Singapore retailers must reassess digital strategy post-pandemic

Retail organisations that neglected to build a robust online infrastructure now should realise digital can no longer be an optional sideline and look to move forward by tapping digital technologies to support their physical stores.
Written by Eileen Yu, Senior Contributing Editor

Retail businesses in Singapore that once overlooked the need to offer a robust online channel now will need to reassess their digital strategy, as consumers are expected to continue heading online for their purchases post-pandemic. Attention also should go towards ensuring logistics and supply chains are not bottlenecks when online demand and sales surge. 

Retail businesses should now realise that digital can no longer be deemed an optional component of their strategy, as consumers will expect all companies to have a digital presence. Those that do not have one risk alienating their customers, warned Ray Chou, Singapore country head for Ninja Van. The Singapore-based logistics operator works with 35,000 shippers across Southeast Asia including e-commerce platforms Lazada, Tokopedia, Zalora, and Shopee, and delivers more than 1,000 parcels every minute

Chou told ZDNet that Ninja Van clocked an increase of some 2.5 times in its parcel volume over the past few months, fuelled by increased online shopping due to safe distancing restrictions. 

The highest sales uplift in online retail sales for Southeast Asia registered 141% year-on-year during the week ending on March 29, according to Pauline Lemaire, Southeast Asia, Hong Kong and Taiwan director of account strategy for large customers at ad retargeting vendor, Criteo. For the week ending May 10, there was a growth of 94%. 

Several product categories also saw significant sales growth during this period, as countries in the region underwent partial lockdowns, including pet supplies, food and beverage, and furniture. For the week ending May 10, compared to data in January 2020, pet grooming supplies climbed 242%, while furniture sales grew 125% and jigsaw puzzles clocked a growth rate of 214%. 

Lemaire said: "Online commerce has now become the lifeblood of consumers [in Singapore] and around the world as we live in a 'social distancing economy'."

Chou said the surge in online demand amidst the pandemic underscored the need for retail businesses to look at technology infrastructure that enabled them to scale up easily and that was sufficiently flexible to provide various options for different market conditions. This, he added, would allow businesses owners to react quickly and rely less on manual fixes when problems surfaced. 

Ninja Van itself faced several challenges as government restrictions had impacted its shippers and, hence, its operations. He explained that some of its shipping partners had to operate on shorter work hours, which meant his team had a shorter window to carry out package pickups. 

Chou said: "We also see more improperly packaged parcels as shippers have restricted access to locations, equipment, and packing materials they would normally have to fulfil orders. This results in an increase in damaged parcels, for example, leaks from liquid items or missing barcodes. We are working with our shippers to support and work with them on solutions they can take during this period."

He added that the company's safety measures including social distancing, daily temperature checks, and staggered driver shifts also had an impact on its productivity, which he said dipped by some 20%. At the same time, its overall parcel volumes had increased sharply and there were more bulky packages to manage, which meant delivery vehicles had to make more pickups and dropoffs to cater to the space requirements. 

To address these issues, Ninja Van expanded its manpower capacity with new hires -- to better match the increase in volumes -- implemented additional work shifts, and extended its delivery operation hours to ensure parcels reached their recipients. 

He said the company's technology infrastructure enabled it to scale up and took the "guesswork" out of certain tasks. This enabled new hires to require less time to familiarise themselves with the organisation's processes and systems, he added.

He also noted that having to handle more bulky packages led to more new hires and changes in the way Ninja Van carried out certain sorting processes.

The pandemic had revealed supply chain and logistics, including fulfilment and delivery, to be top challenges and key areas for improvement, noted Wang Xiaofeng, Forrester's senior analyst. Consumers faced various issues such as out-of-stock items and a lack of delivery slots, she said, adding that retailers struggled to maintain supply chain sustainability. 

The spike in online demand demonstrated the need to improve logistics efficiency, Wang said. 

Forced to close their doors, retailers had to switch to e-commerce platforms to digitise their business and diversify their revenue streams, said Wirecard's vice president of retail sales, Alson Lau.  However, a key challenge for some was simply having the infrastructure and knowledge to transition online. 

"While many retailers have been able to do so, smaller players may find it more challenging," Lau said. "Even established e-commerce players need to review their infrastructure with the surge in demand, and ensure their network can support the increased number of transactions and have sufficient logistics support."

Lemaire noted that online retailers worked to keep up with their logistics networks, fulfilment, and inventory while, at the same time, consumer expectations remained high with shoppers looking to retailers to offer a similar range of products online compared to their brick-and-mortar stores. 

Online grocers, in particular, saw an explosion in demand in Singapore, especially during the extended circuit breaker period, she said. "While this has exposed inefficiencies in the fulfilment process due to shortages in manpower, transport, and supplies, consumers will be looking at how online grocers deal with this crisis. It is critical for these retailers to have a rebound strategy and tactics to re-establish trust in their brand," she added.

