Five challenges Asia's retailers will face amidst e-commerce transition
The region saw more households shopping online during 2020, with Hong Kong one of the fastest changing markets.
Asia’s retailers will have to face five challenges as e-commerce transitions to its next phase over the coming years. This transition is being accelerated amidst a rising number of households buying online, and from increased frequency in both buying and spending, according to an analysis paper by NielsenIQ.
Online sales for fast-moving consumer goods (FMCG) in the region did not stem from increased spending by existing online buyers last year. Rather, it was a significantly larger user base that accounted for much of the growth. This signals "the end of the beginning" of e-commerce in Asia, the report stated.
Hong Kong saw the sharpest growth in the number of households shopping online during the year, with an increase of 46%. Their frequency of shopping rose even more sharply, as they bought 75% more frequently than in 2020. They also spent on average 2.5 times more per trip online than offline, with the value per buyer showing an increase of 52% from 2019 to 2020.
"Online growth mostly comes from local consumers adding online to their shopping repertoire meaning that consumers don't stop purchasing offline but, instead, are looking for more omnichannel opportunities," NielsenIQ Hong Kong’s consumer intelligence head Alix Van Langendonck said.
Against this backdrop, there will be a greater fragmentation in retail. Under the banner of one retailer, there are many other retailers using their platforms to connect with consumers, the report stated.
There will also be redefining of the role of physical stores. "Consumers will continue to visit physical stores but how do you make people spend more in stores or bring in new buyers?" NielsenIQ said.
Furthermore, seemless shopping experiences across platforms and channels have opened to a more exciting playground for consumers, which raises questions for brick-and-mortar retailers on how they can live in this reality.
There will also be a fight for attention amongst the e-commerce sector. "Are keywords and ads enough to catch and keep the shoppers' attention in the future? How different will the role of price and promotions be? What role will loyalty play in the adopted omni shopper world?"
Lastly will be a frenzy in last-mile fulfilmment, particularly on how to meet and feed the appetite for faster delivery services.
The advancement in the retail sector has led to an “environment where trust is solidified, where it is more than logistics but more about pushing the envelope on personalized discovery and curation, where there is exploration of new categories, and seamless omnichannel integration," NielsenIQ’s consumer intelligence managing director in Asia, Vaughan Ryan, said.