As consumers grow increasingly accustomed to online shopping, they also increasingly demand immediate and personalized service, writes Samba Natarajan, Senior Vice-President for Growth Markets, PayPal.
Asia is at the forefront of e-commerce globally, and we can expect this growth to continue in 2022. In early 2021, Asia accounted for nearly 60% of the world’s online retail sales, with Chinese consumers alone making more than a third of the global purchases online.
From startups to major retailers, online platforms have become the primary medium for business – due in no small part to the ongoing pandemic.
As merchants look at growing their business, expanding cross-border and reaching a global consumer base will be key. Rising disposable incomes and growing internet penetration across Asia are fueling the region’s rapid e-commerce growth and burgeoning digital economy, besides the introduction of new trade agreements like the Regional Comprehensive Economic Partnership which will come into effect this year.
The question remains: which trends impacting Asia’s e-commerce landscape are here to stay for the long haul? I believe there are five key trends that we need to look out for as we move into 2022.
Online shopping has witnessed incredible growth with another 70 million digital consumers added in South East Asia alone since the onset of the pandemic. After vacillating between lockdowns and navigating the complexities of shopping in the pandemic era, retailers — both big and small — are now better prepared to leverage digitalization for success and not just survival.
In Asia alone, digital transformation is expected to exceed US$1.3 trillion by 2027. Retailers adopted digital tools in order to expand their customer base, improve customer engagement, develop services and products to meet the changing needs of customers, and leverage the use of cloud to unlock the power of data.
Retailers’ development in 2022 will be marked by digitalization roadmaps and increasing digital maturity.
While the popularity of online shopping continues to grow exponentially, merely having an online presence is not enough for retailers to tap into the e-commerce boom.
Frictionless commerce is now imperative. Every one-second delay from when a consumer logs in to checkout causes conversion to drop by 7%. Making sure that the site loads quickly, navigation is intuitive, and the checkout experience is seamless are just a few ways of servicing the digital consumers’ needs and preferences.
As a result of the pandemic, there has also been a decrease in customer loyalty and an increased willingness to try new brands. This makes understanding the target audience more imperative. Analytics is playing a key role in offering personalized incentives to consumers, and tailoring product recommendations to retain them.
Inventory planning can no longer be a hit or miss. Retailers cannot afford to play the guessing game in today’s competitive landscape. By leveraging the power of data, they can anticipate needs and offer customized experiences.
According to IDC, digital payments are expected to account for 91% of total e-commerce spending by 2025 and along with this increase, we will see growth in the diversity of digital payment methods offered.
We can also expect to see major developments in cross-border mobile payments and more interoperability between e-payment systems across the region. Recently, Singapore’s and Korea’s new digital economy agreement heralds deeper bilateral cooperation in and development of cross-border e-payments.
As consumers grow accustomed to online shopping, enjoying the convenience and ability to shop from anywhere and at any time, they are also demanding immediate and personalized service.
We see retailers investing in improving the service experience and offering innovative services like 24-hour AI chatbots, and the use of messaging apps like WhatsApp. We are also seeing the rise of social selling channels such as livestreaming where brands showcase their products in real-time, engaging viewers with live entertainment, such as contests or quizzes, to encourage participation and purchase.
While live commerce was first launched in China in 2016, it started gaining popularity across the region in 2020 due to pandemic-induced limitations on physical shopping. In fact, livestreaming for online shopping in Singapore alone had reportedly increased by 1,890% from March 2020 to December 2020.
Engaging customers on social platforms can also be a great way to expand market reach and address a wider consumer base. This is also possible as cross-border payments are now so much more seamless with payment partners having a global presence and enabling merchants to accept payments in several currencies.
The continued growth of digital payment methods has also inevitably led to increased concerns about fraud and cybercrime. Eight out of 10 businesses in the Asia Pacific expect security breaches this year, with cybercrime predicted to inflict damages totaling US$10.5 trillion globally by 2025.
Therefore, while businesses work to design more seamless payment experiences, they need to also focus on managing the associated risks. Fraudsters are evolving and becoming more and more sophisticated in their approach. They are not only stealing data but also altering it, creating distrust between businesses and consumers. To counter this, we have seen the evolution and use of new technologies such as geolocation, acoustic analysis, and even data analytics-based identification.
Businesses will need to invest in and evolve their risk management protocols on an ongoing basis. This means quicker deployment of risk management solutions, staying on top of threat research, and using technologies like AI and machine learning to stay a step ahead of these fraudsters.
2021 cemented a new culture of digital payments, online shopping, and seamless on-demand experiences. Traditional retailers can no longer rely on legacy market share but need to focus on creating a winning omnichannel strategy. This will require not just the deployment of technology to make the shift, but also a cultural change.
As the industry continues to evolve, I am excited for the developments and progress that we will see evolve and transform the way we pay and get paid.