According to research, more than half the region became converts of e-commerce, and 2021 will herald five important continuing trends…
At a recent media roundtable, Warren Hayashi, President (Asia-Pacific) of payments platform Adyen shared his perspectives on the upheavals of 2020 that have brought about numerous behavioral trends and expectations.
These changes are probably going to be permanent. “The rapid increase in e-commerce will persist, especially among previously digital-hesitant consumers,” said Hayashi. “Merchants can no longer assume that their digital customers are limited to younger, tech-savvy shoppers.”
Therefore, Adyen has singled out the purchasing and payment trends that organizations in the region will need to watch for:
- ‘Contactless’ will become pervasive
Because of continuing hygiene concerns, customers and workers alike will want to minimize handling of credit and debit cards, keypads and cash.
Our 2020 Agility Report showed that 58% of APAC respondents preferred to use contactless payment methods, with cashless mobile payment services significantly increased in 2020. Research from Kantar reiterates this, revealing that the frequency of e-wallet transactions in South-east Asia rose from an average of 18% (pre-COVID-19) to 25% during the pandemic, indicating a shift from one payment method to another.
In 2021 and beyond, the transition to contactless will only become more widespread now that the bar has been raised among consumers for how appealing and seamless digital transactions can be due to QR codes and digital menus and ordering systems.
The pandemic may have driven the change in behavior, but the superior user experience will cement ‘contactless’ as the baseline expectation.
- Offline and online differences will fade
As countries went into different forms of lockdown, retailers had to quickly pivot and unify offline and online experiences.
Even while many physical stores have opened their doors to consumers again, that digital infrastructure will remain in place. Many shoppers will continue to prefer the convenience of deliveries and expect the options to continue, and retailers will find they are able to forge better customer relationships, thanks to the rich data generated by digital transactions.
One of the biggest takeaways for the industry is the need to rethink the traditional split between offline and online stores. With lines increasingly blurred, retailers will benefit from adopting a unified commerce approach where brand interactions on and across all channels are important.
- Membership models will proliferate
Amazon Prime is a great example of membership models where customers pay an low monthly fee that in effect encourages them to buy more in an effort to ensure they are getting their money’s worth from their memberships.
Quick-serve restaurants (QSRs), especially, are seeking to seize some of that ‘flywheel’ effect. In addition to improved incremental spend, membership programs enable QSRs to get to know their customers (when they were just anonymous faces standing in line) in ways that were never possible.
Meanwhile, subscription passes encourage loyalty and more frequent use. Our 2020 Agility Report found that 27% of APAC respondents (compared to 22% in Europe) signaled their interest in using such schemes to reduce shopping frequency.
Expect to see more retailers offering memberships in 2021 as brands seek to own the customer relationship and the data that goes along with it.
- Instalment schemes will become commonplace
The twin forces of increased convenience and tightening household budgets have brought pay-by-instalment options mainstream: a trend that will only grow in 2021.
Machine learning algorithms have become more adept than ever at assessing risk instantaneously, making it easy to offer ‘buy now, pay later’ options right at checkout. For small and mid-ticket items, shoppers may choose to spread the bill over several months. That kind of transparency makes it easier for shoppers on the fence to commit, which appeals to merchants hoping to avoid the dreaded abandoned shopping cart.
In 2021, providers of such schemes themselves will start to diverge, as some focus on higher-end, multi-year agreements, while others seek to offer instalment plans for shopping baskets as small as US$50. For households increasingly accustomed to paying by the month for everything from streaming services to food delivery premium memberships, instalment plans will start to look like subscriptions that just happen to have a fixed end date.
- Drawing shoppers back to physical shops
In 2020, the appeal of an in-store experience offering limited human contact took on a new dimension, accelerating interest in doing away with the checkout counter altogether.
For instance, in Singapore, one department store is looking to expand its endless aisle offering. By using interactive screens in-store, customers are able to check on inventories across all of BHG’s stores and e-commerce platform and can opt to have items to be delivered directly to their homes.
Eliminating checkout counters frees staff to interact with shoppers in a more personal way, while also making lines a thing of the past. So, when the pandemic is gone, shoppers will still find appeal in the human touch and digitalized physical stores will continue to be relevant, especially in Asia Pacific region.
In 2021, multiple providers are creating their own versions of ‘checkoutless’ store experiences where customers will scan items with their phones’ cameras, pay via an app, and head out the door. If they cannot find a particular item in store, they can try finding it on a connected terminal within the premises and have it delivered.
This combination of increased trust and decreased friction will help cultivate customer loyalty.