E-commerce firms in SEA shift focus to customer engagement

e-commerce customer engagement
Image by Dilok | Bigstockphoto

As many Southeast Asian countries approach the peak of digital adoption, e-commerce businesses in the region are faced with both an opportunity and a challenge when it comes to customer engagement.

The recently launched e-Conomy SEA 2022 [PDF] report from Google, Temasek and Bain & Company highlights the fact that customer acquisition is no longer the primary focus for e-commerce businesses in Southeast Asia. Instead, as these markets mature, e-commerce businesses are turning their attention to customer retention and loyalty.

Despite macroeconomic headwinds post-pandemic, the long-term outlook for the region’s digital economy remains positive.

The report projects that the regional gross merchandise value (GMV) will reach $200 billion in 2022, three years earlier than predicted in the 2016 version of the report. The 2021 version, meanwhile, estimates that e-commerce will drive Southeast Asia past the $1 trillion mark by 2030.

Know your digital customers

With this in mind, e-commerce players can look deeper into how they can better engage customers, bridge gaps in service and product offerings, and build loyalty.

The 2022 report notes that urban affluent users (18% of the digital population) and young digital natives (11% of the digital population) have been the heaviest adopters of digital services. Affluent users see digital services as a natural part of their lifestyle, while young people are always looking for convenience and easy access.

And while suburban users make up the largest segment of the digital population (41%), most of them have only adopted digital services that are related to e-commerce. Other digital service sectors, such as groceries, food delivery, transport, travel, and gaming, continue to see low suburban adoption rates.

(The report defines suburban users as those who live in cities with populations between 50,000 and 200,000 residents and have made a purchase in at least one digital vertical.)

e-commerce customer engagement
Despite widespread adoption, there remains an urban/suburban usage gap, especially in online groceries.
Source: Google-commissioned Ipsos e-Conomy SEA Research 2022

Opportunities for e-commerce businesses

The report authors present several opportunities for e-commerce businesses, as they rethink engagement and take advantage of opportunities in the region. Here are some of the highlights:

  1. Promotions and discounts are no longer the primary focus for businesses in the region. Instead, they are turning their attention to value-add services in the form of loyalty programs, cashbacks, and rewards.
  2. Average orders in the region remain small at $10-15 each, so e-commerce players are focusing on boosting frequency, value, and loyalty of existing users.
  3. The lack of options for online groceries has limited suburban users from making the switch from offline to online. Less than 5% of suburban users order their groceries online, compared to 72% of affluent urban users and 55% of ‘on a budget’ users. According to the report, online groceries need to focus on providing better consumer value in terms of freshness, delivery time, and pricing to tap into the ‘on a budget’ and ‘suburban’ demographics.
  4. As sustainability becomes a growing concern for consumers, e-commerce players have an opportunity to focus on sustainable product offerings and green delivery options. From featuring their products’ sustainability features in their descriptions to offering green delivery options, there are many ways for e-commerce platforms to encourage the adoption of sustainability practices.

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