Future in online buying

By Star Online: Business
26 July 2012

E-COMMERCE continues to see incredible growth amid the global economic uncertainty in the past year. A global report released by JPMorgan in 2011 indicates that e-commerce revenue around the world is expected to hit US$963bil this year.

Closer to home, the online shopping market in Malaysia alone is expected to grow at an accelerated pace from RM842mil in 2011 to exceed RM1.9bil in 2016, according to an Euromonitor survey conducted in 2011.

The buoyancy of this sector is consistently fuelled by the increasing Internet adoption, as well as a flurry of technical innovations that have changed the buyer-seller relationship irrevocably.

Over the next 12 months, there are five key trends that we expect to emerge, shaping the future of online shopping across the world. The extent to which businesses in Malaysia embrace these trends will clearly shape their ability to maximise the growing e-commerce industry.

These trends include:

1. Mobile browsing will turn to buying: In 2011, web-enabled mobile devices transformed e-commerce, opening up a new 24/7 channel to the consumer and creating innovative new ways to engage them, from quick response (QR) codes to location-based offers. Despite the general uncertainty around mobile payments, a study by PayPal revealed that in 2011 Malaysians spent RM467mil on mobile commerce, which amounted to about a quarter of all online shopping. This is an encouraging development that reaffirms consumer acceptance towards mobile commerce. We expect to see the introduction of more secure and seamless mobile payment platforms, which will further improve consumer confidence and drive mobile sales.

2. Smaller merchants will embrace mobile channels: Often it is the biggest brands that have the resources to invest in new technology. However in 2012, thanks to the rise of affiliate services and marketplaces, merchants large and small will be able to harness the mobile channel without incurring heavy infrastructure costs. This will offer local small and medium enterprises (SMEs) the opportunity to experiment with new consumer channels without having to implement a dedicated mobile programme.

3. Tablet commerce will create a tactile online shopping experience: Bridging the divide between mobile and PCs, tablets present an exciting opportunity for retailers. PayPal revealed that in 2011, Malaysians spent RM108mil through tablets alone. The rich functionality of the tablet shifts the traditionally transactional and bargain-hunting online experience into a virtual store experience, making the web an almost tactile experience. To capitalise on this, retailers must optimise content for tablets and think as creatively about presentation as they would in store.

4. More people will take their social network shopping: Getting a second opinion before committing to a purchase is nothing new, but now rather than taking a friend shopping you can take your entire social network with you. In 2012, retailers will increasingly use social, not just for brand awareness, but for product development and customer service too.

5. Flexible, local shipping models will be vital for customer loyalty: According to a report by Forrester in January 2011, shipping issues were one of the most common reasons for cart abandonment in Europe. Learning from this, we believe that market specific, flexible shipping models will be vital for growth of e-commerce in Malaysia. There have been signs that the industry has been responding to these challengers, with an example seen in the partnership of local players Pos Malaysia and Platform2u Bhd in 2009, indicative of efforts to improve online shipping services as a priority.

Clearly, the global e-commerce industry is approaching an interesting era of rapid evolution and technological innovation.

Advancements in mobile devices have opened up new and exciting avenues for retailers to reach their customers. It is also encouraging to see that Malaysians are equally enthusiastic towards the adoption of mobile innovations, pointing to the growing maturity of the local consumers.

The market will further evolve with more creative integration of innovations in mobile devices, shipping services and social networking, among others. These trends, if well capitalised by businesses in Malaysia, will further spur and shape the e-commerce market in Malaysia into one that functions as a critical growth engine for the economy.

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