SINGAPORE — The “Southeast Asia Retail Report 2024” states that Southeast Asian retailers are placing big bets on social media as 68% plan to increase investment in social commerce over the next 12 months. This dovetails with the finding that social media is now the biggest driver of brand and product discovery in Southeast Asia, with more than four in five consumers (82%) discovering new products through social media.
Ecommerce and Sales at Secretlab
Social commerce platforms are seeing staggering growth in the region, with platforms like TikTok projected to grow its user base in Asia Pacific by 11.3% in 2024. In line with this, 39% of retailers surveyed for Shopify’s report said social media engagement is one of the most crucial metrics for determining the ROI of commerce infrastructure, ranking just behind profit margin (44%).
“Given the economic climate, customers have become more discerning and selective with how they spend their money,” noted Eugene Chua, Executive Head of Global Ecommerce and Sales at Secretlab, a Shopify client, in the report. “Social media continues to play a big role as a platform of discovery and in influencing customer’s decisions.”
Consumers are searching for value in current economic climate
The current economic climate has greatly impacted purchasing behavior. Inflation and the rising cost of living have led the majority of Southeast Asian consumers (83%) to cut back on non-essential expenses, with over half seeking the best value when they shop. When it comes to making a purchase, price is the top factor for shoppers in Southeast Asia. Nearly all consumers surveyed (96%) said that they would stay loyal to a brand if it offered them an incentive, with consistently low prices or promotions being a top draw for 70%. In line with this, contextual real-time pricing (71%) is the number one area in which retailers plan to increase their technology spending so that they can drive conversions while maintaining favorable margins.
Although price is a key factor in driving loyalty and churn, competing solely on price is not sustainable, leaving retailers to compete on other forms of value, such as customer experience. This shows that to attract and retain customers, understanding their demands is crucial.
Specifically in Singapore, the top three must-have considerations for online shopping are free shipping, (71%), accessibility of payment with debit and credit cards (55%), and free returns (51%). On the other hand, the top three priorities when shopping in-store are knowledgeable staff (56%), stock availability (55%), and attentive service (36%).
Unique challenges facing retailers
When it comes to where Southeast Asians like to shop, over half (52%) of the people surveyed said they prefer shopping online.
Business websites, also referred to as brand.com sites, are important to shopping journeys in the region. 81% of Southeast Asian shoppers agree that a company with a brand website is more trustworthy and credible, compared to those without one. This trust factor is especially important to shoppers when making large purchases – two in five (42%) of SEA consumers prefer making large purchases on a company’s website instead of its online marketplace store.
Though online channels are the stand-out preference for Southeast Asian shoppers, physical stores remain an important channel. Over a quarter (28%) said they enjoy in-store shopping as much as online shopping, and another 19% prefer in-store shopping. This highlights the importance of creating omnichannel shopping experiences. To succeed in omnichannel, a unified commerce platform that provides a holistic view of customer engagement, inventory, and fulfilment across channels is key. Testament to this, more than three in five retailers (66%) surveyed said they will increase tech investment in a unified commerce platform.
Chief Technology Officer: the new powerhouse for retail
Currently, 85% of retailers face operations-related challenges, with efficiency issues stemming from manual processes and complex business systems. Almost all retailers surveyed (99%) believe that technology will remedy these struggles and are planning to invest about 20% of their total revenue into innovation initiatives in the next year. Topping the list of increased tech investments: contextual real-time pricing (71%), social commerce (68%), business intelligence (67%), unified commerce platform (66%, and composable stacks (65%). Given that technology is set to reshape the retail landscape, an overwhelming majority (93%) of retailers believe that the Chief Technology Officer will contribute to the evolution and/or revenue growth of the business.
As technology-driven innovation becomes a central focus, operational, platform servicing, and support costs emerge as key considerations. Retailers are increasingly selective about their technology infrastructure, favouring solutions that offer a lower total cost of ownership while ensuring performance and stability. Shopify has been proven to help businesses reduce costs and increase revenue, according to data and research conducted by a leading consulting firm. Compared to competitors, Shopify delivers 33% better total cost of ownership, 23% better platform costs, and 19% better operation and maintenance costs compared to competitors.
APAC and Japan at Shopify
“In this current economic climate, the imperative for both shoppers and retailers to achieve more with less has never been greater. Retailers are turning to advanced technology solutions to not only meet evolving customer demands but also to fortify their long-term resilience. Unified commerce is set to be a key growth catalyst, enabling retailers to harness comprehensive data and insights across their customers, inventory, and operations to make informed and strategic decisions. With technology being the linchpin to the future of retail, Shopify is the partner of choice for retailers across Southeast Asia, from large enterprises to small businesses, with solutions that are purpose-built to cater to their unique needs,” shared Shaun Broughton, Managing Director for APAC and Japan at Shopify.
Download the full “Southeast Asia Retail Report 2024“ by Shopify here.
