Published in Nov-Dec 2020
In August this year, research from IBM’s US Retail Index revealed that Covid-19 had accelerated the shift away from physical stores to digital shopping by roughly five years. For anyone sitting at home, quietly adding products to their virtual shopping basket, this was not much of a revelation. The past nine months have upended traditional shopping patterns, leaving much of the retail world in disarray and cementing Amazon’s position at the top of the e-commerce chain.
One thing there is no doubt about is that adopting digital is no longer a choice; there is no option but to shift towards online services and social media. E-commerce is booming, content creation is more interactive, consumers are demanding more focus on customer experience and new channels of marketing, such as gaming and podcasts, have reached previously unimaginable levels of consumer engagement.
For those companies that had invested in e-commerce before the pandemic, the rewards were swift. Convenience and safety, combined with speed and efficiency, have enabled many brands to remain competitive despite the global downturn. Nowhere has this been truer than in the world of food, where online sales have skyrocketed. Uber’s biggest business, for example, is no longer ride-sharing; it is food delivery via Uber Eats. In the UK, Waitrose expanded their delivery capacity to 250,000 a week and added 150 vans to their fleet in June. Even start-ups such as Dubai-based food delivery firm Farmbox have seen their orders jump 10-fold as more and more customers shop online.
The big question, however, is whether this level of growth can be sustained. Have consumer buying habits irreversibly changed or do shoppers still favour physical stores and the ability to browse and socialise at will? And what activities are likely to resume once restrictions on movement and social interaction are removed? After all, if the pandemic has taught us anything, it is that for the long-term, only a few cherish social isolation.
Waitrose’s Chief Executive, James Bailey, believes the shift to online grocery shopping is “irreversible”, while Shopify predicts global e-commerce sales will reach $4.2 trillion by the end of the year. Dubai is even preparing to launch a new ‘city’ dedicated to e-commerce – Dubai Commercity. It will provide a base for online retailers and was built for $870 million.
Yet, many brands were unprepared for the avalanche of demand created by the pandemic and continue to provide poor e-commerce experiences. Simply being online and offering the ability to buy your products is not enough. The customer experience needs to be strengthened. That means improving personalisation, simplifying online menus, heightening search, and adding incentives such as promotions and loyalty programmes. It also means revamping product availability, speeding up last-mile delivery, the introduction of efficient returns policies, and pivoting to omni-channel fulfilment.
Modernising existing digital technologies is another example. Property agents in Singapore are now including virtual tours and communication tools so that their sales teams can chat in real-time. Another consumer goods e-commerce company added a search and voice assistant to give guidance when needed, as well as an interface for another language so more users were able to shop online.
As with most things new, refinement of the existing processes are needed so that gaps can be improved. The experience has to be good from an online purchase, right through to doorstep delivery, as all will be vying for that all-important ‘good review’ and repeat customers.
A noticeable trend that has emerged across many APAC countries is the switch to ‘buying local’. Whether it is because of logistic difficulties during Covid-19 or price concerns in uncertain times, one thing is for sure – local industries can capitalise on both fronts. Small home-grown companies that relied almost entirely on physical premises were forced to either close or to rapidly roll-out online sales options and curb-side pick-up. The whole buy local trend may have been accelerated by Covid-19, but it is far more than just a hashtag. It is a more sustainable way of doing business. One that channels money back into local economies, creates employment and encourages domestic entrepreneurialism.
The MNCs that have historically been entrenched in a country and adapted their marketing to suit local culture and nuances have benefitted too. Their long-term investment has paid off as their products are woven into the fabric of local retail. An example is Nestlé’s Bear Brand (powdered milk) which has been around in the Philippines since the 1900s; it is often regarded as a local brand and has a slew of products that locals are familiar with and find comforting. MNCs can bring advanced technical knowledge as well as innovative products that take years of research to develop.
There has sometimes been a question mark about the quality of local brands, but in these challenging times, ‘supporting local’ is being widely encouraged. In Malaysia, the impression of local brands not being at par with imported ones has changed considerably and some are now highly thought of. The mindset in favour of local brands has increased when you hear examples of success stories such as local heroes Grab (Indonesia, Malaysia, Singapore, etc.) and Papparich (Australia, Hong Kong, Singapore) who have not only expanded nationwide but made their way beyond their own borders.
A critical aspect, especially in these times, is the need for brands to be purpose-driven. Consumers look to them to provide both reassurance and solutions and are looking at shared values to connect with brands on an emotional level. Multiple studies have shown that brands associated with a ‘higher purpose’ such as sustainability, equality, and inclusivity goals, are the ones that the conscious consumer and Millennials will choose and gravitate towards. Just providing products or services is no longer good enough, you have to simultaneously benefit society as well as achieve your business goals. It is about taking a decision to be responsible for the 3Ps – Planet, People and Profit.
Other, smaller trends have also emerged during the pandemic. Will we see changes with influencer relevance? It is certainly true that there has been a noticeable shift towards nano and micro-influencers who focus on a specific niche. For such influencers, it is not just about the money; it is about supporting brands they genuinely have an affinity with. As a result, they have a stronger, more engaging, and authentic relationship with their followers.
There is also a strong possibility that live-streaming e-commerce, which has proven so popular in China, will make further headway as a more diversified means of pushing online sales. It may even gain global traction. The pandemic has supercharged the trend of selling retail in a show format to people who had to stay home and it has shown early success in rural areas where entertainment via the internet is more common.
As a final thought, even within e-commerce we see developments such as the stronger emergence of social commerce. In its simplest form, you can seamlessly buy what you see on social platforms such as Facebook, Instagram, Pinterest and TikTok, with the added benefit of product reviews, social interaction, opinions, comments, referrals and everything social has to offer. Mobile commerce has also picked up. A high percentage of us use our phone devices for social media interaction. Not only is the reach of mobile phones in terms of location and ownership greater than most other devices, now with Amazon’s one-click purchase patent available, payment companies (Apple, Paypal, Shopify, etc.) are all striving to remove the last step of friction in the e-commerce/social commerce payment journey.
Even so, amidst all these rapid changes, brands must remain focused on always bettering the consumer experience and finding solutions in order to differentiate themselves in an e-world which has multiple platforms and numerous competitors from whom consumers can choose to buy from.
Huma Qureshi is Chief Communications Officer, Asia Pacific, Middle East & Africa, GREY Group AMEA