With 2018 dubbed the year of e-commerce for the region, what can we expect in 2019? EcommerceIQ spoke to industry leaders to find out the anticipated trends for online retailers and brands in Southeast Asia.
1. Brands are shifting from data gathering to data utilization
The biggest difference in online retail from offline is the ability to track, collect, monitor, and manage information – all in real time.
Through online channels, brands are able to access customer data through chat, social media, and their own websites. This information can be used to devise online strategies. Globally, 73 percent of brands plan to allocate their e-commerce budget on data and analytics services in 2019.
However, despite its obvious importance, many brands still have no concept of how to use data to their advantage.
“Even today, not all retailers have embraced data fully to the point where they think of themselves as data companies. And this might be why many companies are suffering,” wrote Srikant M. Datar, a Harvard Business School professor.
Data collection is easy, but having the analytics capability and optimizing it to use data is a completely different ball game.
A survey by e-commerceQ identified data analysis as one of the most difficult skills to find among digital talents in Southeast Asia. Brands are constantly searching for data aggregators to consolidate information for convenient retrieval and use to target, re-target, and personalize products and services.
Reagan Chai, head of regional business intelligence and development at Shopee, told e-commerce that data acquisition enables the company to map out and optimize buyer and seller user experience while preempting customer demand and anticipating future potential. The company has seen an increase in website traffic in the past year, which it claims even surpasses that of other regional players.
In China, Alibaba and JD have taken a step further by using the data gathered online to improve inventories and experiences at their physical stores. Chris Tung, chief marketing officer at Alibaba, said the company wants to help brands find the right consumers by tracking them through its system.
“We’re finding all data that has to do with people, their behavior, what they like, what they buy, and binding this online data to real people,” Tung explains.
Recognizing the need, aCommerce – e-commerce enabler and ecommerceIQ’s parent company – launched a data analytics platform called BrandIQ last year. It aims to help brands centralize customer data and offer customized products or services to each target group.
All of this leaves brands with two options: find an economical way to use data, or continue looking for a needle in a haystack.
2. Social commerce channels are becoming brands’ new sales outlets
Social commerce in the region boomed before e-commerce grew to how we know it now.
For example, Facebook Groups have long been established as an online space where people can connect to buy and sell goods – even before Marketplace was launched. The social network’s rapid growth in Southeast Asia is propelled by mobile adoption, where 90 percent of the online population access the internet via smartphones. Some even see Facebook as the internet itself.
With multitudes of potential customers gathered on social media platforms, brands have naturally identified alternative sales channels. Following Facebook’s footsteps, the likes of Instagram and Pinterest have also developed their own shopping features.
“Brands will miss out if they don’t have a social media presence. The best way to get feedback from consumers is by having a direct conversation,” Deb Liu, vice president of Facebook Marketplace, told Forbes.
Meanwhile, the messaging app Line recently acquired a social commerce management startup called Sellsuki in Thailand, where it has the second biggest user base, to build a strong foundation for its e-commerce business.
A few big brands like L’Oreal have already equipped their social media page with the Shop feature, which allows consumers to make a purchase directly on the page. And it’s only a matter of time before more brands follow suit and use social media as one of their sales channels, removing one unnecessary layer between them and consumers.
3. E-marketplaces are launching new services to differentiate
One key factor that successful e-commerce players in more developed markets share is rolling out various services on their own supply chains.
JD’s investment in developing its own supply chain allows the company to scale its technology and offer a retail-as-a-service (RaaS) proposition to help other retailers or brands sell online. Alibaba’s ecosystem is unrivaled: it goes beyond commerce to include a logistics network (Cainiao) and a payment firm (Ant Financial). Recently, it also ventured into the entertainment industry.
The same practice has spread to Southeast Asia. Lazada has strengthened its logistics arm FBL (which stands for Fulfilled by Lazada) post-acquisition. And although no concrete plans have been disclosed, Shopee has expressed its intention to build its own logistics network. (In Shopee’s statement, Shopee Thailand does not have a solid plan to build its own logistics network yet. The comment was briefly mentioned in the interview with Bangkok Post and was made a focal point by the media.)
Singapore’s Qoo10 is expected to launch its blockchain-based e-commerce site QuuBee this year. It seeks to leverage blockchain to eliminate transaction and listing fees, which could help increase retailers’ profit margins, making for a more sustainable approach to commerce.
In Indonesia, Tokopedia is set to offer infrastructure-as-a-service with a fresh US$1.1 billion funding. They also plan to use AI for customer care services and run credit checks on merchants seeking loans for business expansion.
But it’s not only the general e-marketplaces that are making such moves. Fashion e-marketplace Zilingo scored US$226 million in funding as it builds a network of fashion supply chain that anyone – small merchants or big retailers – can tap into.
Facebook is also showing signs that it will jump into the bandwagon. The social network launched the Marketplace feature in Thailand and Singapore without much fanfare. But its recent partnership with Kasikorn Bank in Thailand to allow in-app payment feature might be the start of the company’s effort to bulk up its commerce capabilities and cater to those who use the platform for business.
We anticipate that e-marketplaces will continue to go head-to-head through new services, acquisitions, and partnerships in a bid to recruit more brands to sell on their platforms.
Ready to burn more cash to win in this battle, e-marketplaces?
4. Brands will reinforce reviews and fund user-generated content to win consumers
E-marketplaces in Southeast Asia has been upscaling and building add-ons that provide consumers with the utmost convenience. The search for better technology and assistance for consumers is constant and never-ending.
Consumers begin their online purchasing journey by searching for product information or reading reviews usually on e-marketplaces before making a decision. They can also look for real opinions to validate products.
The habit of leaving product reviews on e-commerce platforms is not as common in Southeast Asia as it is in the US – Amazon even created a dedicated page for top reviewers. And when consumers in Southeast Asia do, the reviews often contain little information about the product and more about other aspects (i.e. delivery time and packaging, among others).
The community-crowd model, which is popular with travel platforms such as Airbnb, might also be suitable for e-commerce businesses in Southeast Asia to alleviate consumers’ apprehension towards online shopping. It’s something that Edouard Steinert, director of channel management at aCommerce Thailand, is investigating, given that the model could save time, increase results, and keep costs low.
“Consumers today want to hear genuine feedback and reviews about a product and become more averse to hard-sell methods. [User-generated] reviews, especially from people who share the same passion with them, proved to drive better conversion for the brand,” he says.
Le Hoang (Source: Techinasia)