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  • By: LazBeat Staff
  • Dec 15, 2020

Goodbye 2020, Hello 2021!

The 2020 pandemic has shifted the retail landscape in Southeast Asia, pushing many more people to shop online, and prompting businesses to pivot digitally to cater to this change. LazBeat talks to eCommerce expert Sarabjit Singh, an associate partner with McKinsey, about some of the trends that have emerged. Based in Myanmar, Singh specialises in building online businesses with retail and consumer companies. He also offers insights into the challenges and opportunities that he expects 2021 will bring for eCommerce in the region.

What are 2020’s top three eCommerce trends for Southeast Asia?

The biggest trend by far was the explosive growth of eCommerce. In our survey of Indonesian consumers in September, we found that 2.5 times more consumers now do most of their shopping online than in pre-COVID-19 times. The pandemic introduced millions of new customers to online shopping, and many are planning to stay online post-COVID.

The resulting economic uncertainties inspired a big shift to value this year, moving the composition of online shopping baskets away from discretionary products. Online purchases of essentials such as groceries drove some of the highest growth in online sales. And value-for-money become even more important in a region that was already very price conscious.

As eCommerce grew increasingly social in 2020, nearly half of all users spent more time on social media. We haven’t yet seen mega platforms in the region that offer a core value proposition around social. But trends such as live sales and influencer marketing point to a merger of social and commerce that can only strengthen.

How have businesses adapted to these changes? What were best practices and keys to success?

The increase in eCommerce demand caught many players unprepared initially. Platforms had to restrict their assortments because of limitations in product availability. Average delivery times doubled in Malaysia and grew by between 10 and 30 per cent in other regional markets.

Since then, the best players have recovered by strengthening their supply chains, securing supplies of essential products sought by most consumers, and investing in logistics capabilities to meet customer expectations of waiting times and delivery experience. When customers shop online for the first time and have a positive experience, this can build loyalty immediately and increase the chances of their returning and spending even more. These are key drivers for customer lifetime value.

Businesses are responding by building partnerships across physical and online retail, from consumer-packaged goods (CPG) companies working with hyperlocal online delivery partners to go direct to consumer (D2C), to offline retailers exploring omni-channel solutions by tying up with eCommerce platforms. Such partnerships are bringing forth an exciting array of fresh innovations in online shopping experience for consumers.

Entering 2021, what’s the industry outlook? Where are the challenges and opportunities?

The eCommerce momentum generated in 2020 is expected to continue into the new year, not just on the back of sustained customer demand but also as a result of large investments that have flowed to this sector.

Growth will not come without its challenges. Logistics and supply chains will continue to come under pressure from COVID-related restrictions (possibly for one or two quarters, and perhaps longer depending on how effective the vaccines prove). Such increases in buyers and sellers online are also likely to accelerate risk of fraud and identity theft, and growing competitiveness will further squeeze profit margins that are already razor thin.

And yet, this is the very crucible from which winners will emerge.

Massive increases in eCommerce demand have created perfect conditions for innovation in user experience, products and services, and in business models. Companies that can seize this opportunity will likely position themselves to be market leaders for years to come.

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