Understanding Sustainable Living, Online Shopping & Brand Switching
Technological advancement has accelerated the growth of Asia’s digital economy - with the world at our fingertips. However, challenges exist and stir Asian consumer behavior and consumption patterns.
To thrive and stay ahead of the competition, businesses need to learn how to serve their distinct type of customers.
The move from an offline to an online economy has taken off at a much faster pace than anyone expected. Particularly in Asia, its consumers will be at the forefront of global consumption growth and its economy has become the main growth engine of the global economy.
By the end of 2020, nearly 70 percent of the 443 million population in Indonesia, Malaysia, Thailand, Singapore, the Philippines, and Vietnam are now digital consumers. (Facebook and Bain Company, 2020). This positive outlook is certainly supported by the internet which has given us all kinds of opportunities and access to abundant resources. However, this is subject to changes from the demographic, social, and economic points of view.
In a publication by ADB, Southeast Asia is on the frontlines of efforts to counter climate risk, accounting for two-thirds of the global risk of climate change. Indonesia, for example, is predicted to experience a temperature increase and a shorter rainy season, affecting the agriculture sector the hardest and both producers and consumers who live in rural areas and poorer households. Moreover, climate risk is potentially going to widen the inequality gap, hitting the low-income households the most.
Besides, there are interesting demographic trends recently published in a McKinsey article, one that stated Gen Z and Millennials (those who were born between 1980-2012) are expected to drive Asia’s consumption growth in the next decade. We call them the “Discovery Generation” as they show openness to digital discovery.
These changes will affect consumer behavior and consumption patterns, for instance, a growing number of more sustainable consumers, more openness to purchase literally anything online, along with openness to purchasing from another brand instead of their usual choice.
Asian consumer behavior and consumption pattern
Insight #1: Increased awareness and appetite of sustainable living
There is evidence that Asian consumers are becoming more aware of climate change risks, which leads to more responsible consumers who choose sustainable alternatives.
A planet-friendly marketplace, Moutar, is one example of a startup that accelerates the increased usage of sustainable product categories by making it more accessible and affordable for just everyone, while also leveraging community engagement to influence the world’s supply to shift into a sustainable model. Nafas, an air quality monitoring startup, also implements sustainability values into its business model by embracing individuals or companies that pay attention to ESG (environmental, social, governance) to participate as a sponsor in providing air quality sensors.
There is certainly an indication that shows consumers in Asia have increased willingness to pay for more sustainable products/solutions. However, sustainable living does come across as expensive and that makes the growth in sustainable products/solutions depend on consumer willingness to pay or a fall in price premiums.
Insight #2: More categories now purchased online
In 2020, each Southeast Asian digital consumer purchases an average of 5.1 categories in their shopping cart - household appliances, jewelry, beauty products, groceries, to name a few. That is a 40% increase in the number of categories purchased from 2019 to 2020.
Groceries still led to be the most frequently purchased category of all, but what is more important is the growth of consumers buying more categories online presents an opportunity for various companies to participate in the digital economy as consumers open up to a wider range of products and services online.
Siklus, is another example of a company that offers sustainable products while also offering a new approach of how people can nowadays shop for FMCG and household products. With a unique approach, Siklus offers a refill delivery-to-door service that changes the way people shop for products such as detergent or dish soaps, in which consumers contribute positively to the ecosystem through the principle of refill, reuse, and remove. There is no need to actually go to a physical convenience store to buy and collect household goods anymore, people can simply order through an app at the convenience of their home, at better value-for-money, and feel less guilty by reducing single-use plastic.
Besides sustainable products, other product categories such as fashion, electronics, and beauty are leading the popularity of online selling categories in Southeast Asia (Statista, 2021). Companies need to understand the popularity of products that are of current demand to stay competitive, as it is only reasonable for a certain period.
Insight #3: Customers have more openness to switching brands, driven by openness to digital discovery
As more companies take part and give more choices of product/service to consumers, Asians have shown openness to switching their most purchased brands. Apparently, this habit is also driven by how they discover brands through online inspiration and influence.
According to a McKinsey founding on Generation Z in Asia, around 20 to 30 percent of the generation spends more than six hours a day on their mobile devices consuming social media, particularly short and medium-length video content, which is the new form of discovering new brands and products.
This particular behavior is a double-edged sword for brands as the openness would mean more opportunities to test out different approaches and offerings, but it could also mean the need to be more innovative to retain loyalty.
How can businesses thrive in these markets?
Understanding of local taste and personalized customer experience
Asian customers are some of the most demanding customers when it comes to personalization, in exchange, they are willing to share their personal data to achieve it. In order to tap this demand, besides honing their understanding of local tastes, companies must be able to map out customer-centric experiences from initial customer interactions to post-interaction. For example, Keyta, a conversational commerce tool specially designed and created to provide a personalized touch to Indonesian consumers/online commerce buyers. Using an embedded keyboard, Keyta is not only simplifying the day-to-day operations of commerce sellers but also enhancing customer experience in online shopping. It is equipped with features such as fast reply/auto text combined with human touch and in Bahasa, real-time delivery option comparison from various couriers, and many more.
In some cases, personalization is less prevalent, and that coexists with other consumer preferences such as the case of limited edition products. As written in McKinsey’s recent 2021 report, when personalization is done right, it “allows retailers to do more than merely survive: it enables them to thrive.”
Today's savvy customers don't just engage with companies across multiple channels like social media, websites, and mobile apps, but they also crave a seamless, integrated experience across all touchpoints. This includes everything from deep consumer behavior analysis to seamless customer service and cutting-edge digital marketing strategies. It's a whole new level of audience engagement.
A company needs to intensify its digital engagement efforts by being even more contextual when reaching out to customers, for example, utilizing short video content through platforms like TikTok or Instagram Reels as key mediums in campaign strategies. The fundamental is to engage customers with the right product/solution through the right channel and at the right time.
Asian modern consumer is a construct of growing demographic, social, and economic pressure. They are changing the way they consume products and services. Companies will need to stay agile to consumer demand in order to tap these ever-changing markets.
ARTICLE WRITTEN BY: MICHELLE VALENTINE
Michelle Valentine is a Senior Ventures Analyst for GK Plug and Play.
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