Retail in Asia

In Trends

Expert Opinion: The disappearance of e in e-Commerce

The day when the lower-case "e" was introduced to define the online nature of a transaction now ceases to have any meaning. In the era of application everything and the highly mobile generation, digital transactions are becoming the norm, rather than the exception in most mature markets. For businesses in Asia, apps are already the majority and "e" or otherwise, is all just commerce.

The departure of the once compelling "e" will take with it the remaining mental barriers surrounding digital transactions. The line between the online and offline world is set to blur even further and increasingly integrate as brick-and-mortar stores enhance the physical retail experience through the convenient use of new consumer technologies.

Growing Trend of Multi-Channel Retailing

According to recent research by Econsultancy, multi-channel shoppers will make up nearly half of urban China’s consumers within a few years. Given this, consumers will expect their engagement with companies to be seamless, with each new interaction being personalised in the context of the last one.

To meet the consumers’ expectation and to capture the best of both online and offline opportunities, retailers and shopping malls are making every effort to expand their mobile services and emphasise their focus on Online-to-Offline (O2O) initiatives.

In China, a growing number of traditional retailers are engaging in the initiatives. 43 percent of the surveyed traditional retailers have launched different types of O2O initiatives, while the remainder stated that they are willing to give it a try in the future, according to a report from the Fung Business Intelligence Centre released in November 2014.

Among those retailers who launched O2O initiatives, 17 percent teamed up with Tencent and 13 percent with Alibaba. Examples of brands who have been successful with their marketing efforts for online and offline marketing include Joy City, a shopping plaza in Shanghai who partnered with Alibaba to provide mobile payment services Alipay to allow consumers to settle payments in its malls. Coco Park, a shopping mall in Shenzhen, also followed suit and collaborated with Tencent’s WeChat to run marketing campaigns focused on scanning Coco Park’s QR code, enabling WeChat users to receive discount coupons and promotional updates from the retailor.

Benefits of Adopting O2O Initiatives

These tactics, besides offering customer convenience and promotional information, enable retailers to leverage customers’ digital data to provide a genuinely personalised experience, using insights from the online world to effortlessly guide and offer advice.

Given the trend towards the App of Everything by consumers, the winners of tomorrow will be those that find a way to complete the puzzle and build a comprehensive picture of individual customer needs and desires. This high level of customer knowledge – what we term Consumer Hyperawareness – enables organizations to tailor products, services and support infrastructure to meet them with previously unimagined precision.

In Japan, McDonalds collaborates with Japanese mobile operator NTT DoCoMo to enable mobile payments and promotions. Before launching the app, the fast food empire could only collect demographic information through loyalty programs. With the mobile payment app, McDonalds can collect and analyse users’ behavioural patterns to offer tailored promotions for:

  • Loyal customers who regularly purchase coffee during weekends – the app will send customers coupons for free coffee in the morning, and on off-peak periods during weekends;
  • Loyal customers who regularly purchase set meals – the app will send customers coupons for discounts on side dishes;
  • Loyal customers who repeatedly purchase the same hamburger – the app will send them coupons for new products at a discounted price;
  • For customers who have not visited the restaurant for a long time, the app will send them coupons for their favourite sets to lure them back

These tailored promotions encourage consumers to visit the restaurant more frequently and spend more money on each visit. The app has already garnered 30 million registered users in Japan, roughly one-fourth of the country’s population, and almost every member of the young generation is using the service.

The timing is perfect: network ubiquity, processing power and analytics solutions are now capable of making it happen. And the social media revolution has made people more comfortable than ever about volunteering information and enjoying a rich mix of benefits for doing so. This marketing framework is a successful strategy that retailers in Asia can also tailor and implement to strengthen and retain customer loyalty.

Transitioning to Multi-channels

To transit from one channel to multiple channels, retailers need to keep their business services consistently available, while fending off security threats by the minute. This is especially crucial during seasonal rushes like Christmas and Chinese New Year. According to F5’s recent survey, 20 percent of consumers would switch to an alternative brand if a website or service does not work within just five seconds.

Retailers also need to address the need for a multi-layered dynamic security architecture in the times of rampant POS and DDoS attacks targeting retailers to secure not only service availability but also customer information.

As shoppers continue to interact with brands through different channels, they no longer will label a shopping experience online or offline. Instead, it will be retailers’ job to provide a consistent, secure, and always-available experience across all channels that tailors to users’ habits and preference.