The Shift to Online Festive Shopping and Its Impact on Retail
The Shift to Online Festive Shopping and Its Impact on Retail
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February 26, 2021
What started as an alternative medium to buy sanitization products without the risks of leaving the house, e-commerce has started to occupy the top of mind of Indonesian consumers across the archipelago. The yearning for offline retail shopping experience has certainly been felt among many, but in parallel, e-commerce has filled the void in making sure the people’s needs are met, especially with the rise in online grocery shopping of late.1 As more and more products enter the e-commerce market while offline retail is still faced with limitations, e-commerce is anticipated to go hand in hand with offline shopping once the pandemic eventually subsides.
Latest Developments
After observing the pandemic developments over time, the government has continued to impose large-scale social restrictions (PPKM) in countering the underlying factors behind the rise of COVID-19 cases. As a result, the Java and Bali provinces are facing the extension of these restrictions until March 8th.2 In parallel, the 3-shot vaccination processes are on its way to reach the first percent of the total population.3 Until the progress enters a safer stage, Indonesians must still comply with the health protocols and are most recommended to stay at home.
Aiding to the current state, determined e-commerce players intend to keep being the consumers’ pick when fulfilling their needs by offering what the consumers seek. As the pandemic reaches its 1-year mark in a few days,4 marketplaces in Indonesia do not rest in bringing forward an assembly of consumers’ favorites; discount vouchers, affordable price points, and free shipping deliveries.5 These factors were paramount to the high e-commerce traffic that’s present today and marketplaces seem to know how to elevate the game; the platform offers added values that can be enjoyed by its users at the safety and comfort of their homes, in contrast to offline retails.
February: E-Commerce at A Glance
Multiple marketplaces have brought the double number festival trend from the fourth quarter of last year towards 2021, engaging in their very own versions of the 2.2 Festival. Tokopedia offered cashbacks for products in the electronics category, giving those who are working from home a chance to improve their home office with good deals. Shopee, taking the opportunity to cater to their gentlemen audience, chose the Men’s Day theme to offer special promotions for electronics, automotive, fashion, and workout equipment categories. In addition to that, Lazada also held their own 2.2 Festival to commemorate the month of love, giving 98% discount for all products.6
According to SIRCLO’s internal findings, categories that topped the ranks during previous festivals remained to be the most sought after categories during the 2.2 Festival; Personal Care, Household Goods, Food & Beverages. When examining these categories more closely, certain products have become among the consumers’ favorites. Some eminent examples entail hand sanitizers (Personal Care), fabric softeners (Household Goods), and packaged snacks (Food & Beverages). Our findings also report that checking out past midnight persists to be a common shopping behavior during festival times, as the peak order performance was recorded among a number of marketplaces. In regards to overall order performance, a number of participating marketplaces experienced an increment that was beyond 100% during the 2.2 Festival, making it yet another strategic moment to gain more.
In addition to the assorted versions of the 2.2 Festival, there were two more merriments taking place during February; Valentine’s Day and Lunar New Year. As both are special moments to celebrate with our loved ones, the current state of the nation still calls for social distancing measures, hence limiting the usual face to face quality time. In turn, e-commerce relentlessly strives to become a solution to that by keeping the gift-giving love language alive during these heartwarming moments.
Particularly for those celebrating Lunar New Year and giving out red pockets (angpao), digital wallets such as Gopay and DANA offered cashback and lottery prizes to make the history-long tradition even more lively.7 In addition to digital wallets being an attractive angpao alternative to money transfer, people have been showing a rather great enthusiasm for gift cards to start the year of the ox. Tokopedia recorded nearly a twofold increment of their Tokopedia Gift Card transactions in comparison to their average daily transactions.8 On top of the angpao tradition, the classic parcel-giving tradition was also being entertained by multiple marketplaces, such as Lazada and Shopee, who offered a deluge of discounts for the Food & Beverages category.9 Additionally, Tokopedia experienced a 2.5fold increase in transactions for food parcels.10
Food for thought
Marketplaces and their unyielding offers have successfully kept consumers shopping online from all over Indonesia. As an e-commerce platform which insofar has acquired the highest level of consumer trust,11 marketplaces are able to convince consumers to cross out their shopping list with a hassle-free and budget-efficient experience through one streamlined place. While individual online stores have their own promotional timeline, marketplaces take every chance they get and make the most of momentous dates to give consumers just enough nudge, leading to them finally checking out their impending shopping cart items along with the profitable vouchers. Even today, the ads for an upcoming 3.3 Festival are already on top of the Google search results.
