Consumers willing to try online shopping due to convenience and price advantage
Security, trustworthiness and uncertain warranty claims may impede growth
ONLINE shopping in South-East Asia is on the rise as more consumers capitalise on its convenience and price competitiveness, a new survey by Google shows.
Speaking to reporters at a media briefing last week, Shylendra A.S.Nathan (pic), head of Google Malaysia for telco, tech and government, said the study suggested that the Web has changed the way consumers shop, and that this trend presents good opportunities for the online retail industry in South-East Asia.
The online poll was jointly conducted by the search giant and market research firm TNS between Nov 27 and Dec 16, 2013, and consisted of respondents between 18 and 60 years old.
The respondents comprised four categories: Recent online shoppers, non-recent online shoppers, non-online shoppers, and online sellers.
For Malaysia, there were 1,165 respondents, 453 of whom were recent online shoppers; 122 non-recent online shoppers; 200 non-online shoppers; and 390 online sellers. The five countries surveyed were Indonesia, Singapore, Malaysia, Thailand and the Philippines.
The study revealed that consumers across South-East Asia were beginning to be more inclined towards online shopping. Nearly half the respondents, many of whom had never shopped online before, planned to do so in the next 12 months.
The country breakdown showed that 46% of Indonesians who have never shopped online before expect to do so in the next 12 months. Other countries displayed similar trends, with Malaysia at 43%, Singapore at 41% and the Philippines and Thailand at 40% each.
Interestingly, the poll showed that many of these newcomers to online shopping in the five countries would opt to buy apparel – defined as clothes, shoes, fashion items and general clothing accessories – more than any other inventory online.
The results seem to tally with similar surveys conducted by market research firm GfK in May and online payment provider PayPal in 2012.
In terms of the shopping experience, these would-be online shoppers said the testimony of other shoppers – particularly people whom they know – and lower prices are the two factors that would attract them to try buying online.
However, respondents noted that convenience is just as important in order to keep them coming back for more, as time saved while buying online is a big attraction to them.
Asked what these trends mean to online shopping and the retailing industry in the South-East Asian region, Shylendra said that when it comes to online shopping, consumers in these countries are all moving in the same direction because it is convenient – a factor that is more important than price.
“The Internet, especially search, is twice as important as any other source for researching products to purchase online,” he said. “For businesses, their online ads drive both direct action as well as triggering research.”
Despite the encouraging survey findings, Shylendra conceded that online shopping still faces a number of impediments as almost half the respondents cited as main concerns the security of their transactions and the privacy of their data when transacting online.
Of the five countries, the poll suggested that Malaysians appeared to be the most worried about their financial details being available online, with some 48% concerned about this, followed by respondents in the Philippines at 45%.
Meanwhile 52% of respondents from Thailand said they were not that confident of the quality of products they order online, followed by 45% in Singapore and 43% in Indonesia.
Other reasons cited as barriers were: The uncertainty of warranty claims for goods bought online; the waiting period experienced when buying online; and the missing thrill of haggling for goods otherwise experienced by buyers in physical stores.
Shylendra said online retailers must take security very seriously. Noting that the survey indicates that more people are willing to try buying online, he advised retailers to ensure that they have the right platforms with the right security protocols in place.
“Online retailers must make it easy and trustable to shop online,” he argued. “To do this more effectively, they need to secure their platforms with the right technology while at the same time ensure that it’s not tedious for the user to transact.”
Search and ads
Shylendra said the study also suggested that online advertisements drive direct action and/ or trigger research. For instance, 79% of Indonesian respondents took direct action from viewing online ads, followed by 72% in Malaysia, 70% in the Philippines, 68% in Thailand and 62% in Singapore.
While the figures seemed very positive, one digital marketing agency has suggested that most visitors to e-commerce websites leave without buying anything.
In an interview with Digital News Asia (DNA) in May, Yuko Saito, South-East Asia managing director of the Paris-based Criteo, said, “Some 97.5% of customers visit e-commerce websites and they don't complete and convert, leaving the site without buying, according to the E-commerce and Distance Selling Federation (Fevad).”
Quizzed as to why there seemed to be a wide discrepancy between Google's findings and those of Fevad's, Shylendra said that the Google survey does imply that the actions taken by the respondents do not necessarily mean that they completed a sale or performed a specific call-to-action, and that the survey merely recorded what action the respondents took after viewing an ad.
“We need to be very clear what the number means. For example in Malaysia, 72% took direct action after seeing an ad and all this means is that they did something after that,” he explained. “That action could be research or purchase.”
Asked if he agreed that many e-commerce sites do not have good call-to-action conversion rates, Shylendra declined to comment specifically.
“Actual conversions are based on a host of factors such as what the site is selling, its value proposition, and how easy is it for users to use the site,” he said.
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