SINGAPORE — A whitepaper released by specialist information, data, and ecommerce optimization company Ascential Digital Commerce highlighted the rapid growth of ecommerce sales across Southeast Asia (SEA), and explored the opportunities and challenges consumer brands face as ecommerce becomes the number one driver of retail strategy in the region.
“Navigate Retail 5.0 in Southeast Asia” laid out how consumer brands in the region can thrive in a new era of shopping – what the paper’s authors describe as Retail 5.0. But the requirements to succeed online are very different from the physical store.
The paper suggested that optimizing digital retail platform growth can only be accessed by adopting a fundamentally different set of capabilities, skills, and in many cases, wholesale organizational change.
The whitepaper projected ecommerce sales in the region to grow nearly 18% to reach US$38.2 billion by the end of 2022, up from US$31.9 billion in 2021. By 2026, ecommerce sales are projected to reach US$57.8 billion. This comes after bumper ecommerce growth in 2020 of US$27.4 billion and shows how pandemic shopping behavior has changed retail for good.
Indonesia, one of SEA’s largest online commerce markets, is expected to add $9 billion in ecommerce sales in 2022, while the Philippines, Vietnam, Thailand, and Malaysia are also key markets to watch.
One of the key takeaways in the whitepaper for brands is to focus resources and investments on mass personalization to reach and retain digital-first shoppers, who use smart devices, such as laptops and mobiles, to discover, select, purchase, and engage. But the whitepaper cautioned against consumer brands from jumping on the bandwagon and crowding the mass personalization space.
The paper emphasized the need to understand the strategic priorities and unique growth levers of the fastest growing digital retail platforms, such as Alibaba-owned Lazada, Grab, and Sea Group’s Shopee, in order to succeed.
“Southeast Asia is brimming with opportunities for retail operators. In this evolving Retail 5.0 landscape, retail operators must constantly reevaluate their investments and innovation strategies to stay relevant, grow, and effectively tap into the largest ecommerce marketplaces,” said Jill Meng, customer success director, APAC, Ascential Digital Commerce.
“Consumers are dictating and shaping the retail sector, informing brands about their preferences via social media or conversations. Consumer brands that can analyze, adapt and adopt solutions quickly to the new shopping environment will win these dollars,” said Xian Wang, vice president, retail insights, Edge by Ascential.
“With shifting consumer behaviors, ecommerce and fast delivery are now considered table stakes. Consumers expect much more from their online experience. They want to try new products frequently, have personalized experiences, seamless customer journeys, and interactive engagement,” said Saad Ahmed, managing director, regional head of merchants & commercial, Grab.
According to the whitepaper, these are the recommendation to win marketplace shoppers:
- Identify how your shoppers are searching for your brand and products online and understand their purchase journey;
- Get full oversight of your and your category’s performance and sales, and share online and on the marketplaces you are selling through to inform effective business decisions; and
- Understand the marketplace dynamics and their capabilities to focus investment in the right places.
On the product side, consumer brands must ensure a highly flexible product innovation and distribution model where sufficient stock is immediately available for rapid distribution globally. This is crucial especially as businesses can lose up to 22% of weekly sales every day a product is out of stock, according to data from Edge by Ascential.
For more information, read the full “Navigate Retail 5.0 in Southeast Asia” whitepaper at https://www.ascentialedge.com/insights/apac/retail-5.0-sea-whitepaper.
