Poor market conditions and increasing innovation in the digital space is facilitating the growth of ecommerce, according to e27.
Consumers are being more economical amidst slow economic growth. A report by Deloitte in 2015 cited that in APAC, retail revenue growth slowed dramatically in 2014. 55.3% of the APAC companies surveyed in that period reported a lower net profit margin and 4.3% reported a negative net profit margin.
While sales have contracted, the impact would have been even worse if it wasn’t for ecommerce.
Of the top 140 most profitable retail companies worldwide, 7.6% of sales came from online channels and 33% of the companies don’t have an offline store.
Examples of most profitable online retail companies
- Amazon: Raked in more than $70 billion in revenue in 2014
- JD.com: Sales jumped to 62% at $17.7 billion
- The top 50 e-tailers in total saw a boost of 19.7% in profits in 2014.
Shift in consumer behavior
There are various factors that are contributing to the growing trend of online shopping, from a sharp increase in smartphone adoption, the rise of cross channel social media to competitive pricing. Over half of survey respondents said they have shopped online at least once since 2016, in a total retail survey published by PWC.
51% of online shoppers shop through social media channels in Thailand, Malaysia at 31% and China at 27%.
Shoppers in Asia Pacific are more social orientated, their spending habits are susceptible to what their peers think.
In Malaysia, 69% of consumers said that feedback and reviews influence their purchasing behavior.
Shopee case study: heading towards retail innovation
It may be too soon to say that the sun is setting on traditional brick and mortar retail, but radical innovation is crucial to retain customers. Figures have showed that the ecommerce sector provides the engine of seismic changes that the industry needs in this slowing economy.
An example of disruptive technology is Singapore based C2C ecommerce platform, Shopee, developed under internet platform service Garena.
Shoppee allows buyers to snap and upload screenshots of their items directly onto the platform and start selling instantly.
For more established SMEs, it has a ‘seller assistant’ function to help to organize inventory and track performance.
The platform also forms third party collaborations to enable logistics, such as a partnership with Singapore based startup, NinjaVan. The platform also recently launched Shopee University, an online program to teach sellers online marketing and photography skills.
Ecommerce does not just enable traditional businesses and SMEs to seek another channel for revenue, it is democratising commerce. By putting ditching the physical modus operandi, anyone with a smartphone or a computer can put an item for sale to potentially millions of customers in a matter of seconds.
A version of this appeared in e27 on July 13. Read the full version here.