox Research (Yashan Cama) and Archetype (Julian Chow).