Innovations on the rise in the retail market

Online shopping festivals and livestreaming are becoming the trend for e-commerce players in the region.

The rise of e-commerce has become more prominent amidst the rapidly changing consumer trends and retail experience.

The Consumer and Competition Commission Singapore (CCCS) has observed that e-commerce platforms generally start off as a player in a single market segment, and incrementally expand into other market segments. Along the way, these platforms face major challenges in gaining a critical mass of multiple user bases on board.

With this, e-commerce platforms implement use acquisition strategies engaging in efforts to convert offline consumers into online consumers.

Some of the strategies being employed include supplementing online businesses with physical brick and mortar stores, use of online reviews and ratings, feedback systems for consumers, comprehensive customer protection policies, and integration of offline experiences into online experiences to rebuild consumer confidence and trust in the platforms.

Moreover, the platform user survey conducted by CCCS revealed that whilst customers display a certain degree of platform loyalty due to non-price factors and strategies employed by e-commerce platforms, price continues to play an important role in attracting and retaining customers as a significant number of customers currently practise multi-homing.

These findings can be crucial in rebuilding the retail industry amidst declines in retail sales.

Recently, SingStat has reported an 8.6% fall in retail sales in October 2020 on a YoY basis, marking an improvement over the 10.7% YoY decline recorded in September 2020. The estimated total retail sales value in October 2020 was about $3.3b, of which online retail sales made up an estimated 10.5%.

Despite where the sector stands at the moment, there have been visible efforts made by brands to rebound from drops in retail sales.

Leveraging on digital ecosystems

Livestreaming and online shopping festivals have also become a trend this year, partly because of social restrictions and physical distancing measures imposed to mitigate the spread of COVID-19.

One of the companies that rode on this trend is e-commerce and technology specialist Alibaba Group, which commenced its 11.11 Global Shopping Festival in November 2020 with focus on helping more merchants tap the surge in Chinese consumers’ demand for cross-border online shopping as a result of the ongoing global travel restrictions.

“We designed this year’s 11.11 festival based on this understanding of consumer behaviours and preferences, optimising the kinds of products being offered to shoppers, as well as developing more innovative ways to engage our shoppers,” according to Alibaba Group chief marketing officer Chris Tung.

The event was extended to 11 days this year to give merchants affected by the pandemic a longer period to interact with and build up relationships with a bigger audience.

As Alibaba continues to cater to younger consumers in providing a more engaging shopping experience, livestreaming shopping took the center stage of this year’s 11.11. About 300 celebrities and 400 company executives held individual livestreaming sessions for the first time during the festival, in addition to sessions hosted by top livestreamers.

According to a report by KPMG and AliResearch, livestream shopping has already taken firm roots in China’s e-commerce landscape, with the country’s livestreaming e-commerce market estimated to grow to $204.48b

Tung mentioned the appeal of livestreaming lies in the trust between merchants and consumers, and how consumers can have authentic reviews of products on the spot.

“Livestreaming e-commerce adds value by its ability to showcase products in more detail, and offers consumers a better shopping experience than through the usual static online browsing,” he said.

A report from Knight Frank also noted that companies have been increasingly looking to hire influencers or opinion leaders to sell their products online, with some investing in their own in-house ecosystem of live streamers to create a hybrid online selling platform.

“Brands that can entertain and interact effectively with their customers online through entertaining and witty banter, livestream comments and information- sharing, are perceived to be more authentic and in tune with their followers as compared to those which use digital platforms purely for commercial transactions,” according to the report.

Recently, CapitaLand and Sea Group, the parent company of e-commerce giant Shopee, has also convened the Alliances for Action which aims to pioneer new operating models to help Singapore retailers digitalise, diversify their revenue streams, and export their brands overseas.

This is done to address ever-evolving consumer preferences in the current COVID-19 landscape.

Adapting to the changing trends

Both participating for the first time in the 11.11 Global Shopping Festival, brands Irvins and SecretLab noted that they fared well in the event. Both companies saw their sales exceed expectations as more customers turn to livestreaming studios to make their purchases instead of just browsing the online store, which has opened new doors for merchants like them.

SecretLab saw a massive surge of 13x in their 11.11 sales compared to a regular day. Its co-founder and chief executive officer Ian Alexander Ang stated that many customers are investing in home workstation upgrades which include a comfortable and supportive chair amidst work from home arrangements being the norm globally.

Meanwhile, Irvins’ debut saw their sales double and shoppers triple as compared to Tmall’s 618 mid-year sale earlier this year.

“Livestreaming helps to drive deeper brand awareness and product storytelling. Most importantly, it brings a strong level of credibility to our products, which translates to more buyers and sales,” said Irvins general manager Raymond Lo.

Irvins said that with more small and medium enterprises and international brands being introduced into mainland China, it needs to continue maintaining close ties with its platform managers to outline unique selling points and develop differentiating strategies that will broaden their brand exposure.

“We need to be agile and be flexible in our branding and marketing strategies, be open toupgrading our digital skills and product showcases, and be aware of consumer trends and adapt to them accordingly,” Lo added.

Despite this progress, an American Express survey showed over half of local shops in Singapore are worried that their business cannot stay open for more than six months if their sales do not recover to pre-COVID levels by end-December.

In addition, nine out of 10 of those surveyed also said their business sustainability is likely to be moderately to severely impacted if tourists do not return by mid-2021.

With this, the survey noted that three business model changes are expected to continue beyond the pandemic, which include communicating to customers via social media (83%), providing digital and/or delivery options (81%), and accepting more payment types (80%).

Staying on top

Amidst a more digitised retail industry, retailers are urged to transform their businesses in order to stay on top.An Accenture survey revealed that 71% of Singapore consumers would be more likely to buy from a brand that focuses on better experience using immersive technologies such as augmented and virtual reality and 3D content. Moreover, about three in five (59%) felt they would better remember brands that regularly engage them with immersive technologies.

With brands and consumers also generally having a positive experience in the 11.11 festival last November, innovations introduced in the event will likely remain.

Over 470 brands each generated more than $204.47m (RMB100m) in GMV in the event, a sign that merchants have adapted well to the changes and the value creation facilitated by the event’s digital transformation.

As more brands transition to selling online, Alibaba believes that this form of e-commerce will become even more popular in the coming years.