This mass switch to online commerce has ushered in a new shopper-brand and shopper-retailer relationship – Retail 5.0, says Ascential Digital Commerce.
Recent research forecasts that eCommerce in Southeast Asia will see a rapid rise in 2022 growing nearly 18% to reach US$38.2 billion by the end of this year–up from US$31.9 billion in 2021. It additionally projects eCommerce sales to reach US$57.8 billion by 2026, further emphasizing the need for brands to adapt to the rapidly evolving retail landscape.
The new whitepaper, “Navigate Retail 5.0 in Southeast Asia”, released today by Ascential Digital Commerce, highlights the rapid growth of eCommerce sales across Southeast Asia (SEA) and explores the opportunities and challenges that consumer brands face as eCommerce becomes the number one driver of retail strategy in the region.
The paper lays out how consumer brands in the region can thrive in a new era of shopping – in what the paper’s authors describe as Retail 5.0.
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.
“Southeast Asia is brimming with opportunities for retail operators,” said Jill Meng, Customer Success Director, APAC, Ascential Digital Commerce.
“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.
With the requirements to succeed online being very different from the physical store, the paper says 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.”
One of the key takeaways in the whitepaper for brands is to focus resources and investment 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.
“Brands and retailers must invest in capabilities that allow them to offer personalization at scale to succeed in a new generation of digital-first shopping.”
However, the whitepaper cautions against “consumer brands from jumping on the bandwagon and crowding the mass personalization space.”
The paper points to the “strategic priorities and unique growth levers” of rapidly growing digital retail platforms, such as Alibaba-owned Lazada, Grab, and Sea Group’s Shopee, in order to succeed.
“Consumers are dictating and shaping the retail sector, informing brands about their preferences via social media or conversations,” said Xian Wang, Vice President, Retail Insights, Edge by Ascential.
“Consumer brands that can analyze, adapt and adopt solutions quickly to the new shopping environment will win these dollars.”
“With shifting consumer behaviors, eCommerce and fast delivery are now considered table stakes,” said said Saad Ahmed, Managing Director, Regional Head of Merchants & Commercial, Grab.
“Consumers expect much more from their online experience. They want to try new products frequently, have personalized experiences, seamless customer journeys, and interactive engagement.”
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Ascential adds “that 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.
Image: Jenny Ueberberg