Let’s start topically, COVID-19 has created a gaping chasm that will be etched for years to come across the world and its inhabitants. Its impact into daily lives has effectively changed behaviours, pitted human lives versus economies and shifted our daily lives. Grocery inventory shortages and huge demand has caused a massive ripple effect on supply chains. Its effect on human movement with no defined period has challenged our basic requirements  Maslow’s triangle or hierarchy of needs has somewhat in this pandemic centred on the physiological, the safety and love and belonging and this naturally has applied to behaviours during this pandemic. 

We were initially swamped with visuals of individuals in Asia coveting shopping trips with surplus supplies of food, toilet paper and cleaning supplies to the point that we were congregating in these stores which made social distancing a paradox.  This became a huge challenge for the distribution and logistics channels in offline retail and naturally a tipping point for consumers to flock to eCommerce businesses to satiate needs. The volume of orders for online retailers especially for basic grocery items escalated beyond their capabilities. However, the bounce effect on the supply chain was managed more efficiently possibly due to real-time supply chain management of online stores.

The S&P Global report for SEA saw a huge surge in eCommerce transactions. In the week of March 22, weekly downloads of shopping apps in Thailand jumped 60%, according to data from mobile analytics firm App Annie. The country declared a state of emergency on March 26 after nearly a week of partial lockdown. Indonesia, Vietnam and Singapore, which were under stay-at-home advisories at that time, each recorded a 10% jump in weekly downloads. In contrast, downloads in the Philippines, which enacted a lockdown on March 17, fell 25% during the week.

Singapore’s RedMart and Malaysia’s Jaya Grocer briefly suspended online orders in early April, while Tops supermarkets in Thailand warned on its website that deliveries were limited during this period. Restrictions on movement, the safety of human life and reducing the opportunity to succumb to the coronavirus resulted in large opportunities for eCommerce platforms. Singapore’s grocery market alone, which is expected to be worth S$9.9 billion by 2023, up 14.5 per cent from 2018, according to research firm IGD Asia is attractive for any online retailer. This is just one market in the region which has just under 6 million people so you can imagine the opportunity beyond this for the rest of the region. 

In this region we have Alibaba backed RedMart through Lazada, Shopee through SEA Limited,  NTUC, Giant, Amazon Prime and many others. We recently also had Grab create their GrabMart  as well as Foodpanda create Pandamart which are on-demand delivery services to connect businesses without logistics and last mile to consumers through their platform. In Thailand we have seen Line move to expand their portfolio into taxi service as well deliveries as food and other deliveries under their app LineMan. The last mile for the consumer has become a saviour in this new world and we will see it grow and become heavily competitive.

eCommerce platforms work on notoriously small margins when you think about their associated costs of managing shipping, packing, managing third parties, payment gateway charges etc. They will need to pivot deeper into managing those direct conversations with FMCG companies and look at differing business models to engage with them and also best ways to re-distribute and sell those offerings to their consumers. They will evolve into curators of the ‘shop window’ to lure in existing or new consumers. 

For years the supermarkets were given huge discounts and cash bonuses for offering eye-level shelf space to certain brands willing to pay for it – here in the virtual world we know exactly how important that is and online eCommerce companies can offer this and more from dedicated online stores within their platform, real-time discounts, new product samples distribution and more. The eCommerce platform will seek ancillary revenue beyond their own store and will likely want to merge into SaaS based organisations where recurring revenue for the virtual branded store is coupled with distribution and likely data that can be shared back to the marketer.

Cap Gemini in their recent research across 11,000 global consumers found that ‘59% of consumers worldwide had high levels of interaction with physical stores before COVID-19, but now only 24% expect to return to that level and in the next 6–9 months, just 39% of consumers expect a high level of interaction with physical stores.’

It is no surprise that Singapore recently announced the eCommerce Booster Package  where SME retailers can sign up with one of four eCommerce platforms – Amazon, Lazada Singapore, Qoo10 or Shopee – and have 90 per cent of qualifying costs waived. This is to help diversify revenue streams for local businesses. Singapore has been pushing for a move towards smart cities through its smart nation initiative and strives towards digitisation are going to be accelerated due to this pandemic.

It is also feasible to assume that the largest online retailers will effectively evolve to take advertising budgets at some point since brands directly engaging with eCommerce platforms may likely look at new ways to engage through native advertising, AR and VR integrations. We will likely evolve towards voice shopping. The future is not digital, it is digital magnification to consumers. 

Sharper rise in digital transformation will create a domino effect to fuel further digital advertising and the likely beneficiaries will be through programmatic due to the real-time insights from data. Owning first party data and in-housing will likely evolve under this new world order and the marketer will no longer want to be a passenger in the ecosystem but drive the car themselves. Exciting times ahead lie in a world of uncertainty. 

This thought leadership article was written by IAB SEA+India Regional Board Member

  • Sonal Patel, Managing Director, Southeast Asia, Quantcast