At the eTail Asia 2018 conference in Singapore on March 8, S&P Global Market Intelligence heard industry experts share their thoughts on how augmented reality, artificial intelligence, internet habits and Amazon.com Inc.'s expansion are shaping the retail industry in the region.
The Amazon effect
Amazon's expansion into Southeast Asia is seen as creating a positive ripple effect among smaller local online players, according to a panel discussion at the event. The e-commerce giant debuted in the region in July 2017 with the launch of the Prime Now service in Singapore.
"Ever since Amazon entered the market, we actually ended up growing faster and faster every month till now," said Jean Thomas, marketing director of RedMart, a Singapore-based online grocer that counts Alibaba Group Holding Ltd.-backed Lazada as an investor.
Elaborating on how RedMart's growth benefited from Amazon's entry into its market, Thomas said: "People trust Amazon, but people also like to compare in Singapore." As a result, while Amazon is luring more people to shop online, part of its traffic is spilling over to other marketplaces.
However, Thomas said Amazon's entry has not triggered any strategy adjustments at his company. "Realistically, RedMart is not looking at what the competition is doing," he added.
"It's not that we feel that we are better than them, it's because we feel if we are going to compare ourselves with Amazon and try to copy some of its services, we are always going to be behind since Amazon is basically one of the most innovative companies in the world. If you want to be ahead, you have to innovate on your own."
Thomas also noted that Amazon still needs to figure out its logistics capabilities before it can find success in its new market.
Rise of the machines
"Augmented reality will change the landscape of how a customer experiences a product, both online and offline, in a couple of years," Amit Mangwani, director of retail marketing at Intel Corp., said in another eTail Asia panel discussion.
Mangwani expects AR applications to be adopted more widely in the retail industry, pointing to chains such as furniture retailer IKEA and LVMH Moët Hennessy Louis Vuitton SE-owned cosmetics brand Sephora that have gotten a head start.
Sephora's Virtual Artist app, for example, allows customers to virtually sample makeup products such as lipsticks and eye shadows. Powered by facial visualization technology, the app maps and identifies facial features, then uses AR to virtually apply products and suggest shades based on the user's skin tone.
Lorenzo Peracchione, regional director of mobile commerce for Southeast Asia at Sephora, also noted that artificial intelligence helps the beauty retailer with personalizing offers for customers.
Looking ahead, Peracchione anticipates voice recognition as the next technology that attracts retailers' attention in Asia. He added that while Amazon's Alexa smart speaker has gained traction in the U.S., retailers in this part of the world have not yet been able to leverage such technology to engage consumers.
Search and shop
Marc Woo, head of e-commerce, travel and financial services at Google Inc. Malaysia, said in a keynote at the event that more people are running internet searches on the go, with their searching on mobile devices largely related to their geographical location or the places they want to visit.
"At Google, one of our discoveries is that local information searches are severely outpacing mobile searches as a whole, 50% more," said Woo, adding that search terms used in Singapore include "the nearest fashion boutiques to me" or "shopping malls in Changi [airport area] that are open over the weekend."
Meanwhile, the majority of consumers who made online searches for a shopping spot tend to make a purchase almost immediately and turn out to be a valued customer, Woo said. According to research findings by Alphabet Inc.-owned Google, 75% of these consumers tend to go to a business found though a search within 24 hours and are 25% more likely to make an in-store purchase and spend 10% more on average than those who have not done research online.
