What you need to know about ecommerce in SEA for 2016
As the ecommerce market continues to evolve through research and client work we have put together the key elements of change for 2016 and how brand’s need to think to succeed in new customer acquisition.
Positioning mobile into the centre of the ecommerce strategy
As mobile penetration grows rapidly in Southeast Asia, the first 6 months of 2015 experienced a 27 percent share of all online sales made on a mobile device which is a significant shift towards m-commerce and is progressive versus the global figure of 35 percent.
The above demand has created increasing pressure for advertiser’s to shift their digital media budget to allocate more to mobile campaigns including the build of applications.
However, in order to accelerate this change in buying behavior we predict that brands will expand the use of “mobile exclusive promotions” incentivizing customer’s to take discounts only found in-app (e.g. 10 percent of your first mobile purchase when you download the app).
Taking advantage of a customer that prefers to shop through their mobile phone app and leveraging their base is where Expedia and Lazada have found success.
From an agency and advertiser point of view, the impact will be that dynamic mobile retargeting will grow simultaneously providing another large contribution to programmatic buying.
More payment options and improved delivery
Across APAC eMarketer data shows us that 30 percent of customer’s abandon a shopping cart because their preferred payment option was not offered.
Despite growing credit card adoption in Southeast Asia the low level of credit card penetration has forced brands to innovate the traditional model of buying online and offer cash on delivery and in some cases paying in-store.
According to Nielsen 60 percent of Malaysian consumers say their preferred payment method in daily spending is cash instead of card. In order to meet this preference Tesco’s in Malaysia which is a Maxus client allows customer’s to shop for their groceries online and then pay using cash to the delivery person at the door.
Zalora was one of the first to partners with 7-Eleven so consumers could pay and collect their products in-store whilst serving a mutual benefit. With 70 percent of sales in Indonesia coming from rural areas this was a distinct need for brands to innovate to acquire more customers and it was a move with a significant pay off.
With the introduction of Ali Express in Indonesia and a partnership with digital wallet provider DOKU, it is only a matter of time before electronic payment picks up and paves a new wave of flexibility for consumers in Indonesia who will be able to buy/sell to and from China and pay in IDR.
Similar to the Zalora partnership, Alfamart will also be supported as a pay and pick up option.
In 2016, we predict that companies such as Ali Pay will play an educational role in markets outside of China and connect the last stage of the sales funnel for online shoppers.
Growing middle class and impact on the millennial shopper
The successful growth of ecommerce in Asia is a result of numerous factors but a key element is the growth of the middle class demographic; the countries with the highest shift in class demographic correlate with the top three for ecommerce growth: China, India, and Indonesia.
Contributing strongly towards the online shopping ecosystem are the millennial consumer who when preparing for a purchase decision 66 percent would ask for a friend’s advice; this combined with the importance of mobile connectivity puts social networks in an important place for access.
An example of the above impact is a partnership in Thailand between LINE and L’Oreal a Maxus client, LINE launched a flash sale through their messenger app selling Maybelline lipstick. This was the beginning for LINE’s step into ecommerce and highlights the potential of in-messenger acquisition.
In 2016, as the market continues to innovate and as spending increases a few factors may determine the success of customer acquisition which are to localize approach, leverage on data, address customer needs early and become fluid in their mobile centric approach.