Shopify Inc.’s Southeast Asia Retail Report 2024 reveals that 68% of Southeast Asian retailers plan to increase their investment in social commerce over the next 12 months. This move aligns with the finding that social media is now the leading driver of brand and product discovery in the region, with 82% of consumers discovering new products through these platforms.

Platforms like TikTok are experiencing rapid growth, with projections indicating an 11.3% increase in their Asia-Pacific user base in 2024. Shopify’s report highlights that 39% of retailers view social media engagement as a crucial metric for determining the ROI of their commerce infrastructure, second only to profit margin (44%).

Eugene Chua, Executive Head of Global E-Commerce and Sales at Secretlab, a Shopify client, emphasized the importance of social media: “Given the economic climate, customers have become more discerning and selective with how they spend their money. Social media continues to play a big role as a platform of discovery and in influencing customers’ decisions.”

Economic Challenges and Consumer Behavior

The current economic climate has significantly impacted purchasing behavior. Inflation and rising living costs have led 83% of Southeast Asian consumers to cut back on non-essential expenses, with over half seeking the best value when shopping.

Price is the top factor for shoppers in the region, with 96% stating they would remain loyal to a brand if it offered incentives, and 70% favoring consistently low prices or promotions. Consequently, 71% of retailers plan to increase spending on contextual real-time pricing to drive conversions while maintaining favorable margins.

While price is critical for driving loyalty and preventing churn, retailers also compete on customer experience. In Singapore, the top online shopping considerations are free shipping (71%), payment accessibility (55%), and free returns (51%). In-store shopping priorities include knowledgeable staff (56%), stock availability (55%), and attentive service (36%).

Despite the preference for online shopping, with 52% of Southeast Asians favoring it, physical stores remain vital, with 28% enjoying in-store shopping as much as online, and 19% preferring in-store. This underscores the need for omnichannel shopping experiences. Over 3 in 5 retailers (66%) plan to increase investment in a unified commerce platform to provide a holistic view of customer engagement, inventory, and fulfillment across channels.

Technology as the Future of Retail

Currently, 85% of retailers face operational challenges, mainly due to manual processes and complex business systems. Nearly all retailers (99%) believe that technology can address these issues and plan to invest about 20% of their total revenue into innovation initiatives next year.

Top tech investment areas include contextual real-time pricing (71%), social commerce (68%), business intelligence (67%), unified commerce platforms (66%), and composable stacks (65%).

With technology poised to reshape retail, 93% of retailers believe the Chief Technology Officer will play a crucial role in business evolution and revenue growth. Retailers are increasingly favoring technology solutions that offer a lower total cost of ownership while ensuring performance and stability.

Shopify has proven to help businesses reduce costs and increase revenue, with data showing it delivers 33% better total cost of ownership, 23% better platform costs, and 19% better operation and maintenance costs compared to competitors.

Shaun Broughton, Managing Director of APAC and Japan at Shopify, remarked: “In this current economic climate, the imperative for both shoppers and retailers to achieve more with less has never been greater. Unified commerce is set to be a key growth catalyst, enabling retailers to harness comprehensive data and insights across their customers, inventory, and operations to make informed and strategic decisions.

“With technology being the linchpin to the future of retail, Shopify is the partner of choice for retailers across Southeast Asia, from large enterprises to small businesses, with solutions that are purpose-built to cater to their unique needs.”