How E-commerce Has Transformed the Retail Industry in Asia

Consumerism has become a large part of the lives of people residing in developed cities such as Singapore and Hong Kong, and it is interesting to review the year and how ecommerce has transformed the retail space in Asia. In fact, retail continues to be one of the biggest industries in the world. A big part of this is thanks to the increasing internet penetration driving digitalisation of retail and thereby the popularity of online shopping. A study by Bain & Company found that Asian online retail is growing at three times the rate of the rest of the world.

Nowhere is this trend more evident than during the year-end shopping bonanza. Between Black Friday, Cyber Monday, and Singles Day, these shopping ‘holidays’ have contributed massively to the growth in retail sales. And let’s not forget the traditional (and often last minute) rush to get Christmas gifts as the year closes.

We took a deep-dive into the volume of invoices and accounts payables issued by our retail merchants during these key sales events to gauge the sales performance across Singapore and Hong Kong and here’s what we found out.

Singles Day takes off in Singapore

Since it was launched by e-commerce giant Alibaba almost a decade ago, Singles Day has become the largest shopping holiday in the world, with online purchases far eclipsing its American counterpart Cyber Monday. In 2017, shoppers spent over US$25 billion on 11 November—nearly four times more than both Black Friday and Cyber Monday combined, according to The Guardian. A year later, this number shot up to US$30.8 billion.

This year, we found that Singaporeans had become major contributors to this incredible growth. Based on Xero’s data, the volume of sales made by retail merchants in Singapore on Singles Day increased by a massive 268% in 2018.

Online shopping platform Lazada played a big part in this, bringing more than 400,000 brands and merchants to consumers across Southeast Asia as part of its 11.11 Shopping Festival. This has benefitted many small retail merchants who leverage the platform to gain access to a wider pool of consumers. More brick-and-mortar stores are also starting to adopt a dual-pronged approach, launching both online and offline offerings during this period.

However, in Hong Kong, we observed that the volume of sales made by both online and offline retailers remained stagnant. This might be due to the presence of large e-commerce players—think Alibaba's Taobao, and its own 11.11 sale event—in their backyard, making it hard for smaller local retailers in Hong Kong to compete against.

Cyber Monday takes centre stage on Thanksgiving

Coming off the heels of such an enormous shopping spree, one would think that shoppers would take a pass on Black Friday and Cyber Monday, which happens a week after but we couldn’t be more wrong!

According to Xero’s data, sales volume increased in both Singapore and Hong Kong on these two shopping holidays in 2018. But interestingly, Cyber Monday was the more popular of the duo, with sales volume tripling year-on-year for the past two years in both Singapore and Hong Kong. In comparison, Black Friday sales increased marginally in Singapore, and by 52% in Hong Kong.

One possible reason might be the fact that Cyber Monday has always been considered to be the ‘online’ segment of the weekend-long Thanksgiving shopping holiday, allowing it to reach a wider group of consumers digitally, while Black Friday has traditionally been the domain of brick-and-mortar stores. Not forgetting, Cyber Monday has the additional element of tech deals, which has the tendency to draw male shoppers who might otherwise not be attracted to other sales events.

‘Tis the (shopping) season to be jolly

While certain shoppers might have the foresight to get all their Christmas gifts during the previously mentioned shopping holidays, Xero’s data suggests that most either don’t or simply can’t resist the last sale event of the year.

In fact, for the month of December, Xero’s stats show that sales volume of retailers in Singapore (2016 to 2017) and Hong Kong (2016 to 2018) have been doubling and tripling respectively, year-on-year.

A possible reason for this might be the sheer stress of going out to do Christmas shopping. A study by Ebay found that the heart rates of festive shoppers tend to increase by 33 percent—on par with marathon runners. It is certainly comparatively less nerve-wracking to click a few buttons and make some purchases in the comfort of your home.

Navigating the changing retail waters

Clearly, the rise of e-commerce in Asia has transformed the retail industry—not just for brick-and-mortar stores, but also for the new online incumbents. The former now face the daunting task of discovering what their unique offerings might be, and finding their place in the new digital world.