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Commerce in APAC: a greater risk appetite

Helen McRae of WPP’s Mindshare in APAC explains how a willingness to try new things has created a standout environment for commerce in APAC

APAC is a high-growth market characterised by optimism and innovation. Put simply, the risk appetite is often bigger. People want to try new things, both from a consumer standpoint, but also from that of business. And let’s be clear, how you operate in high growth markets is very different from how you operate in an established, more linear one where it is all about managing incremental growth.

In APAC, whether you’re talking about retail media, social commerce or ecommerce, you will find vibrancy and dynamism. Partly this is down to the absence of dominant players in each market and the variety of smaller players.

That being said, one market can influence another, and we’re seeing that clearly. Historically, China was considered a self-contained ecosystem. Yes, the platforms are unique to China, but the ways in which channels in China are used – omni channel (both online and physical stores), social commerce, quick commerce – are influencing the rest of APAC, especially Southeast Asia.

Perhaps TikTok is the most obvious example of this. Social commerce is booming in Indonesia, and even with recent legislation limiting TikTok, it is a massive phenomenon which requires us to look at commerce fluidly across channels, not in siloes.

Points of differentiation

While omni channel commerce, e-retail (online only) and direct to consumer commerce are ubiquitous, in APAC social commerce, live commerce and quick commerce are far more prevalent than in the rest of the world. Largely emanating from China and spreading out across Southeast Asia, these three routes to market are quickly establishing themselves across this region while they remain largely nascent in Europe, the US and other western markets.

Today, social commerce is very much part of the zeitgeist in APAC while, in western markets, there has been slowness around putting the cash register inside the social ecosystem. At its heart, social commerce takes influencer marketing one step on from brand-building to commerce – actual selling. It must perform both roles so there can be no fracturing of the consumer journey if the consumer is to complete the transaction. All functions should ideally be completed within one ecosystem which means you are, in effect, bringing shoppable media and transactions closer to the brand.

Now social commerce now is turning into live commerce. This is not just about media assets in your social feed; it’s about live broadcasting by studios produced 24/7. And human influencers are not always necessary – we have generative AI now. In fact, in Indonesia virtual influencers are generating millions in revenue per annum for brands, and this is growing exponentially. Mega days like 11.11 see products selling out in seconds and these days are becoming critical 'must-win' parts of business KPIs.

But take any Asian market, when you go outside tier one cities the influencers who are the most successful are the ones who appear to be local and authentic. It's also one of the reasons why TikTok has been so successful and can deliver better engagement metrics.

And quick commerce has boomed in APAC too. Typically, food and mobility services, platforms like Grab are entering grocery – and even finance. To be a super app is clearly the ambition and is another export from China. This boom is not limited to urban centres but is spreading outward into more rural geographies. These platforms hold powerful insights on consumers which has been historically hard to get.

Retail media is growing too

A US FMCG brand could spend about 50% of their media budget on retail media. In the UK, it is probably lower – around 30% – but, in APAC, it is 15-20%. This is because, in APAC, most FMCG sales are still offline. But again, this varies tremendously across APAC – Indonesia is over 60% traditional trade versus 16% in Malaysia.

Retail media is very much part of commerce in APAC. It's simply retailers monetising their own online and offline abilities, and using their own inventory, data and insight to enhance sales and opportunities for brands to sell more – but it’s TODAY much more personalised than brands could have achieved before.

Through programmatic, online retailers can connect outside their own platforms and pull consumers from non-digital environments onto their platforms to transact – it’s not so different from the promotions of yesteryear (in physical stores). Now, retailers are taking that same premise and doing it digitally. These routes to market are all very valuable for brands – they enable them to understand their consumers and target them better, especially in the cookie-less world.

In APAC too, brands need to integrate their planning and thinking around commerce and retail media into their normal media planning – there are just a few more layers. But brands in APAC work with more complexity because of that dearth of dominant player.

Learning from each other

Ultimately, it is a two-way street: APAC is learning from the west but there is much for the west to learn from APAC, especially around influencers, live streaming – and conversational commerce.

We’re becoming more equal partners with each contributing something different to create a more complete picture of what modern commerce can deliver.

Helen McRae

Mindshare

published on

28 November 2023

Category

Commerce

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