person holding a shopping bag

They Came, They Shopped, They Bought – What’s Next for Online Marketplace Startups?

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Unlike brick and mortar retailers and supermarkets, many of which have been forced to shut down during COVID-19, online marketplaces have enjoyed strong levels of growth over the past two months.

As consumers confined to their homes turned to the internet for necessities as well as entertainment, digital retailers across Asia noted sharp spikes in sales.

Take China’s Miss Fresh for example. In February and March, when COVID-19 reached its peak in the country, the online grocer saw a tripling of its gross merchandise value (GMV) as consumers of all ages sought fresh ingredients and ready-made meals on its platform.

Shopee, which is Southeast Asia’s largest online marketplace, said gross orders reached $429.8 million in the January-March quarter, an increase of 111% year-on-year. In April alone, gross orders grew over 140% year-on-year, according to its financials.

As competition online grew, marketplaces have also become more creative in capturing new market share. After starting a livestream service for brands to engage with consumers, Lazada, another Southeast Asian e-commerce platform, said total GMV rose by 45% month-on-month in April.

According to Lazada Group CEO Pierre Poignant, the platform is now aiming to increase its daily livestream sessions by 50%. It expects this to raise total views by up to 40%.

When people get an improved user experience, it’s not that easy for them to go back to the old way of shopping.

- Cecila Sun, Partner and COO of Miss Fresh

A permanent shift in trends

Cecilia Sun, partner and COO of Miss Fresh, said COVID-19 has permanently reshaped consumer shopping behaviours in favour of e-commerce in China. Miss Fresh runs 1,000 micro warehouses stocking over 3,000 stock-keeping units, allowing it to fulfil up to 2,000 orders per day across 16 cities in China, all within the hour.

“One of the biggest impacts of COVID-19 is bringing older people online. It actually quickened this online penetration trend by two or three years,” Sun said. “Now we see our customer base getting older; the average age is up to 40 compared to before, when our customers were younger, around 30 to 35.”

Here’s what happened. With wet markets and supermarkets out of bounds during the COVID-19 lockdown, a generation of older shoppers in China began coming online to buy everything from onions to ice cream for the very first time. That opened their eyes to a more convenient way of grocery shopping and introduced them to the option of being able to buy everything they need on a single platform.

“When people have this better user experience, it’s not that easy for them to go back to the old way of shopping,” said Sun, adding that retention rates on Miss Fresh reveal many new customers over the last three months have remained on the platform.

In fact, Miss Fresh has increased its inventory of vegetables, meats and seafood to cater to the demands of older shoppers while reducing items popular with the younger generation, such as chips and other snacks. “These are the changes we have made over the last three months as a result of COVID-19. Essentially they are long term,” said Sun.

Juggling multiple strategies

Things are more challenging for digital retailers covering Southeast Asia, where each country has implemented COVID-19 response measures in different ways. Countries such as Indonesia and Malaysia, for example, issued movement controls and lockdown orders much earlier than Singapore, where restrictions were rolled out, and are now being pulled back, more gradually.

In an interview with Campaign Asia, Ian Ho, regional managing director for Shopee, noted the online shopping platform saw more orders for daily essentials such as toilet paper and baby food at the beginning of the pandemic. As work-from-home measures kicked in, demand for computer accessories, fitness equipment and educational aids for kids began to spike. More recently, with economies emerging from lockdown, Shopee is seeing more interest in clothes and cosmetics and people prepare to go out again.

Consequently, Ho says international brands such as Adidas, Under Armour and Muji have all launched their merchandise on Shopee’s platform, while native Southeast Asian brands like Thailand’s topvalue.com, Indonesia’s Matahari Department Store and Malaysia’s Naelofar have also moved their businesses online.

For Shopee, keeping up with the varying levels of government responses has meant juggling changing preferences and trends at different times in each market as consumers adjust and adapt to ongoing restrictions to get by. Going forward, retaining interest in e-commerce amid shifting consumer trends will be key for Shopee to maintain its position as the region’s dominant e-marketplace.

To encourage brands to stay onboard, Shopee is now adding value by helping with supply-chain issues and offering perks such as seller support packages, shopping vouchers and free shipping.

While e-commerce has evolved to become a mainstream mode for shopping in Southeast Asia, for online retailers and marketplaces, the work has only just begun.

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