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.
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