Ready for Retail 5.0: What the future holds for digital commerce in Southeast Asia

Ascential Digital Commerce organised a live summit to spearhead discussions about Retail 5.0 — a revolutionary retail experience combining data and algorithms to deliver a high-customisable shopping experience. 

Ecommerce, the vehicle for Retail 5.0, has enjoyed exponential growth over the last few years. Growing three times faster than store-based retail, it has developed into a sophisticated network of retail formats and channels, consisting of pureplay, omni-channel, quick commerce, social commerce, and B2B business models.

The APAC region alone generated USD120 billion worth of digital commerce sales in 2020, and is the birthplace of some of the biggest ecommerce players in the world — Lazada, Tokopedia, Shopee, Grab, and more.

Listen: Saad Ahmed, Managing Director, Regional Head of Merchants & Commercial, Grab, Xian Wang, VP Retail Insights, Ascential Digital Commerce, Jill Meng, Customer Success Director, APAC, Ascential Digital Commerce, Jasper Knoben, CEO, Intrepid, Ascential Digital Commerce. Fill out the form below to get a full recording of the live summit and PDF presentations. 

Preparing brands for the onset of Retail 5.0

The 21st-century retail landscape is shaped by an omnichannel framework — ecommerce platforms co-existing alongside physical touchpoints. And in a world where data is king, algorithm-driven commerce is paving the way for mass hyper-personalisation, ushering in Retail 5.0.

Over the next five years, Southeast Asia’s ecommerce industry will generate USD25.6 billion worth of additional sales by 2026. These insights were amongst the many featured in Ascential Digital Commerce’s recent Navigate Retail 5.0 in Southeast Asia Live Summit.

Lessons from super app Grab’s data-centric Retail 5.0 approach

Grab has established itself as an indispensable online companion for all types of consumer needs. From ordering breakfast to paying bills online, the Singapore-based super app offers a full suite of digital solutions and services that are deeply embedded in many people’s lives.

“While Grab is a utility app, it’s evolving to become a lifestyle app,” said Saad Ahmed, Managing Director, Regional Head of Merchants & Commercial at Grab, who spoke at length about how brands can thrive in Retail 5.0. He recommends that brands should: 

1. Leverage powerful data insights: “Digital transactions provide a wealth of insights into consumer behaviour. Brands need to use these analytics to inform their product development, so they can create better products for consumers,” he said. 

   Ahmad commented on Grab’s work with Maggi, which had recently launched a new noodle flavour inspired by Japanese and Korean cuisines. To drive greater in-app purchases and interests, Grab identified customers who had recently ordered Japanese or Korean food, and encouraged them to try out the new noodle flavour when they shopped for groceries on the app. 

2. Champion hyper-personalised interactions: Doing so can help a brand earn a competitive advantage over its competitors offering the same products, as well as deeper customer loyalty.

   Consumer goods giant Unilever worked with Grab to identify customers most likely to order dessert, and showed them a series of ‘in-transit” ads encouraging them to purchase ice cream while waiting for their food. 

3. Create seamless customer journeys: Consumers expect brands to provide them with a consistent shopping experience across both online and offline touchpoints. “You should know your customers and their retail preferences, and provide them with relevant offers and loyalty programs regardless of the channel they use to communicate with you,” Ahmed continued. 

   He spoke about Grab’s partnership with Starbucks in Southeast Asia, where consumers can access their Starbucks Rewards in the Grab app, making it easier for them to shop across multiple brand touchpoints. 

4. Make customer engagement memorable: People want to interact with their favourite brands, and feel like they are a part of conversation. “In a brand activation with Knorr, we combined content and commerce to create shoppable recipes for home chefs,” said Ahmed. “If people wanted to try out the recipe, they could simply click on it, and all the ingredients would automatically get added to their Grab basket.” 

As part of a Chinese New Year gamification experience, Grab collaborated with merchants to create special Coca-Cola bundles, exclusive collectibles, prizes, and more. By using gamification to encourage repeat purchases, Grab and Coca-Cola were able to create a sense of excitement and urgency for consumers eager for special rewards. 

How ecommerce channels can help refine brand objectives

Ahmed also touched on how consumer behaviour on the Grab app can provide valuable insights into how brands and retailers should sharpen their business goals: be it awareness, branding, conversions, or customer loyalty. 

“We need to understand what a brand’s objective is, before we can suggest any solution,” he said during the live summit. “A 30-minute delivery model might not be the right step for brands — for instance, some want to improve discoverability or increase product availability. So how can we use different types of ad placements or campaigns to achieve those goals?” 

Jasper Knoben, CEO, Intrepid, Ascential Digital Commerce shared about how brands still tend to see ecommerce platforms as a conversion destination, rather than considering it integral to connecting with consumers. 

