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The Future of eCommerce: Retailers Must Evolve

THE world of retail is undergoing an unprecedented wave of innovation. “The Future of eCommerce: The Road to 2016” white paper, commissioned by Criteo and published by Ovum, found that technology, new business models and evolving consumer behaviour are the key drivers of disruption in retail.

With more than 21,090,000 local internet users contributing US$2.3 billion (RM10.2 billion) to the nation’s revenue in 2015, Malaysia has become one of the leading e-Commerce markets in Southeast Asia.

Interestingly, given that three in five Malaysians have only started shopping online in the past three years, public acceptance of online technology and the consistent growth of smartphone users is set to raise the demand for online shopping platforms and experiences in the months ahead.

Online shopping today is largely driven by price and convenience — a good deal on products that are delivered quickly. By 2026, these fundamental desires will still exist, but expectations of the shopping experience would have changed drastically.

Millennials and Generation Z consumers, for example, will be demanding more from eCommerce providers, such as the ability to discover in real-time unique goods they will not find in big-box retail chains.

Undeniably, with the rise of e-Commerce — in Malaysia and globally, the retail sector is becoming more competitive. For online and offline retail businesses to stay relevant 10 years from now and beyond, here are two key developments that must be considered:

The term ‘online pure-play’ will be eradicated by 2026

For many customers, one initial trial is both required and sufficient to build the trust necessary to make future purchases without having to physically see and feel each new product.

As such, while new entrants to retail will no doubt start from an online pure-play perspective, they will inevitably move to test out physical retail space with pop-ups, complemented by collections or showcase stores to facilitate product discovery and trial.

Zalora is a prominent example of an e-Commerce brand in Asia that has already done this.

Once they turn into established brands with a significant consumer following, pure-play online retailers must further develop their physical presence, to enhance fulfilment and customer service. For most, this will take the form of partnerships along the lines that are emerging today, such as the “click-and-collect” model.

Retailers in Malaysia can perhaps draw inspiration from the UK — where brands like ASOS and Boots, and eBay and Argos, have started collaborating and implementing click-and-collect models.

Another example is in Indonesia, which has combined its online presence with designated counters within its existing physical malls and hyper-marts to enable click-and- collect.

By 2026, physical retailers will continue to reduce the amount of physical space they hold, switching their investment emphases online. Online retailers, on the other hand, will invest further in establishing physical presences.

As such, the term ‘pure-play’ will be rendered obsolete.

Becoming mobile-first is key to creating shopping experiences of the future

In the retail and commerce domain, mobile will soon become the dominant channel for loyalty programmes and rewards, due to its ability to provide levels of interactivity and engagement that traditional programmes cannot match.

In technologically advanced markets like Hong Kong, Singapore and Taiwan, mobile advertising is already firmly in the advertising mix and will become the dominant (but not exclusive) channel for most brands by 2026.

With more than 44 billion mobile users, digital advertising and content is emerging as a key customer engagement channel for retailers in Malaysia.

In 2016, Malaysian businesses invested a total of RM1.37 billion in digital advertising. As businesses start to derive more value and even more consumers come online, annual investment in digital engagement is expected to exceed RM2 billion by 2020.

As a natural extension of mobile becoming mainstream, “contextual location” will become an integral part of the retail experience. The ability to identify a user’s location and deliver targeted, timely and relevant information and messages to his or her mobile device is a powerful and compelling proposition.

Moreover, the real-time aspect of location analytics will offer a more adaptive approach to marketing, enabling retailers in Malaysia to adapt their engagement tactics in real-time to meet an individual consumer’s needs.

One example is the use of Bluetooth Low Energy (BLE) beacons. BLE beacons are tiny units with built-in sensors that can broadcast signals to BLE-enabled and mobile devices within range, triggering corresponding beacon applications on the device and allowing retailers to engage their customers after they have left their physical stores.

In this instance, if an individual in Low Yat Plaza stood in an aisle looking at smart TVs for more than 15 minutes but leaves a store within the mall without buying one, location-based technology will suggest that interest is there even though it has not led to a purchase.

A retailer in the mall who has implemented this technology can then follow up by sending personalised recommendations and promotions related to the product to the customer’s smartphone.

These serve as reminders and incentives for the customer to purchase from that retailer, rather than its competitors.

Today, most mobile advertising happens on the mobile web because it is convenient and scalable.

However, with consumers increasingly engaging with digital content and services anytime and

anywhere on mobile devices via native applications, retailers must become familiar with application-based and cross-device advertising and messaging.

Retailers who can integrate the mobile web, apps, in-app targeting and contextual location into today’s business operations and engagement strategies will set the stage for the seamless adoption of newer mobile technologies or add-ons when required.

A decade from now, instant gratification will mean something more sophisticated than just a quick fix.

It will have evolved into expectations of a seamless shopping experience across a range of connected devices, in which immediacy, convenience and personalisation are paramount. Consumers will expect goods advertised online to live up to the promise in every way – with no disconnect between the “fit and feel” of what they see and what they get.

This places immediate pressure on retailers to evolve in the way they operate and engage consumers. Those that fail to meet expectations will soon fall by the wayside.

To read the full ‘The Future of eCommerce: The Road to 2016’ research whitepaper, commissioned by Criteo and produced by Ovum, visit

This article first appeared in Malay Mail. Yvonne Chang is Asia Pacific executive managing director for Criteo, a Nasdaq-listed performance marketing technology company.

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