Consumer behaviours and expectations in Asia are evolving, with many increasingly embracing e-commerce thanks, in part, to a growing demand for convenience and immediacy in the region. According to a new report by Hong Kong-based retail solutions provider, Tofugear, in partnership with market research firm, Rakuten Insight, Asia is expected to account for over half of the world’s online sales by 2025.
Despite this forecast, the report – the Digital Consumer in Asia 2018 – reveals that brick-and-mortar remains an important channel in many markets, but retailers need to consider investing in practical in-store technologies in order to engage with today’s connected consumer. Comparing data across twelve markets, each with their own localised opportunities and challenges, it identifies a number of trends currently shaping shopping habits in the region, and how brands and retailers should be adapting.
Below, ORDRE outlines the top five takeaways for retailers to consider.
1. E-commerce prevails (but not everywhere)
Today, a majority of consumers in Asia favour shopping online over in-store, but the extent of this varies considerably between countries. Unsurprisingly, China is the front runner with 88 percent turning to digital channels, led by giants like Alibaba’s Tmall, Taobao and JD.com. India and South Korea follow closely, with 75 percent and 73 percent of consumers choosing to shop online respectively.
Interestingly, countries with advanced infrastructures like Hong Kong and Singapore score relatively low (51 percent), with consumers evenly split between their online and in-store shopping preferences. The report indicates this is to be expected, considering the large square footage of shopping malls in both markets, as well as consumers’ close living proximity to physical retail options. The Philippines is at the lowest end of the spectrum: only two in five shoppers having a preference for e-commerce, which can be attributed to numerous logistical challenges for online retailers to reach consumers outside major urban areas.
2. Online expectations are rising
The findings go on to suggest that e-commerce's growing popularity comes with new challenges, including higher expectations surrounding fulfilment. Across all markets, 52 percent of respondents named high shipping costs as a leading frustration, and one in three shoppers are unhappy about the speed of deliveries.
While logistical challenges may be the root of slow delivery speeds in countries with vast remote areas – such as the Philippines or Indonesia – interestingly, consumers also demand faster fulfilment in highly urbanised areas like Hong Kong or Singapore. Additionally, Tofugear found that only 20 percent of retailers in the region plan to extend their fulfilment options over the next year, suggesting that many have yet to fully tap this opportunity.
“Over half of all respondents rate detailed and accurate product information as crucial to their buying decisions.”
3. Details are key to winning online spend
What’s the most important factor for online purchases? Over half of all respondents rate detailed and accurate product information as crucial to their buying decisions. Breaking this down by country, eight out of twelve markets choose this as their top priority, with only Hong Kong, Japan, Singapore and South Korea ranking ‘lower prices’ more highly.
Product search capabilities, flexible payment options, ease of returns and product reviews are also listed highly on the scale, suggesting e-tailers need to offer a wide range of features and functionalities to match customer expectations. Only 18 percent of consumers mention personalised recommendations as a priority, implying that their purchasing decisions are swayed elsewhere. In fact, according to the report, 72 percent of consumers admit to making purchases based on peer recommendations, while 67 percent turn to social media.
4. Switching channels is the new norm
Considering a majority of consumers are influenced by digital streams, starting the path to purchase online is a natural port of call. However, many may not necessarily finalise transactions through this channel. The report states that over 70 percent of consumers admit to researching products online but buy in-store, valuing the ability to touch and feel items in real life. Surprisingly, this was most important for markets with less developed e-commerce infrastructures, such as the Philippines (78 percent), Thailand (75 percent) and Vietnam (73 percent), suggesting these consumers have less trust in online purchases.
Of almost equal importance is immediacy, with two-thirds of shoppers turning to stores if it means they can get their hands on a product on the spot. This suggests online retailers across the region need to step up their fulfilment speeds, as physical retailers currently have the advantage over their online counterparts.
“Two-thirds of shoppers turn to stores if it means they can get their hands on a product on the spot. ”
5. In-store technology must be practical
Given that brick-and-mortar presence still makes sense in numerous countries across the region, retailers need to find innovative ways to stay relevant in a competitive market. Unsurprisingly, the data shows that consumers overwhelmingly prefer practical technology applications that help remove friction and improve the in-store customer experience.
Mobile payments rank highest, with 76 percent of Gen Z consumers and 79 percent of millennials willing to use the technology, while in-store wifi is considered equally desirable. Autonomy is another growing trend, with self-checkout from mobile phones and self-checkout terminals also scoring highly. Gen Z consumers are most enthusiastic about using emerging technologies such as virtual reality, augmented reality and smart mirrors, although these fair decidedly lower on the scale. With that being said, consumers across the region may have yet to experience such innovations and may be unclear about its benefits.