Acknowledging that logistics was a key challenge for e-commerce platforms, Chou said Ninja Van aimed to offer better support to its clients such as providing timely updates on changes to its operations, in response to new government restrictions, as well as avenues for its shipping customers and marketplace platforms to obtain quick resolutions of issues.

The logistics operator also recognised there were areas it could improve on, including how it handled exception cases such as missing or damaged items, and addressed parcel recipients' concerns through its customer service team, he said. 

Tap bricks to support bytes

Traditional brick-and-mortar retailers, particularly those that had not fully developed an online channel, should now move forward by leveraging digital technologies to support their offline stores, said Wang.  

For instance, they could enable customers to buy online and pick up their orders in-store or enable self-checkout at physical stores via mobile apps, said the Forrester analyst. 

These businesses also should tap digital channels for sales, marketing, and communication, she said. Sales channels could be extended through the organisation's own e-commerce site or third-party e-commerce marketplaces.

Wang noted that social media also could serve as an effective marketing communication and, at times, sales channel.

She added that traditional retail organisations that previously resisted developing an online strategy over concerns it could cannibalise their brick-and-mortar business, should look at adopting the above measures, too, and leverage digital technologies to elevate their offline channels.

She also stressed the importance of establishing the right KPIs (key Performance Indicators) and measurement systems, so the credit could be correctly attributed to the right channel. Digital marketing's contribution to offline sales, for example, should tracked as should offline sales' credit in converting sales online, so any channel conflicts could be removed, she said. 

Lemaire said these businesses would have to look at the long term, especially as online retail in Singapore was expected to hit $2.73 billion this year and $3.35 billion in 2023. Citing figures from eMarketer, she added that Southeast Asia's online retail market was projected to reach $35 billion this year and $52.86 billion by 2023. 

"Consumers are increasingly digital savvy...The growth in the digital economy will play a part in the progress of online commerce, making omnichannel a necessary strategy for businesses to keep up with the changing landscape," she said. "Traditional commerce players who have been skeptical about going online will need to reconsider their business strategy to keep up to changing customer behaviours. Having an online storefront is no longer an option."

She suggested that these businesses could start by partnering with others that already had an online presence. Traditional commerce players also could consider working with a trusted partner that was able to help them establish and grow their online business.

Wang said: "Consumers today are channel-agnostic, retailers should catch up and provide seamless shopping experience [for customers]."

Before the COVID-19 crisis, Chou noted, many businesses viewed e-commerce as ancillary to having a brick-and-mortar presence. He anticipated that this would change as social distancing would become the norm and these organisations would have to quickly adjust or risk being edged out by competitors that were more willing to adapt.

"We've also increasingly seen more businesses take a direct-to-consumer model and try to leverage social media and influencers to engage with their customers," he said. "As we adjust to a post-COVID-19 scenario, businesses will have to figure out how to replicate the in-store brand experience on an online platform. There are many low-risk methods and solutions out there for businesses, so it's a matter of experimenting with one that works best for each business sector."

Deridian Nurhalim, content marketer for online shopping aggregator iPrice Group, noted that the current shift towards online spending would continue to impact consumer shopping behaviour post-pandemic. 

"Categories we once thought to be 'unusual or unexpected' as an online purchase now have higher interests," Nurhalim said. "Our recent report on consumer's search in Singapore revealed that people are more likely to purchase more unique and necessary items online to meet their needs during the quarantine period, indicating a high interest in these items."

For instance, unexpected demand for products under categories such as electronics, appliances, and games climbed since February, as people rushed to set up home offices and prepare for more home cooking and turned to games to stay entertained at home.

Asked how governments could do to augment the e-commerce ecosystem, Chou pointed to more support in terms of infrastructure to better facilitate contactless deliveries. In this aspect, he applauded the Singapore government's introduction of a nationwide locker network, but said it should also explore other options such as providing logistics operators shared access to mailboxes. 

Lau noted that more consumers likely would continue to favour digital channels as countries transition to a new normal post-pandemic and businesses should continue to see the value in retaining these channels alongside traditional payment methods. 

"Unified commerce will be the natural result as businesses transitioning out of survival mode begin to shift their thinking and envision how these new, more efficient payment channels could help them grow and unlock new customers," he said. "Those that were initially resistant to digital innovation and preferred to do things the 'old' way are now part of an evolution that is driven by necessity, but will be sustained by the many benefits of digital payment channels, such as speed, flexibility, and security."

"Local business owners should not count on reverting back to business-as-usual. Instead, they must relook their online and offline operations to become more convenient, flexible, and human-centric across all channels."


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