Southeast Asian retailers are focusing on social commerce, with 68% planning to increase investment

According to Shopify’s Southeast Asia Retail Report 2024retailers in Southeast Asia is betting big on social media, with 68% planning to increase their investment in social commerce over the next 12 months. This insight aligns with the finding that social media is now the biggest driver of brand and product discovery in Southeast Asia, with more than 4 in 5 consumers (82%) discovering new products via social media.

Social Trading platforms are seeing staggering growth in the region, with platforms like TikTok expected to increase their user base in the Asia Pacific region by 11.3% in 2024. In line with this, 39% of retailers surveyed for Shopify’s report said social media engagement is one of the most important metrics determining the return on their retail infrastructure investment, ranking just behind profit margin (44%).

“Given the economic climate, customers have become more discerning and selective about how they spend their money,” he said. Eugene Chua, executive director of global e-commerce and sales at Shopify customer Secretlab, in the report.

“Social media continues to play a large role as a discovery platform and influences customer decisions.”

Consumers are looking for value in the current economic climate

According to the report, the current economic climate is having a huge impact on shopping behavior. Inflation and rising living costs have caused the majority of Southeast Asian consumers (83%) to cut non-essential spending, with more than half looking for the best value when shopping.

Price is the most important factor for shoppers in Southeast Asia. Almost all consumers surveyed (96%) said they would remain loyal to a brand if it offered some kind of incentive. For 70% of respondents, consistently low prices and promotions are the main reason.

As a result, real-time contextual pricing (71%) is the number one area where retailers plan to increase their technology spend to drive conversions while maintaining favorable margins.

While price is a key driver of loyalty and churn, competing on price alone is not sustainable, leaving retailers to compete on other forms of value, such as customer experience. This shows that understanding customers’ needs is key to attracting and retaining them.

In Singapore, the top three things to consider when shopping online are free shipping (71%), availability of debit and credit cards (55%) and free returns (51%). On the other hand, the top three priorities when shopping in-store are competent service (56%), availability of goods (55%) and attentive service (36%).

Unique challenges facing retailers

When it comes to where Southeast Asians like to shop, more than half (52%) of those surveyed said they prefer to shop online.

Brand websites, also known as brand.com sites, are important for shopping in the region. 81% of Southeast Asian shoppers agree that a company with a brand website is more trustworthy and credible than those without. This trust factor is especially important for shoppers when making large purchases – two in five (42%) Southeast Asian consumers prefer to make large purchases on a company’s website rather than its online store.

While online channels are the most preferred by Southeast Asian shoppers, brick-and-mortar stores remain an important channel. More than a quarter (28%) said they enjoyed shopping in-store as much as online, with a further 19% preferring to shop in-store, underlining the importance of creating an omni-channel shopping experience.

To succeed in omnichannel, a unified commerce platform that provides a holistic view of customer engagement, inventory, and fulfillment across channels is essential. This is evidenced by the fact that more than 3 in 5 retailers (66%) surveyed said they will increase their technology investment in a unified commerce platform.

Chief Technology Officer: Retail’s New Powerhouse

Today, 85% of retailers face operational challenges, with inefficiencies stemming from manual processes and complex business systems. Almost all retailers surveyed (99%) believe technology will solve these challenges and plan to invest about 20% of their total revenue in innovation initiatives in the next year.

Topping the list of increased technology investments are real-time contextual pricing (71%), social commerce (68%), business intelligence (67%), unified commerce platform (66% and stackable (65%). Given that technology is set to change the retail landscape, the vast majority (93%) of retailers believe that a Chief Technology Officer will help drive the evolution and/or growth of their business revenue.

“In the current economic climate, the need for both shoppers and retailers to do more with less has never been greater. Retailers are turning to advanced technology solutions to not only meet changing customer demands, but also strengthen their long-term resilience,” said Shaun Broughton, Managing Director, APAC and Japan, Shopify.

“Unified commerce is poised to be a key catalyst for growth, enabling retailers to leverage comprehensive data and insights across customers, inventory, and operations to make informed and strategic decisions. With technology at the core of the future of retail, Shopify is the partner of choice for retailers in Southeast Asia, from large enterprises to small businesses, with solutions that are purpose-built to meet their unique needs.”

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Download the full Shopify Southeast Asia Retail Report 2024 here.