Globally e-commerce is a low hanging fruit with low teens penetration. E-commerce is a proven channel and is expected to continue to gain marketshare to the chagrin of incumbent retailers in 2018.
International grocery research firm IGD, noted that both traditional retailers and ecommerce players, lured by the rosy prospects of the thriving e-commerce market, have stepped up their online expansion, reaching out to more customers in Asia via online platforms.
In many Asian countries, with m-commerce getting more popular among online shoppers, the move towards a cashless society is gaining steam. Some retailers have also partnered with payment service providers to offer electronic payment services and mobile wallets to provide their online customers a frictionless payment experience.
In 2017 IGD predicted that online grocery will be the greenfield that will drive battleground. The excitement revolves around the anticipated significant potential as far as addressable market is concerned. In China, online grocery penetration is around 4% (compared to mid- to high-tens for e-commerce) compared to 1% in the US.
“We think that online grocery is going to be the next driver because the cost of customer acquisition cost while helping Internet companies to cross-sell,” said Sundeep Gantori (video top rigth), director, Equity Analyst, UBS AG. In this exclusive video interview with Retail Tech Innovation, he describes the key pressure points facing retailers in 2018.
The strategy for much of 2018 will likely be further integration of digital with brick-and-mortar operations as retailers further embrace advanced technologies to improve customer engagement with tools such as virtual and augmented reality as well as gamification. One clear strategy is alignment of business with the needs of the evolving customer.
IGD also noted that “experiential shopping” is gaining traction in Asia as consumer palate for additional value – exceptional service and personalized experiences, or as the research firm refers to it: immersive shopping experiences and services.
The latest IDC FutureScape: Worldwide Retail Predictions says that by 2019 50% of retailers will have adopted an omni-channel commerce platform. IDC forecasts up to a 30% increase in omni-channel profitability as a result of increased revenue and efforts to drive up TCO while driving down inventory costs and operational costs.
The analyst also predicts that in the same period, the top 30% of retailers will be actively engaged in digital transformation, driving organization shifts and investment strategies in foundational endeavors.
