E-commerce to shift into 'digital commerce': Accenture

• Combines omni-channel, social media, technology, and marketing strategy
• Indonesia slowly digitalising; consumers have already moved to online shopping

ACCENTURE’S latest study predicts that there will be a shift from e-commerce to ‘digital commerce’, which is a combination of integrating omni-channel, exploiting social media and new consumer-facing technologies, and providing actionable insights for effective and integrated marketing.

“Simply featuring your products on an online platform and spending money on marketing is not enough to attract the evolving Asian consumer,” said Accenture Digital managing director Mohammed Sirajuddeen.

With the best technology literally in the palm of consumers’ hands, they expect seamless customer experiences offline and online. Almost one in four online purchases are now made on smartphones and by 2020, 65% of all transactions will be carried out online.

Falling brick-and-mortar sales are also testament to how savvy shoppers have shifted to using smart devices.

Consumers also seek information and make informed buying decisions by reading crowd-sourced reviews and comparing prices across apps and websites to find the best deals.

‘Digital Commerce’ in Indonesia

According to this report, Indonesia has been identified as Asia Pacific’s (APAC) digital laggard with low internet penetration among its 264 million strong population.

However, with that population set to increase by 13.4 million by 2022, its digital consumer index score should rise considerably.

Of those who are already connected, 43.5% are digital buyers and their numbers are expected to surge to 65.4% of internet users by 2022.

Per capita spend on digital purchases remains at a fairly low level, which is US$31.70 per buyer.

“But expect that to more than double in the next five years,” says Sirajuddeen explaining that a predicted significant increase will be powered by Indonesia’s general economic expansion.

GDP growth is expected to continue at an annual average of 5%, providing a solid foundation for new investments in the country and increasing the disposable income of the growing middle class.

Other important drivers include the youth of Indonesia, with 50% qualifying as millennial.

As for Indonesian companies, specifically FMCG and retail, Accenture Indonesia managing director technology consulting Leonard Nugroho says that most are aware of ‘digital commerce’ elements but have not combined these into their businesses strategies yet.

Sirajuddeen adds, “There are two qualifications to see whether a company has successfully shifted to ‘digital commerce’. They must be able to leverage on multiple digital technologies and use the right data to make decisions.”

Indonesian retail buying behaviour

Snapcart country sales and operations director Eko Wicaksono then shared Snapcart’s survey of more than 3,700 respondents across Indonesia in April 2017.

The report shows that Indonesian shoppers use multiple channels to source their different needs.

Fifty-five percent use hypermarket channels (57% supermarkets) for monthly purchases and/or to maintain stocks at home (planned behaviour).

Forty-eight percent shop at minimarkets to buy urgent needs and/or daily purchases (immediate / impulse behaviour), and 79% shop online for the purpose of experiential behaviour, given the appeal of various promotions.

General trade channels such as traditional markets and kiosks are widely perceived as the most affordable channel to purchase needs (65.2%).

“This is affected by the barriers for consumers in going to purchase daily necessities online such as prices indifference, issues with preferred payment options, shipping fees and times,” explains Eko.

He says that the category of products may affect the options for suitable channels in selling products.

Therefore, Sirajuddeen feels that, “Offline stores are still needed and they need to be digitised.”

Strategy towards ‘digital commerce’

Sirajuddeen also suggested that companies build up their ‘digital commerce’ and marketing playbook, while evaluating their current online strategy and level of technology.

 “This can be achieved through technology enablers such as data analytics, product and web content management systems, payments, order management, and logistics planning to deliver a best-in-class consumer experience.”

‘Route-To-Market’

Based on the market potential in APAC and specifically Indonesia, it is very important to have an understanding about who buys what by when in where and how, because the winners in this new world will be companies that have a Route-To-Market (RTM) strategy that’s fit for its purpose in this changing landscape.

RTM is basically the knowledge to understand the behaviour of typical buyer in typical store types.

The five key questions in Route-to-Market (RTM) analysis are:

1. Who are the consumers: How best do we reach and engage this new consumer or shopper in-store?

2. Where are they: How do we ensure that we have the right product where they are when they need it while balancing revenue growth and cost to serve?

3. What will they buy?

a. What should we sell them that is in line with their preference?

b. What should we sell them that will optimise our margin mix?

4. Where will they buy: What should our ‘Channel mix or options’ be it by category and consumer cluster given revenue potential and cost to serve? What should the RTM mix be to deliver what they need when they need it?

5. How will they buy: How do we deliver an omni-channel experience that’s reflective of consumer’s path to purchase?

To start of doing the RTM analysis, the very first thing that needs to be done is categorising or clustering the typical trader and consumer.

The market needs to identify the archetypes and the needs that are to be catered to. Then the next action is the mapping of each type of consumer with traders.

“Think of ‘digital commerce’ as an increment, it is not to replace existing businesses. It is a part of a company’s growth channel to deliver and receive better experiences.”

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