2. Omni-Channel Awakens: “There Will Be No More E-Commerce, Only Commerce”
This is what aCommerce Group CEO Paul Srivorakul said when e-commerce logistics player SingPost announced it would create a futuristic mall that combined online and offline shopping, in pursuit of the omni-channel retail dream — a dream that is quickly becoming a reality in the U.S. and China.
Referring to a seamless shopping experience across stores and the online channel, omni-channel retail is considered the elusive Holy Grail in retailing due to the politics and logistical challenges of integrating often independent online channels with their brick-and-mortar counterparts. But so far, Southeast Asia has been late to the game, with its focus (reasonably so) on building up pure-play e-commerce first.
In 2016, we expect to see serious movement in the region from offline players moving online, and vice versa. 2016 will be the year in which offline brands will go online due to the plethora of online marketplaces available, as well as the presence of full-service e-commerce enablers.
For B2C players, the appeal of adding offline operations to the mix includes enabling faster last-mile fulfilment and delivery. In Southeast Asia, Vietnamese electronics retailer Nguyen Kim (acquired by Central Group) is able to pull off same-day, 4-hour deliveries because of the massive offline retail footprint it has.
E-commerce players with a traditional offline arm, such as MatahariMall, Cdiscount and Central, will be in an advantageous position to execute on this. However, 2016 will also have B2C pure players looking into this, as logistics and last-mile in Southeast Asia increasingly struggles with industry-wide capacity bottlenecks.
3. Niche-Commerce Models Will Evolve To Avoid The B2C Bloodbath
In our 2015 predictions, we discussed how B2C e-commerce is a long-term, cash-intensive, winner-takes-all game. Companies trying to battle it out in this space better have deep pockets (see Lazada, MatahariMall, and JD) — or face extinction (see Paraplou Group).
In his seminal essay “E-commerce is a Bear,” Andy Dunn, founder and chairman of Bonobos.com, elaborates on why B2C e-commerce is a winner-takes-all game, and what options remain for other players who don’t have the luxury of deep pockets or a sugar daddy.
Much of this comes down to a “David versus Goliath,” Peter Thiel-esque contrarian approach to e-commerce. The U.S. e-commerce scene has been dominated long enough by Amazon to witness some of these models coming to fruition over the last several years: 1) Proprietary Pricing (think flash sale, Gilt Groupe), 2) Proprietary Selection (ModCloth, NastyGal), 3) Proprietary Experience (Rent the Runway, Birchbox), and 4) Proprietary Merchandise (Warby Parker, Bonobos).
This will be the year where more creative e-commerce models emerge. Companies like Pomelo and Sale Stock Indonesia have already adopted the proprietary merchandise approach toward achieving a competitive advantage. They do this by designing their own fashion and gradually moving upstream to include manufacturing.
Moxy has staked their flag as the “Everything Store,” but focused on women. We also may see the return of subscription-commerce business models with retailers like Central, impacted by a dip in foreign shoppers, seriously considering a Gilt-style flash sales model to get rid of excess inventory.