The COVID-19 pandemic might have the whole world on alert, but there are a few groups of people who are actually benefitting from it.
Not everyone or business entity is toast.
The moment the government started issuing stay-at-home directives, business owners in Singapore started looking at the role that the digital economy and internet access plays in the wake of a crisis.
This pandemic didn’t just disrupt the economy – to some; it was a wake-up call on why they should cultivate an all-inclusive digital space.
Ecommerce platform and ICT tools, in general, turned out to be a vital lifeline for individuals to stay in touch with their loved ones, businesses to remain operational, and students to engage in e-learning.
It’s safe to say that COVID-19 didn’t exactly come to wipe out businesses, but to strengthen some – and one of the biggest beneficiaries of this pandemic is the ecommerce sector.
How Covid-19 Is Impacting the Ecommerce Sector in Singapore
To sum up everything, the Covid-19 pandemic turbocharged what was already the fastest-growing ecommerce market in the Asia-Pacific region. At its current rate of growth, the ecommerce sales in Singapore are expected to increase to a staggering $10 billion in 2020.
One would also expect the traditional retail sector to experience a downward spiral. But, as it turns out, the retail sector has experienced a 56% growth rate in sales for hypermarkets and supermarkets and a 9% spike for minimarts and convenience stores.
This crisis has also seen to it that the shares of the third-largest supermarket chain, Sheng Siong, rise by a good 39%, as RedMart (an online grocery service owned by Lazada) registers 11 times more unique visitors per day.
Hypermarkets and grocery stores aren’t the only thriving sectors in the country’s post-COVID retail landscape.
In May alone, the ecommerce sector registered a blistering growth rate of 125%. It also went on to account for a record high of 25% of the total $1.8 billion retail sales made within the month.
Change in Consumer Behaviours
The COVID-19 pandemic has also impacted consumer behaviour. According to a recent study conducted by Nielsen, the challenges arising from the Covid-19 outbreak accelerated the use of both new and existing ecommerce tools.
This study went on to prove how the Covid-19 outbreak was setting a new digital norm.
According to the study, about 37% of consumers in Singapore have increased the rate at which they were shopping online, with 76% indicating that they won’t go back to their traditional shopping ways after the outbreak.
With this, we can conclusively say online shopping is becoming the new normal.
The convenience and accessibility of online shopping during this crisis has not only increased the number of online shoppers but also converted a good chunk of offline shoppers to online shoppers.
So, will the trend return to normal after COVID?
At the time of writing this, about 76% of shoppers that made the switch have already confirmed they plan to continue with their new online trends.
This pandemic also increased the online penetration rate for FMCG products (beverages, home care, packaged food, and personal care). 7 out of 10 consumers now rely on online shopping to stock their pantry, a behaviour that’s thought to continue even after this pandemic ends.
The number of users that shop online is also expected to continue rising. According to Nielsen’s post-COVID-19 dipstick, 69% of the people that purchase products online for the first time promised to do that again.
Among the non-FMCG products that people bought online, electronics recorded the highest increase in the number of online purchases made after the Covid-19 outbreak. Office and school supplies, on the other hand, had the lowest increase, with 8 in every 10 consumers opting for offline purchases.
Understanding, non-FMCG products recorded a significant reduction in online purchases compared to FMCG products. That’s because consumers prioritise essential products.
About 27% of the consumers bought mineral and packaged water, whereas 24% opted for functional drinks.
As for food products, 24% of the customers purchased frozen food, and 26% bought instant foods most often.
Raw food was purchased the least (at 12%) since consumers prefer foods that they can store for longer, not perishable foods.
Consumers still flock to physical stores to stock their pantries. Consequently, hypermarkets and FMCG retailers are advised to come up with omnichannel strategies that reduce out-of-stock incidences, both offline and online.
How Covid-19 Has Impacted the Retail Landscape
One of the leading ecommerce platforms Shopee also experienced a change in consumers’ shopping behaviour. Their shopping experience became more social and personalised.
In another data report as published by Sea Group, there was a 40% screen-time increase in the number of users that clocked the app after Covid-19 erupted. That would also see to it that the transaction volume also increases during the circuit breaker.
As one would expect, surgical masks became one of the bestselling commodities at the time. There was also a surge in demand for non-perishable food, essential household items, and beverage products.
More and more customers also started flocking these stores for furniture items and computer peripherals. Pretty obviously, these purchases were a direct result of people setting up their home offices.
Suffice it to say this pandemic has supercharged ecommerce adoption in Singapore.
Shopee is one of the ecommerce stores that saw the opportunity in this crisis. So, instead of just waiting for customers to come and find them, they decided to make it their mission to reel them in.
They started by introducing in-app entertainment, where they try to make things a little bit fun for their customers to get them to engage with them. Players are rewarded with coins that they can exchange for cashback or use to get price reductions on their orders.
Their suite of in-app games is designed to capture attention and boost engagement. For example, those playing Shopee Farm water their plant, as well as their friends’ plants, and in the process get to accumulate points that they can afterward redeem for cashback and price deductions, as we mentioned.
Shopee took a different approach to its reward system. Instead of offering a one-time reward, they focused on rewarding their users for their long-term effort. Since the year started, their games have been played 1.6 billion times in Indonesia and over 60 million times in Singapore.
