The stats are staggering: Singaporeans are the most frequent online shoppers in South-east Asia; and 90 per cent of women here are avid online shoppers. But with new e-stores, online department stores and traditional retailers going online almost every month, has e-commerce reached saturation point?
As much as the Internet might seem an infinite entity, the online shopping space here is fast becoming overcrowded.
Within the last month, a new multi-brand shopping platform for emerging Asian designers called SocietyA was launched; a brand specialising in clothing with detachable collars and cuffs - endorsed by celebrity and entrepreneur Jacelyn Tay, no less - called Formasian Label was also unveiled exclusively online; and old school department store Metro made headlines for exploring online shopping as an antidote to the challenging retail environment. Digital is king, but is it too late for the slow adopters of e-commerce?
Turning the model on its head
"The reason why Formasian Label chose to start an e-commerce business is because of low running costs," admits Debra Chong, founder of Formasian Label. "We can keep our online store open 24/7 without incurring additional costs. Furthermore, operating our business via an online store means we are not limited by geographical area in terms of our customers."
But while previously competitive price points, creative styling and a strong Instagram feed were enough to sustain a profitable online fashion business, these days it takes a lot more tech know-how and much-deeper pockets to be an e-commerce powerhouse.
For two-year-old "omnichannel" retailer Inverted Edge, which also operates the online shopping businesses of clients ranging from SPH Magazines to multi-label boutique Manifesto, it means turning the online model on its head - and going offline. "We had always wanted to have a brick-and-mortar presence, even when it wasn't considered sexy," reveals Debra Langley, chief executive officer of Inverted Edge.
"The reality is that the cost of setting up in a great location is always a huge challenge, particularly in the Orchard area, but more importantly, we didn't want to build just another store. There had to be a point of difference and, logically, that would be grounded in digital so we could become a true omnichannel player."
Last month, the Singapore-based business opened a brick-and-mortar store in Scotts Square that allows customers to try out its products across devices and platforms, via social media and in the real world as well.
It has teamed up with business intelligence software company Qlik design and digital service agency Deloitte Digital to incorporate technology into every shopping experience, analysing shopping patterns, consumer behaviour and transactions.
It also offers a service that is trending in the e-commerce realm: click-and-collect. According to Deloitte, there has been a 20 per cent jump in businesses offering the service in Europe this year from the last, mainly because online consumers shop with greater confidence knowing that they can receive their purchases without worrying about delivery times, and try on or return a product that they've bought online.
"We are now at the tipping point in the retail industry, both on- and offline, where we have huge amount of data to determine consumer shopping habits and the impact to business performance," explains Paul Winsor, director of market development for retail and services at Qlik.
"The key to gaining the competitive edge, however, is how a retailer uses business intelligence (BI) technology to make sense of this plethora of data and turn them into insight."
Drawing links to connections
According to Mr Winsor, BI helps e-commerce retailers trawl through the massive amount of data to draw links to the most distant of connections. It could analyse a consumer's shopping process and determine, for example, if she started shopping online before finally make a purchase in a store.
The technology also dishes out specific insights that finetunes retail therapy to almost a science.
"The sale of dresses might be highest on Thursday afternoons because office ladies are surfing the Net post-lunch and planning for a Friday night out, or sales may be lowest on Sunday afternoons as people tend to feel fat after Sunday brunch," explains Mr Winsor.
Even independent retailer The Label Monster, which was launched under a year ago, banks on the information gleaned from e-commerce data to improve its performance - an essential tool for a first-time retailer.
"Competing in a digital space can be tough when you're competing with big players with big budgets," says Bianca Dakin Davis, digital content marketing manager for The Label Monster. "Increasing Web traffic and conversions has been a challenge for us and is a challenge for many new entrants."
Unlike running a traditional retail business, however, Ms Davis is able to track the performance of her marketing activities with relative ease.
By tweaking online ads according to its ability to drive traffic to the site, the company is able to maximise its expenditure on advertising.
"Having ads that perform well and gaining brand awareness through the media and social media influencers have all been key to driving traffic so far," reveals Ms Davis. "It's a work-in-progress and we're learning a lot as we go from our customers and our analytics.
This allows us to make improvements to our product range each season, have better price points, refine how our site functions and create content that we know our audience will engage with."
Whether or not most e-retailers are privy to the Big Brother-esque smart data that provides revealing explanations of why and how folks like to part with their cash, many are still optimistic about the potential of e-commerce on a very simplistic basis: the fact that we are glued to our gadgets around the clock.
"I don't look at it in terms of saturation point," adds Ms Langley. "What I see with 87 per cent of Singaporeans online and more than 85 per cent with smart phones is that everyone in Singapore now has access to every website, app and retail offering anywhere in the world. And they can do something about it with just a few swipes or clicks."
Being Singapore-based also doesn't confine an online retailer's reach to just local consumers. For Zalora, being a major player in the region, rather than just devoting its efforts to the tiny population that resides here, is the secret to survival.
"While online shopping in South-east Asia only accounts for 0.2 per cent of all retail sales now, if it rises to 5 per cent, the market could be worth around US$21.8 billion," points out Dione Song, managing director of Zalora.
And instead of globalising its product offerings to appeal to as many shoppers as possible on the Net, the retailer has been creating a multitude of lines to cater to every segment of the market possible. It stocks a new UK high street label, Finery London, backed by its own parent company Global Fashion Group (GFG) - helmed by fast fashion heavyweights from Topshop and Asos.com, and recently launched a Muslim wear brand of trendy but modest pieces called Zalia.
"For e-commerce players to survive in this competitive landscape I think what's important is localisation - forming strong local teams that understand the local nuances in each market," adds Ms Song.
"South-east Asia is a unique market with diverse cultures and diverse languages. Having a strong local base with people on the ground who understand the challenging landscape has given Zalora that extra edge in ensuring that campaigns appeal to local psyches, deliveries can be done quickly (with our same-day delivery option), and new products can go live in the shortest possible time. It's about having a global outlook but a local approach."
But to create such a structure of vertical integration and variety requires very deep pockets - GFG, for example, is valued at a cool 2.7 billion euros (S$4.1 billion).
For companies with funding a little less stratospheric, focusing on just that one niche segment through specialised merchandise might be the only way to go. Leaving the couture-esque designs and astronomically-priced products to other fashion brands, Formasian Label is geared towards more democratic designs for busy mums.
"As mothers, we know how difficult it is to find the right apparel to fit our figures," says Ms Chong, who declines to reveal the start-up cost for the store. "At Formasian Label, we not only want to be trendsetters, but also create designs that complement an Asian woman's body shape. Using a concept of removable cuffs, collars and hemlines, wearers can give a new spin to their basic wear items by mixing and matching with various 'attachables'. Our designs provide greater mileage and value for money."
Likewise, The Label Monster doesn't try to appeal to every taste and budget, instead focusing on wearable, timeless looks with an edge.
The company sources for independent labels from around the world like Australian brands Injury and Bless'ed Are The Meek, and premium denim streetwear labels BLK DNM and Frame from the US. Rather than simply photographing its products to save costs, The Label Monster always shoots its wares worn on a model, and paired with other items from its collection.
This enables customers to visualise how its outfits would look, without actually having to try them on. "Having a small team and therefore less manpower has also been a hurdle at times," reveals Ms Davis. "When you start a new business, everyone is so enthusiastic and there are so many big ideas.
We've learned that we have to prioritise our ideas so that we create content that is on par with the big players and each idea that we execute meets our key objectives."
This article was first published on June 6, 2015.
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