Digital Commerce to continue driving Retail Growth

Digital Commerce to continue driving Retail Growth

13 May 2022, Kuala Lumpur – Southeast Asian sellers continue to adopt a confident outlook on business growth, with 77% of online sellers expecting more than 10% increase in their sales for the next quarter, according to findings from Lazada’s Q1 2022 Digital Commerce Confidence Index (DCCI).

The latest report also found that sellers are also more optimistic about the state of the economy, with three out of four online sellers sharing the view that it will be better in the next quarter.

“With the fourth instalment of Lazada’s Digital Commerce Confidence Index, we see that sellers’ confidence continues to pick up as economies bounce back. According to Lazada Consumer Study, 73% of Southeast Asian consumers identified online shopping as integral to everyday life.

“Online sellers who can better understand and optimise on digital shoppers’ preferences and category trends will be well positioned to stay competitive and win in the digital commerce industry,” says Magnus Ekbom, Chief Strategy Officer of Lazada Group and CEO of Lazada Malaysia.

Sellers’ confidence extends the momentum from the last quarter of 2021, where 74% expected at least a 10% increase in sales in the subsequent quarter. Similarly, sellers who expect a decline in sales has decreased from 12% in Q4 2021 to 7% in Q1 2022.

Special occasions and celebrations such as Ramadan, Hari Raya and Chinese New Year, as well as the upcoming festivals are important drivers of the positive outlook, as these occasions often translate into increased demand and consumption of goods from buyers.

Confidence in business growth

To support this anticipated growth in online sales in the next quarter, 74% sellers said that they would further increase their inventory by at least 10% in the next three months and 47% said that they would increase staff resources, signifying confidence in their business growth.

Conducted in the first quarter of 2022 with the participation from 766 online sellers across Southeast Asia, the report also found that sellers’ confidence is shared across categories, with general merchandise (81%), fashion (78%), and FMCG (76%)[1]amongst the top three categories.

This is also in line with consumers’ online shopping preferences, with fashion, health and beauty topping the charts for future online purchases, according to a recent Lazada Consumer Study of Southeast Asian consumers. 

Additionally, the same study also found that customers look for low prices, affordable shipping, ease of search and convenience when shopping online, as well as payment options such as e-wallet and COD.

More buyers for digital purchases

According to the Lazada’s DCCI Q1 2022, businesses are in tune with these factors, and they need to put their efforts into attracting more customers to shop online and ensuring that their products are competitively priced – 58% of the sellers surveyed cited attracting more online traffic from shoppers.

56% stated increasing price competition as top two considerations for growth in the next quarter. On the other hand, 23% of sellers are also citing high operations cost as a potential challenge. This is reflective of growing global uncertainties like rising inflation rates, geo-political instabilities affecting oil supply and disruptions to the global supply chains.

DCCI is the first study of its kind that seeks to map out the trends in digital commerce by indexing the sentiments and confidence levels of Southeast Asian online sellers.

It measures business confidence based on surveys benchmarking the opinions of online sellers in Southeast Asia, including Malaysia, Singapore, Indonesia, Philippines, Thailand and Vietnam.

In the first quarter of 2022, Lazada surveyed 766 e-commerce sellers on their current online sales performance and their expectations for their digital commerce business in the future.

The index ranges from 0 to 100, with 0 being “very pessimistic” and 100 being “very optimistic” on the spectrum.