Social and Personalised Shopping Experiences
Another common shopping trend in 2020 is the customers’ preference for more social and personalised shopping experiences. For this, Shopee has been working on offering an all-rounded shopping experience through innovative features, exciting campaigns, and interactive engagement.
Their feed plays a crucial role in their attempt to integrate social elements into their online shopping experiences. Through this feature, shoppers can share their listing or content on what they’re buying or selling to their friends and families or with other community members, and even ask for real-time reviews from previous customers, as well as updates from brands and sellers.
They would also go on to launch a series of shop-from-home campaigns, with which they hoped will help users leverage the convenience of doing their shopping from home.
Lastly, they also managed to implement additional support measures that they have been using to manage supply and demand and to make sure essential items remain accessible to all.
What Can Shopping Malls Do to Stay in Business?
In a study conducted by Euromonitor, 47% of digital commerce sales in the Asia Pacific region were made via marketplaces in 2018. Shopping Malls are the physical versions of online marketplaces, considering there’ll be multiple vendors selling from a single location.
Taking this into account, the only way shopping malls can stay relevant during this crisis would be to move their businesses online. They can set up a digital marketplace where they can invite all their vendors and have an online extension of their business.
Pursuing an offline to online digital strategy will not only add a new distribution channel for mall vendors; it’s also a great way to cushion sales losses.
You can start by targeting consumers who are regular and loyal to your shopping mall. Their products will be delivered right where they are, saving them the trouble of mingling with a crowd and risking to catch the virus.
It’s been said, “life is 10 percent what happens to you and 90% how you react to it.”
Any retailer or shopping mall vendor or owner that does not want to embrace online commerce will soon be left behind or be kicked out of business. Their only option is to step up and disrupt or watch as their business gets disrupted.
Current Consumer Trends to Take Advantage of
It’s a rough patch for entrepreneurs already. Many of them are struggling to stay afloat while a few have already thrown in the towel, with no idea of what to do next.
While the condition isn’t conducive for business, a few opportunities still exist to not only tide you through this crisis but to make you stronger.
It bears repeating that ecommerce consumption is experiencing a boom, and that’s the first opportunity that you wouldn’t want to ignore.
More Consumption Trends Have Emerged after Covid-19
Statista recently conducted a survey that went on to show how online grocery and non-grocery purchases have significantly gone up. Confirming this are companies such as Mothercare Singapore and Luiga, both of whom agree online sales have spiked up.
Luiga even goes a step further to suggest their online sales have been sufficient enough to offset their brick and mortar losses.
With many Singaporeans now at home, it’s only natural that groceries and health food products such as vitamins will be among the best performing product items. Also performing are home care products, as well as products that help people to work better at home (products such as webcams, monitors, and home office furniture).
The more people spend time at home, the more they would want to bring in more home activities that they didn’t normally do at home. A typical example is fitness and sports, with ecommerce retailers for gym equipment, such as Gymsportz.sg, seeing significant increases in demand. They have even been forced so many times to put some orders on hold and clear an existing backlog first.
Categories with enormous potential to also see an increase in demand include hobbies and toys, with many families now turning to board games or craftwork as pass-time or to bond with one another.
Backing this up is a recent report on Google search interest this year. According to the report, the interest people have in board games has spiked twice since the Covid-19 outbreak.
- The first one was in February when the government (Singapore’s government) raised the DORSCON (the Disease Outbreak Response System Condition) level to orange.
- The second one was in April after the government announced the Circuit Breaker.
Will Online Sales Surpass General Merchandise Sales?
The global Covid-19 pandemic has triggered a nose-dive in market indices, worldwide recession, and widespread bankruptcies.
Yet, the same destruction has created opportunities for innovative players.
This begs the question, what businesses have been destroyed, and which ones have emerged even stronger?
While industries such as Tourism and airlines are hard to forecast, some of these industries, including the ecommerce industry, are a snap to predict.
Ever since the internet was invented, ecommerce has been consistently nibbling the market share of the brick and mortar industry.
For the first time in the US, online sales managed to beat general merchandise sales in February 2019.
According to eMarketer, ecommerce sales managed to hit $700 billion in 2020, a significant improvement from the $600 billion sales made in 2019. That’s 14.5% of the total retail sales made in the US.
If the trend continues, then it’s projected that ecommerce shares will be accounting for 15.5% of the total retail sales made in 2022.
It’s no surprise that Amazon’s stock price soared instead of plummeting (at 66%). It’s the same case with eBay, which managed to rise by 55% since the year started.
Coming back home, ecommerce sales for six largest markets in Southeast Asia (with a total population of 570 million people) surpassed the $100 billion-mark last year – according to economy Southeast Asia’s report of 2019.
The internet economy of most Southeast Asian countries has been growing at a steady rate of 20 to 30%, save for Vietnam and Indonesia that have been growing at over 40% per year.
Online shopping didn’t just soar in Singapore, but worldwide following lockdowns and the fact that it was no longer possible for people to carry on their usual brick and mortar shopping.
In Singapore, this Covid-19 crisis triggered a shift in consumers’ behaviour, thus spurring the country’s digital economy by an additional US500 million, with some businesses experiencing three times their normal growth.
The Covid-19 crisis has led to the loss of human lives, destroyed jobs, and ruined so many businesses and people’s livelihoods, but it’s not without a silver lining.
The creative destruction has spurred innovations, with innovative technology replacing existing technology, thus helping to ensure resources are reallocated more efficiently.