How pre­pared are e-tail­ers for Ama­zon’s en­try?

With more than 70% of con­sumers in Sin­ga­pore shop­ping on­line at least once a month, e-com­merce play­ers are bat­tling it out to win cus­tomers.

Singapore Business Review - - INDUSTRY INSIGHT: ONLINE RETAIL -

Ama­zon, the world’s big­gest on­line re­tailer, will soon en­ter Sin­ga­pore’s e-com­merce scene. But with a num­ber of es­tab­lished play­ers al­ready suc­cess­ful in their niche, how are each of them adapt­ing and up­ping their game?

It was five years ago when one of Sin­ga­pore’s first fash­ion re­tail­ers, ZALORA, hung out its shin­gle with just 20 peo­ple crammed into a small of­fice space and a dream to sell clothes on­line. Since then, the Kin­nevik backed-com­pany has raised over US$365M and now has 350 em­ploy­ees in Sin­ga­pore and over 1,500 staff spread across its re­gional of­fices in South­east Asia.

Go­ing be­yond on­line

ZALORA chief mar­ket­ing of­fi­cer Tito Costa tells Sin­ga­pore Busi­ness Re­view that a typ­i­cal ZALORA user spends 50 min­utes a month on the app, which has been down­loaded over 10 mil­lion times so far. “Strate­gi­cally, ZALORA is prepar­ing for a ‘mo­bile-only’ mar­ket,” Costa says, not­ing how con­sumers are now ex­pect­ing re­tail­ers to know what their pref­er­ences are. “By putting cus­tomer and be­havioural data to work, we are able to recog­nise in­di­vid­ual shoppers when they land on ZALORA, and de­liver tai­lor-made ex­pe­ri­ences and rec­om­men­da­tions in real time, pro­vid­ing them a more mean­ing­ful and rel­e­vant on­line shop­ping ex­pe­ri­ence,” he adds.

But whilst more than half of ZALORA’S or­ders come from mo­bile, the com­pany found it needed to adopt a phys­i­cal store pres­ence in new cities to drive mar­ket­ing. “A sec­ond trend that we see is that the ex­per­i­men­ta­tion of tra­di­tional re­tail­ers with on­line shop­ping and vice-versa on­line play­ers are test­ing pop-up stores and dig­i­tal show­room con­cepts, may lead to a con­ver­gence to­wards a new om­nichan­nel dig­i­tal-first re­tail, putting to­gether the best of the two worlds for an op­ti­mal cus­tomer ex­pe­ri­ence. In

In 2014, ZALORA launched its flag­ship store at ION Or­chard. Costa notes that one of the ben­e­fits of such a set-up is that many con­sumers are able to try on pieces they saw on­line. “We saw that a ma­jor­ity of sales at our pop-up stores, up to 60%, were new ZALORA cus­tomers,” he states. Costa notes one of the qualms from on­line cus­tomers is that they are un­able to phys­i­cally test out the prod­ucts be­fore they place their or­ders, re­sult­ing in a dif­fer­ent prod­uct ex­pec­ta­tion as well as high re­turn rates.

On­line re­tail­ing is also a game of scale with ZALORA sell­ing off its un­der­per­form­ing units in Thai­land and Viet­nam. And cer­tainly, even five years into its growth, it’s still a busi­ness that re­quires deep pock­ets and in­vest­ment, with ZALORA’S rev­enue re­port­edly ris­ing 78% to US$234M in 2015 but its net loss in­creas­ing 36% to $105m.

Prashant Dad­lani, founder of re­tail mar­ket­ing con­sul­tancy blu, agrees that con­sumers go through a dif­fer­ent jour­ney now com­pared to when the early hype was seen in the e-com­merce land­scape.

And al­though more than 70% of con­sumers shop on­line at least once a month, ac­cord­ing to Visa’s Con­sumer Pay­ment At­ti­tudes Sur­vey, it is wrong to say that e-com­merce is slowly dom­i­nat­ing re­tail. He points out that pit­ting e-tail­ers against tra­di­tional brick-and-mor­tar stores per­pet­u­ates the wrong no­tion and ig­nores the re­al­ity that there ex­ists seam­less­ness across re­tail chan­nels.

“The jour­ney is much more mul­ti­di­men­sional now, so re­tail­ers have to be pre­pared to be present at ev­ery touch­point,” he says. And as the mar­ket gets a lot more crowded with Ama­zon’s re­ported plans of set­ting up its base in Sin­ga­pore, the challenge is for local e-com­merce play­ers to up their game.

Ge­orge Pepes, ver­ti­cal so­lu­tions and mar­ket­ing lead re­tail at Ze­bra Tech­nolo­gies, says re­tail­ers who want

The jour­ney is much more mul­ti­di­men­sional now, so re­tail­ers have to be pre­pared to be present at ev­ery touch­point.

ZALORA found the need to adopt a phys­i­cal store pres­ence

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