Decoding the rising retail opportunities and pitfalls for ecommerce businesses

With Covid-19 spurring shoppers to adopt digital habits, many of them have come to expect doorstep delivery for everything, from essential items to fashion pieces.

While the pandemic has indeed driven the growth of ecommerce and digital payments, Southeast Asians have already been the most engaged mobile internet users in the world even before the crisis, according to the 2019 e-Conomy SEA report. And the region’s US$100 billion internet economy is still set to grow.

In this booming digital economy, how can entrepreneurs rapidly start an online business, acquire more customers, and provide better user experience despite troubling circumstances? While there are a number of helpful tools available to them, there are also many potential pitfalls that they need to look out for.

Omnichannel for a well-rounded customer experience

Popular brick and mortar fashion brands have taken a hit due to the physical shutdowns put in place worldwide. Zara, for one, will close 1,200 stores – though it plans to turn online sales into its dominant channel over the next two years.

That said, there have been retail winners too. Despite the global recession, ecommerce platforms in Singapore have experienced double-digit growth – specifically 23% – in web visits in the first half of 2020.

“Between May 17 to 23, 2020, while merchant sectors like sporting goods or health and beauty increased significantly – up 101% and 74%, respectively- there were even greater increases in sectors like furniture (307%) or office supplies (128%),” says Shannon Ingrey, vice president and general manager for Asia Pacific at cloud ecommerce platform BigCommerce.

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Sporting goods retailer Decathlon was one of the big winners, as it had invested in an omnichannel experience even before the pandemic hit. This approach meant that consumers could shop from anywhere and arrange for delivery or store pickups; the firm’s mobile application even offers customized promotions.

Clearly, shifting to online is the way forward. But the biggest challenge for businesses now, according to Ingrey, is differentiating themselves in a crowded landscape. In a traditional mall, a shopper would be limited to a handful of retailers. Now, a simple Google search brings up thousands of options.

“It quickly becomes more about access to products than the quality of the products or the brand that produces them,” he says. To get a leg up, he recommends investing in tools and technologies to create personalized experiences.

For online sellers, the data that these tools provide is essential in predicting consumer needs, making for effective ad spend and inventory management.

Enhancing digital customer experience

The loss of foot traffic has compelled some eateries to shut down for good. Those that have been successful, however, are the shops that pivoted their customer experience quickly and effectively while staying true to their brand, says Ingrey.

One of them is the Sydney-based brewer Beer Cartel, which was forced to close its physical doors in March. It then quickly ramped up its ecommerce store, offering customers a variety of beers, which have driven a 300% increase in year-on-year sales.

Some other examples are Singapore Airlines’ new initiatives which include dining in grounded planes and home deliveries of first- and business-class meals.

Even if companies don’t expect to do online sales, it’s important to continue engaging with customers digitally.

“Social media is a significant touchpoint for customers. Engaging and selling to them directly via those platforms can simplify the path to conversion,” says Ingrey.

Connecting with their communities online has certainly helped many brands – even those in high fashion – become authentic and relatable. For instance, luxury brands such as Chanel and Alexander McQueen have stayed in touch with customers by organizing musical performances, holding guided drawing sessions, and curating Spotify playlists.

“The opportunity here lies in creating the best possible experience for your customers and appealing to their sense of community,” says Ingrey. “Create an experience where your shoppers feel like they’re part of a community, rather than just another contributor to the bottom line.”

Acceleration towards digital payments

Changing habits is not just limited to how shoppers discover new goods but also how they choose to pay for them.

Amid the pandemic, going contactless has never been so important. In April, the BBC reported that nearly a fifth of small businesses in the UK were running out of cash.

And according to Visa’s Back to Business study, 78% of consumers have made changes to the way they pay for items, including shopping online whenever possible (49%), using contactless payment (48%), and not using cash as much (46%).

Photo credit: gregorylee / 123RF.

This has necessitated companies to pivot and adapt to these changes quickly. Small and medium-sized businesses are a particularly vulnerable segment. “Those that have survived and thrived share some common traits: the agility to migrate online, manage payments well, and offer customers a range of options for order collection and fulfilment,” says Chris Hughes, head of regional client sales in Asia Pacific at Visa.

Visa’s solutions such as Cybersource – which allows customers to pay via a variety of digital payment options like Apple Pay, Google Pay, and Alipay – can provide a simple way for small businesses to go digital and accept payments across multiple sales channels.

Payments security

To make things more difficult, the pandemic has also complicated certain aspects of ecommerce that used to be firmly established.

According to Hughes, orders that mostly used to be made in the evenings are now being placed midday as people adapt to working from home. More people are also making ecommerce orders on behalf of others, such as children purchasing groceries for their parents and having them delivered. “Such out-of-pattern behaviors can trigger security alerts, and transactions are often declined,” says Hughes.

As a result, nearly half of companies’ fraud management budgets are allocated to manual review processes for evaluating and preventing risks.

One workaround for merchants? Using solutions that come with fraud management features.

Tantri Krishnaraja, senior vice president for South and Southeast Asia at Global Payments, a pure-play payments technology company, has seen this work firsthand. “[We have a] client who is a telecommunications service provider in Asia. We set up a scheme that enables merchants to handle recurring transactions by providing tokenization services. This solution encrypts and stores credit card information for more than a million cardholders in secured tokens,” he shares.

“As a result, the merchant is not required to handle sensitive card data directly or the hassle of achieving PCI-DSS certification.”

Future points of consideration

In the future, Tantri sees huge opportunities in retailer-owned digital wallets, especially by big brands. Branded digital wallets can even form a closed-loop customer relationship management (CRM) ecosystem.

“Digital wallets serve as a central hub for big brands to identify full customer purchase journeys (including preference and behavior), collect payment data, and analyze insights by accessing detailed transaction information,” he says. “It will open a new channel for merchants to leverage big data like spending behavior or transaction patterns for CRM analytics.”

Apart from taking an omnichannel approach, retailers “will have to spend effort to integrate multiple touchpoints to create a consistent omnibrand shopping experience,” adds Tantri.

Going online

There’s a joke going around on the internet that it was Covid-19, not CEOs and chief technology officers, that led the digital transformation of companies. It becomes less funny when entrepreneurs realize that there are many immediate actions they could do today to start resilient, pandemic-proof businesses.

According to Visa research, more than two-thirds of small enterprises have tried a new approach to keep their business on track since the onset of Covid-19. Close to a third have started to do targeted advertising on social media, followed by selling products or services online and offering home delivery.

With more awareness on growth factors and pitfalls, entrepreneurs and small-business owners will be able to grow digitally and weather the storm that the pandemic has brought on.

BigCommerce has partnered with Visa to enable online businesses with an effortless payment experience for their customers. Sign up here for a 15-day free trial and receive the first three months free.

This content was produced by Tech in Asia Studios, which connects brands with Asia’s tech community. Learn more about partnering with Tech in Asia Studios.