Southeast Asian market, the fast-growing go-to for e-commerce brands is entering the second quarter of 2019 with promising prospects. There is a lot of optimism concerning its development. According to Google-Temasek study, the industry will hit $100 in gross merchandise volume (GMV) within the next 6 years. However, because e-commerce accounts for only up to 3% of all retail in the region, there are growing opportunities for both local and international companies to tap on these markets.
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Wait… e-commerce brands also celebrate Christmas?

It comes with no surprise that retail experiences seasonal trends in sales volume – and it happens everywhere in the world. Southeast Asia is no different here. Local consumers’ shopping behaviors visibly depend on seasons, holidays and other similar factors. However, due to big cultural diversity within the region, those trends may sometimes vary from country to country.

Seasonality is a characteristic of a time series in which the data experiences regular and predictable changes that recur every calendar year.

Definition by Investopedia

 

Wait, it sounds like a math class which we all already passed. Let’s put it in different words – people don’t buy the same products in the same quantities all year round, because their needs change according to a specific season. These can be 4 seasons of the year, but also periods in which people take part in certain traditional celebrations or turn to specific habits. Therefore, online stores receive higher or lower amount of consumer orders at specific points of the year.

 

What are all these seasons?

The most important peak in e-commerce performance worldwide is the last three months of each year. Southeast Asia shows an identical trend, with almost 40% of online sales happening in October, November and December.

They include events such as Thanksgiving Day, Cyber Monday, Black Friday, Singles Day, Christmas and New Year celebrations. Although Singles Day was invented in China and popularized among young Chinese shoppers, it has spread to other parts of the world, creating one of the world’s largest shopping days. It’s a new opportunity for e-commerce brands to knock on and check whether it’s something they can benefit from. According to a report by Meltwater, Singles Day stands for over 20% of social media conversations when it’s happening – most of them in Indonesia, Philippines and Malaysia respectively. To our surprise, Singapore accounts for only 1% of these conversations. This makes brands need to start preparing for this three-month holiday season as early as August and September – all this to be able to meet customers’ expectations and fill in all the orders without delays. Moreover, an advance is needed to book influencers and find good cooperation opportunities with merchants.

 

Although the last quarter of the year is so important, other seasons play their part too. For example, an interesting period for e-commerce in Malaysia is Ramadan happening between May 5 and June 4 (2019). Malaysians spend as much as MR18 billion during Ramadan which makes brands seek ways to catch consumers’ attention and accommodate for their period-specific needs. May is a month when people celebrate Mother’s Day, and February – Valentine’s Day. These seasons bring major increases in sales for online flower and sweets shops.

 

Winning strategies

Numbers sounds impressive, but is it really that easy to offer a discount during Christmas and earn million dollars? It turns out that only 10% of e-commerce sellers worldwide make a profit (CNBC survey). Where is the trap? In understanding the profit margin and calculating the price. As it needs to take in expenses such as shipping fees, all side factors need to be taken under consideration before a final price is announced. Customers tend to return more and more products which, combined with holiday season free shipping, can instantly kill the profit margin.
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The first tip comes rather expected – be careful with the price you set before the holiday campaign. Many brands turn to bad practices of increasing it before the discount is added which can result in serious damage to the company’s image. E-commerce sellers can also cooperate with shipping companies to avoid giving consumers hard time with expensive shipping choices. It is important to understand well the target market of your brand and analyze consumers’ seasonal shopping behaviors. What holidays do they celebrate? When is the sales volume in peak? Answering all such questions creates a strong base to build an effective e-commerce strategy and tap on season-specific opportunities in particular countries. Without a doubt, e-commerce platforms always benefit from any kind of seasonal shopping spree, because their share is based on volume. It is retailers that need to pay attention to all the opportunities, but also risks that seasonality brings and make the best out of it.

 

As e-commerce in Southeast Asia is becoming increasingly conversational, high social engagement of shoppers is another aspect that brands should focus on. Consumers no longer want to enter a website, buy a product and leave. Instead, they are interested in e-commerce apps offering entertainment, community activities and product discovery features. Many people enter such online environment without any clear need – they create it while using the app and consuming content. It makes new metrics such as time spent on such platforms important for e-commerce platforms in the region.

 

Conclusion

Consumers’ purchasing behaviors vary according to particular seasons throughout the year. Disregarding seasonality can take many opportunities away from e-commerce players – and not only that, it can bring loses. It is important to learn about local customs, traditions and important events not to miss out on any chance and not to fall behind competitors’ strategies. If all the other brands celebrate Christmas together with their customers – celebrate it too, but don’t forget that profit margin is the limit you shouldn’t cross.  

 

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