Upon reviewing the e-commerce industry that accountedly drives Indonesia’s internet economy growth by a healthy 11% annually,12 one championing benefit that e-commerce brings forth is its ability to give widespread access to products in a more cost-effective way. Rohit Bhasin, global brand VP of POND’S recently mentioned a championing benefit of e-commerce while talking about the effectiveness of marketplaces, “Retail is largely experiential and if e-commerce platforms are able to replicate a more experiential feel, in a world where travel has been curbed, the need for retail spaces would be minimal.” As an example to illustrate this, beauty brands which used to put a lot of emphasis on the retail experience with its friendly clerk have now recreated a similar experience through e-commerce with the help of today’s avant garde chatbot AI.13 This case can serve as a real-life beacon of hope for brands in other industries with similar pain points. Moreover, it further reinforces the likeliness of e-commerce eventually co-existing with offline retail⏤in synergy.
All things considered, the people’s favorability towards online shopping in Indonesia is bound to stay even after the pandemic has ended.14 It is undeniable that the hope for things to return to its normalcy from pre-pandemic is still felt among many people. For the collective majority, being able to live our daily lives without the worry of a virus infection would mean being relieved from the COVID-19 health concerns. For business owners in particular, the final termination of social restrictions could bring operations to a respawn and allow as many visitors as possible. Notwithstanding, every new e-commerce developments that raise the convenience up a level can further formalize e-commerce’s position through the lens of the consumers. If business owners optimize the use of e-commerce, they no longer need to wait for things to go back to normal to have visitors coming from the high traffic that’s already occurring.
Further down the road, brands across all industries and sizes need to reevaluate the model they have been utilizing. E-commerce has the potential to offer all-encompassing platforms that are competitive to the offline retail landscape. Therefore, nurturing a robust brand presence across both the offline as well as online platforms will only become more important in the course of time. Retail brands that were accustomed to the previous ‘multichannel’ model have moved forward to another model that can integrate their business ecosystem to its maximum potential; integrating their offline and online operations to create a seamless customer experience. In a digitalized era where technology is focused on making its users’ daily lives a lot easier, brands need to also be fully user-centered⏤and the omnichannel model helps brands in putting customers at the center of everything.
Still curious about what it’s like to be omnipresent? Visit our previous article that discusses omnichannel in depth or reach out to our ICUBE by SIRCLO’s team with a decade’s worth of experience in building more than a hundred integrated e-commerce platforms.
Disclaimer
SIRCLO neither provides regulated advice nor guarantee results. The materials we convey reflect general insight and best practice based on information currently available, and do not contain all of the information needed to determine a future course of action. Such information has not been generated or independently verified by SIRCLO and is inherently uncertain and subject to change. SIRCLO has no obligation to update these materials and makes no representation or warranty and expressly disclaims any liability with respect thereto.
REFERENCES
Kantar, “10 slides to make you think about COVID-19 and its impact on purchasing and consumption in 2020 and beyond”, 2021
https://tirto.id/aturan-terbaru-ppkm-jawa-bali-yang-diperpanjang-sampai-8-maret-2021-gat5
https://news.detik.com/berita/d-4991485/kapan-sebenarnya-corona-pertama-kali-masuk-ri
SIRCLO & Ravenry, “Navigating Indonesia’s E-Commerce: COVID-19 Impact & The Rise of Social Commerce”, 2020.
https://services.google.com/fh/files/misc/winning_ramadan_with_digital_playbook.pdf
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