“TikTok is all the rage now, and it sits between social commerce and a traditional ecommerce option as it offers shopping and checkout solutions,” he said. “Consumers will use a wide variety of channels at their disposal when it comes to shopping, product research, and brand discovery. Brands need to carefully curate and orchestrate their presence across these channels — they just need to be where consumers are looking for them.”

Xian Wang, Vice President, Retail Insights, Ascential Digital Commerce, agreed when he said, “Brands need to listen. Digital commerce provides plenty of listening opportunities for brands to figure out what consumers want. Whether it is interactions on social media,  analysing data from a platform like Grab, or online ratings and reviews, there is a rich tapestry of online consumer feedback that brands can use to refine and innovate.”

Effectively managing ecommerce challenges faced by brands

Jill Meng, Customer Success Director, APAC, Ascential Digital Commerce shed some light on some of the difficulties faced by brands and retailers navigating an ecommerce landscape, and offered some actionable tips: 

• Prioritise online channels that create value

Focus on the leading marketplaces in your region,” said Meng. “If you are eyeing regional domination, setting up shop in Shopee and Lazada is a must. However, you should not ignore up-and-coming online channels, as they offer excellent growth opportunities and can catapult your brand to success. “
 
“Traditional” or long-standing ecommerce platforms like Tokopedia or Lazada offer brands a steady stream of sales and revenue, and will continue to contribute to a large chunk of their profits. However, Meng advises that brands need to pay attention to newer online channels like Tiktok Shop or Pandamart.
 
“Think about how you can coordinate a well-rounded digital commerce plan that accounts for both existing and new online channels. Prioritise your assortment across each channel, and use the advantages offered by each to your benefit.”

• Adopt digital solutions offered by mature online marketplaces

Existing ecommerce retailers are constantly innovating new methods of attracting consumers. For instance, “shoppertainment”, an experience combining shopping and entertainment, is fast  emerging as a way to entice customers to keep using the app for as long as possible.

During 12.12, Lazada enjoyed a 7X increase in sales from its “LazLive” event, and enjoyed similar success after its “SuperShow” livestream program earned 26 million views. 

• Address “out-of-stock” status as swiftly as possible 

Being out-of-stock online carries considerable risks. According to Edge by Ascential’s data, businesses stand to lose approximately 22% of weekly sales every day a product remains out of stock. Online search rankings may be affected, and retail platforms might remove the product entirely.

To prevent going out-of-stock, Meng recommends that brands review and update online inventories by regular forecasting. “Running a “worst offenders'' analysis will help brands identify SKUs that are repeatedly out of stock. ” 

Meng also advised brands to set up alerts on availability tracking tools like Edge by Ascential’s Digital Shelf , or set up alternative fulfilment solutions, so they can respond to out-of-stock situations effectively.

• Make yourself visible online 

The top online search results are responsible for generating almost two-thirds of shopper clicks, according to Edge by Ascential’s data. “Being visible online has a tangible impact on sales,” said Meng. 

A higher search ranking can translate to a 15% increase in sales, while a decline can result in a 5% dip in sales. As much as 64% of customer clicks usually fall on the top three search results, so make sure your priority SKUs are most visible to consumers. This includes ensuring that your inventory on quick commerce marketplaces is up to date, as people might prioritise those sites, rather than brands’ ecommerce website or third-party marketplaces. 

Characterised by granular personalisation levels and big data, Retail 5.0 will see retailers grapple with disruptive retail models like quick commerce, social commerce, and third-party marketplaces.

Lightning-swift growth exhibited by third-party marketplaces

Online marketplaces are forecasted to earn an additional USD 1.3 trillion, and account for 63% of all global ecommerce sales growth between now and 2027, according to data from Edge Retail Insight. “Southeast Asia is experiencing some of the fastest marketplace growth,” said Wang,“Either international ecommerce players want to enter Southeast Asia, or local platforms are eyeing overseas markets. Fast-growing ecommerce players like Shopee and Tokopedia are competing with the likes of the Alibaba-owned Lazada to secure consumer interest and loyalty.” 

Online marketplaces operate by aggregating brands and sellers to build up product assortments, both broad and deep. By offering consumers access to any product or service of their choice, and at affordable prices, brands can deliver a high-quality shopping experience. “Online marketplaces function as a network of sorts. More shoppers on ecommerce platforms attract more sellers and brands, which translates to a higher sales volume,” Wang explained. 

To remain top-of-mind for customers and acquire more market share, ecommerce sites have been pulling all the stops. “Shopping events” — once reserved only for holidays or special occasions — are helping to build cultural significance for online marketplaces. In 2021, Alibaba’s Singles Day Festival generated a record-breaking gross merchandise value of USD 8.5 billion. 

Encouraging product discovery with social commerce

Social platforms like Facebook and TikTok are captivating consumers with a steady stream of content from brands and influencers. While these apps were already popular with Millennials and Gen Z audiences, global pandemic-era lockdowns strengthened their positions as bonafide social commerce channels. 

