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The digitization of retail has been progressing over the last 3 decades with several distinct phases: The first phase was for pioneers who built the first e-commerce websites to serve a growing digital audience. Contrary to popular knowledge, the first online bookstore was an early pioneer called Books.com, not Amazon. A key challenge for many early independent online retailers was finding a cost effective way to scale their logistics to carry hundreds of thousands of products. This led to the second wave where large online marketplaces emerged to dominate e-commerce. Amazon, Alibaba, JD, Shopee, Lazada: these are all leading examples of the second wave of digital retail, where marketplaces offering everything one can possibly imagine battle to keep customers stuck to their respective platforms. Today e-commerce marketplaces have grown to a 27Bn industry across the region by offering reliability and convenience to consumers. This has come at the expense of local retailers who lack access to technologies and skills to engage with consumers whose journeys are ever more digital.
In fact, retailers across South East Asia are losing $4.5Bn in annual sales to their online competitors, simply because they are not able to appear in search results for the products they carry. The reason for this is simple: the products they carry are generally not digitised because they simply have too many. A typical independent online only retailer would carry 200 SKUs, but a local store on average carries over 1,500 SKUs. At this scale, existing tools simply just don't work, and they don’t work because they were originally designed for small e-commerce only businesses.
The coming third wave Shopper behaviours are changing in ways that offer unique opportunities to retailers. Over the last 5 years, search has seen a seismic shift towards local listings. The reality used to be that consumers would go online only to buy online, but this has changed dramatically as consumers spend ever more time online. And of course they expect their local retailers to be online too. Search terms demonstrate a shift to local results as well. Looking at Singapore search trend data shows that somewhere in 2016 queries for ‘near me’ overtook ‘buy online’, and grew steadily up until the pandemic hit, and began to accelerate again as the pandemic has begun to wane.
"Shopper behaviours are changing in ways that offer unique opportunities to retailers."
Brick and mortar stores have a history that runs back to ancient times. In fact, one of the earliest marketplaces were the Greek Agora, which was a centrepiece of ancient Greek society. Fast forward to today and retail is a 670Bn industry in South East Asia alone."
This is incredible considering the increased power and reach of e-commerce platforms, and perhaps can even be read as a response to their growth. While the pandemic arrested this trend in the early part of this year, we see that searches for local options have returned once the lockdown was lifted In this environment, it is critical for physical retailers to maximize their local reach or they will lose out to online competitors. Fortunately, they have two fundamental advantages: their proximity to their customers and their local inventory. Present a consumer with the option of getting what they want quickly at a nearby store vs waiting for it to be delivered and chances are they will go with the former. This is demonstrated by the fact that 46 percent of all searches online are for local products and businesses. Making sure store inventory is visible online is critical to capitalizing on these behaviours and driving foot traffic to retail stores.
The third wave of digital retail will bring the same level of transparency and availability from e-commerce experiences to physical stores as well. Fairmart is at the forefront of this by supporting local stores to quickly digitize large inventories and publish their real time availability across search channels. This empowers local stores to capture relevant and high intent search traffic, bringing digital shoppers to physical stores.