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4 trends that will shape e-commerce in Asia for 2022

By Otohiko Kozutsumi, Chief Commercial Officer and co-founder, AnyMind Group

In recent years, we have witnessed tremendous growth in the online commerce space, driven by the pandemic-induced behavioral shifts of consumers. With businesses having had two years to adapt to this accelerated digitalization, the landscape will likely shift again in 2022.

Greater consumer familiarity with online commerce means that businesses and the vendors serving this space can innovate – be it in improving the efficiency and effectiveness of their supply chain, developing enhanced user experiences across various customer touchpoints, or leveraging on technologies that can fundamentally change how businesses deliver value to consumers.

Let’s dive into four e-commerce trends that businesses cannot ignore in 2022.

Owning it all

Direct-to-consumer (D2C or DTC) is a business model that sees the product or service originator selling directly to consumers, usually through online means. Looking at a more traditional means of commerce, a manufacturer typically goes through a wholesaler, distributor, and retailer, before finally reaching the consumer.

Going D2C means cutting out the middle players – the wholesaler, distributor and/or retailer – which provides businesses with reduced dependency on third parties, greater ownership over customer or user data, minimizes brand risks and increased control over user experience.

With e-commerce experiencing positive growth momentum from COVID-19, small and medium enterprises have benefited by going D2C, and even large enterprises such as Unilever and Nestle have also developed their own D2C sales channels – even though they already own, or have in place, more traditional retail systems all over the world.

However, going D2C through e-commerce is not without its own challenges. It’s a new playground for many, and not all businesses have enough resources or infrastructure to carry out all stages on their own. From e-commerce enablement and operations to marketing, logistics management, analytics and more.

An explosion of vertical marketplaces

An e-commerce marketplace is an online exchange or market where businesses (sellers) can sell their goods and consumers (buyers) can purchase them. The likes of Shopee, Lazada, Amazon, Rakuten, Flipkart and more, marked the explosion of the horizontal marketplace model, where a variety of products from various industry verticals were sold. However, we have also seen the rise of vertical marketplace models in the past decade, which house just a single product vertical from an array of brands. Familiar names include Sephora and Sociolla for cosmetics and skincare products; Zalora, SHEIN and Pomelo for fashion.

In fact, we will see even more vertical marketplaces rise. This is not just beneficial for businesses, but even individuals such as influencers and content creators can find opportunities in vertical marketplaces. Last August, we launched PopBox, an online retail store for influencer brands and products. With celebrity merchandising rising in popularity many years ago, this area is still a rather fertile segment for the Korean, Chinese, and Japanese entertainment industries. However, it is still a scattered space which had not been optimized for consumers.

In the coming year, we will continue to see more vertical marketplaces being launched, whilst existing ones will continue to rise in strength. The demand for online shopping continues to grow, and users are increasingly wanting greater personalization in shopping experiences, which is something that vertical marketplaces do. Vertical marketplaces are especially suitable to meet niche needs of consumers, such as furniture, automobiles and health products. Besides looking at horizontal marketplaces like Shopee and Lazada, businesses should also not ignore vertical e-commerce channels.

The rise of conversational commerce

Conversational commerce is e-commerce on messaging applications that integrates the ability to communicate between sellers and buyers with the ability to make purchases, and potentially more. In some Asian markets, digital-first brands have turned to messenger apps such as LINE, Whatsapp and Facebook Messenger to respond to queries from consumers, provide recommendations and status updates, and even prompt consumers to complete a purchase – just like a brick-and-mortar store service agent or salesperson.

Operating multiple messaging apps or chat channels is simpler for micro-sized businesses and SMEs, but can become an operational nightmare or be seen as a cost center for larger businesses. However, what businesses have with conversational commerce is an already-penetrated and frequently-used sales channel (although rather varied across Asian markets).

With conversational commerce platforms, the above are all tied together, with such platforms created to help businesses improve sales conversation rates and digital user experience. Besides opportunities to implement automation into conversational commerce, data around user behavior and conversations are also accessible to businesses. These are two factors to consider especially when choosing a conversational commerce platform.

Greater control, efficiency and effectiveness in operations

With businesses moving to online retail, a move that will likely stay in the future, there are and there will be gaps between legacy systems, infrastructure, and online channels. New challenges such as connecting existing ERP solutions to retail operations through e-commerce marketplaces or D2C channels, and establishing constant, timely, and relevant customer communication and engagement, will only add to existing operational challenges that businesses face.

However, this move also presents businesses with the chance to reevaluate whether legacy systems and infrastructure are still relevant to today’s needs – whether these systems are able to integrate newer technologies, span newer and more efficient processes, or even deliver desired outcomes when the goalposts have shifted for consumers.

There will definitely be new opportunities presented, be it in real-time tracking of manufacturing to uncover inefficiencies, optimizing warehousing and fulfillment, increasing process automation, or even just turning the large amounts of available data across disparate systems into something usable across all levels of an organization.

Gazing into the crystal ball

What the pandemic has done is to accelerate a rather sticky consumer behavioral shift – and businesses around the world realized this in 2020. 2020 was also the year businesses were forced to adapt, 2021 was spent getting used to this new way of working and spotting gaps, and in the year ahead, we will start to see these gaps being filled.

One thing is for sure: even with online front-end retail operations being the norm today, backend operations and systems need to be improved to keep pace. The channels that a business can tap on will continue to increase. The question is: Are you ready?

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