“Social media — because of its visual nature and interactive layout — is in a unique position to inspire online shoppers to take action,” said Wang. “TikTok and Weibo have been investing heavily in their ecommerce capabilities, making it easier for brands and consumers to interact. This includes features like in-platform shoppable stores, or the seamless integration of sponsored ads.” 

In Q4 2021, people spent as much as $824 million on in-app purchases on TikTok. Viral content on the platform has helped boost product discovery, thanks to hashtags like “TikTok made me buy it” with over 5.7 billion views. 

Some retailers are even taking a page out of China’s playbook, where livestreaming is an established ecommerce channel. “Entertainment is the next frontier of the ecommerce experience,'' said Wang, during the live summit. “More brands are also waking up to the immense potential of influencers, who have helped brands generate sales worth billions of dollars.”

Redefining convenience with quick commerce

As a response to the heightened need for always-on delivery services, quick commerce — a retail model championing on-demand availability — promises to get products to people’s homes within the same day or hour. 
 
Consisting mostly of legacy food delivery services, intermediaries, and ultra-rapid delivery startups, which deliver products within the same day or hour, quick commerce offers brands an opportunity to build last-mile delivery capabilities. Forecasted to be worth USD 1 trillion in 2026, the global quick commerce market will also see rideshare apps like Uber and Grab building large-scale relationships with brands and retailers directly to deliver products in a matter of minutes. 

“Grab is focused on small-quantity, high-frequency product categories, where people are willing to spend on convenience,” said Saad Ahmed, Managing Director, Regional Head of Merchants & Commercial, Grab. “For instance, if I host a party and want some drinks, I can have those delivered to my house at the touch of a button on the Grab app.” 

Knoben pointed out that quick commerce was driven primarily by product categories centred around spontaneity. “There’s a huge assortment of products which people like to buy on impulse.” 

However, unlike online marketplaces and social commerce, quick commerce is tied heavily to the consumer need of the moment, or hour. As a result, the profitability of this retail model is something brands would have to continuously optimise for, Meng added. “You need to optimise your assortment, price, and operational costs. However, I would advise brands to first zero in on their priority platforms, and then perfect their quick commerce strategy if they need to.”

Right now, brands are faced with a wealth of opportunities to succeed in a Retail 5.0 landscape. Ascential Digital Commerce can help ecommerce players unlock valuable insights, make informed decisions, and effectively manage retailer relationships.

Meet our experts 

Saad Ahmed, Managing Director, Regional Head of Merchants & Commercial, Grab

With over 15 years of experience in the field of sales, business development and management consulting, Saad leads a dynamic team supporting Grab’s merchant-partners in Southeast Asia. He and the team are focused on helping these merchant-partners grow and optimise their presence on the platform across the different verticals within the Grab ecosystem, which includes GrabFood, GrabMart, GrabExpress, GrabPay and GrabAds. Saad was previously the Regional Head of Business Development and Partnerships for GrabFood, where he built and led the team responsible for acquiring and managing key restaurant partners across Southeast Asia.

Prior to joining Grab, Saad was previously the Head of Business Development for Uber in Southeast Asia, as well as India. He has also held roles in the Tata Group, Times of India Group, and Publicis (France).

Xian Wang, VP, Retail Insights, Ascential Digital Commerce

Xian Wang is Global Content Director for Retail Insight at Edge by Ascential. With nearly 15 years of experience in global research, data analytics and content strategy, Xian brings a comprehensive knowledge and understanding of digital retail business models and market trends to the organization. Prior to joining Edge by Ascential, Xian served as Director for the Intelligence division at investment research firm Third Bridge. Xian graduated from the University Cambridge with a BSC in Economics.

Jill Meng, Customer Success Director, APAC, Ascential Digital Commerce

Jill is an expert when it comes to analytics, data mining, modeling, and all topics related to retail analytics. She prides herself on anticipating her clients' needs and wants, and delivering those results before they asked for them. Jill has over 12 years of experience with analytics and consulting, with 5 years focused specifically on the ecommerce space in both China and Korea. Prior to her time with Edge by Ascential, Jill was employed with Nielsen Analytical Consulting for 7 years, beyond that Jill boasts 6 years of experience in a biomedical lab. Jill is passionate about helping her clients find success through our data and insights.

Jasper Knoben, CEO, Intrepid, Ascential Digital Commerce

Jasper is CEO of Intrepid Group, a leading, regional innovative Ecommerce & digital solutions provider with offices in all 6 SEA countries. He has been in SEA since 2013 and has worked on the marketplace side (Head of Marketplace Lazada Vietnam), on the brand side (APAC Ecommerce Lead Philips) and is now working with more than 60 international brands across all marketplaces and online sales channels along the entire ecommerce and digital marketing value chain at Intrepid. This experience has given him a holistic understanding of the market, its challenges and opportunities ahead. Jasper is originally from the Netherlands and holds an MBA from INSEAD.

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