Ogilvy has released a new report highlighting how brands need a direct-to-consumer digital strategy to come out on top of the covid disruption and lead the market in the future.
According to the report, digital commerce is on the rise, yet online purchasing has been slower to catch on in Southeast Asia compared to markets like China. Brands in Southeast Asia should prepare for a ripple effect of changing habits with wide-reaching impact across all sales channels.
Online shopping marketplaces like Shopee and Lazada are driving digital commerce penetration and leading online customer experience trends in the region. Dependence on marketplaces for digital commerce strategy will come with rising costs and loss of ownership of an increasingly precious asset: customer data.
The report argues that direct-to-consumer provides the ability to adapt nimbly to changing customer expectations, offering unique experiences that sets brands apart. Not only providing ownership of invaluable customer data but encouraging innovation and personalizing offerings based on data-driven insight.
Last year, the pandemic significantly increased the adoption of digital commerce and related digital services in Southeast Asia. Internet penetration, digital payment, and consumer trust in digital commerce all rose significantly in 2020. The region’s online industry is poised to triple to $309 billion USD in gross merchandise value by 2025.
“In Southeast Asia, social media penetration ranges from approximately 60% in Indonesia to 90% in Malaysia from early 2021,” said Tim Till, Vice President of Presales Consulting-Technology for Ogilvy.
“Referral-based commerce with influencers may see an increase as the sophistication in payments to those influencers matures. A growing consumer base, including unbanked individuals, will increasingly be able to buy online as individuals and businesses become able to receive payment and pay through new and developing methods such as cryptocurrency, buy-now-pay-later, e-wallets.”
According to Waheed Bidiwale, Global Vice President for Verticurl, Ogilvy’s Delivery and Operations Center, the digital commerce trend will eventually accelerate from lifestyle to the entire gamut of products and service categories.
“Not many thought of buying toilet paper online before Covid,” said Bidiwale. “Brands that are thinking ‘I’m in a commodity business, or I am in the impulse purchase category or nobody buys a car online so I don’t need digital commerce,’ need to relook at their strategies.”
The Ogilvy report argues that the advantages of marketplaces will not be sustainable as a long-term option and eventually there will be associated costs such as a need to buy advertising in order to generate traffic on the site.