Future of commerce: Understanding Southeast Asian consumers- Accenture

The Future of Commerce has ArrivedUnderstanding the Asian ConsumerIndonesia – Not to Be Missed Opportunity

Contents

Indonesia – Not to Be Missed Opportunity 3

The Asian Consumers Expectation 14

New Platforms and Technology 18

Appendix 23

Indonesia : Not-to-be missed Opportunity

5Copyright © 2016 Accenture All rights reserved.

100 million new ASEAN consumers will add over $770 billion in new spending by 2020

ASEAN by 2020

$3

6th

580

+50%

$2.3

x2

$770

Trillion USD Economy

Largest Economy World Wide

Million People

Living In Cities

Trillion Annual

Consumer Spending

Consumer Spending To

Double By End Decade

Billion In New Spend

60 Million New ConsumersAble To Purchase Items Beyond Their

Subsistence For First Time

Greater Number Of Wealthier Consumers

Emerging In

New Target CitiesOutside Asean’s Tier 1 Cities

38 MillionNewly Affluent

Copyright © 2015 Accenture All Rights Reserved. 6

6

Indonesia

Population

growth and

urban

development

will drive

growth in large

and mid-size

provinces

across the

country

Moving To Higher-income Tiers And

Expanding Access To Premium Product

Categories

Note: All figures are comparison between 2012 and 2020, ASEAN includes Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam

Source: Accenture analysis based on data from Euromonitor International 2013

Copyright © 2016 Accenture All rights reserved. 7Accenture Digital Consumer Research in 2015

8

CPG has the opportunity to drive market development of eCommerce in emerging geographies – and take the lead in capturing the share of the consumer’s basket

The online shopping landscape in Indonesia and Singapore is less evolved vs. China.With the evolution of technology, this is at the inflection point

Need to strategize basis the degree of evolution of online shopping landscape to maximize benefits

APAC Digital Commerce Shopping Landscape: China vs. Indonesia vs. Singapore

Mature online ecosystemPayments/delivery/Infrastructure

Highly evolved consumer with sophisticated demandsReadiness to embrace technology interventions in lives

Social aspect of shoppingEntertainment & Family bonding

Comfortability with the online ecosystemTrust and reliability. Quality of products is an issue across all

Intensive research before shopping: consumer awarenessResearch limited to price and deals in Indonesia & Singapore

Key technology adopterse.g. Rise of m-commerce

Source: Accenture Research: APAC eCommerce Digital Research

Copyright © 2016 Accenture All rights reserved.

Owing to a rapidly growing consuming class, Indonesia

35.7 52.7

2014 2019

9

CAGR 14-19Asia

CAGR 14-19World

1.7% 4.6% 3.3% 5.5%

5.2% 6.8% 6.3% 7.3%

Home Care Beauty & Personal Care

Packaged Foods

Soft Drinks

CAGR 14-19Indonesia

5.4% 12.8% 7.2% 8.9%

Indonesia shows tremendous potential in beauty & personal care~3x Global CAGR~2x APAC CAGR

CPG in Indonesia to be up more than 40% in 2019 vis-à-vis 2014; High growth potential makes Indonesia an attractive market

Indonesian CPG Market*

(USD Bn)

CPG Category GrowthIndonesia v/s Asia v/sWorld

~2X GrowthIndonesia CPG* 5-year CAGR @ 8.1% v/s Global @ 3.8%. (5 Yr. CAGR 2014-19)

* CPG includes packaged food, home care, beauty & personal care and soft drinks

Source: Euromonitor International 2016


10

With high mobile & internet penetration, Indonesia is on track to become a potential eCommerce hub; Poised to grow 5X between 2014-18


$1.3 Bn

2015

2020

Indonesia eCommerce Retail Sales: All Categories* (USD Bn)

~6X $7.9 Bn

Significantgrowth potential

in Indonesia

Indonesia

• Increase in internet & mobile penetration; Mobile penetration at 126 (subs. per 100 inhabitants) v/s 89 for Asia1

• Growing consumer base; Increase in consumer spending

• Rapid development in online ecosystem• High interest and continuous activity in

social media – Jakarta is the most twitter active city in the world2

Pros

Cons• Consumers do not find online shopping

reliable: payments, quality and delivery• Shopping time is family bonding time.

How do consumers get similar experience with eCommerce ?

Source: See Notes

*Includes products or services ordered using internet; from any devices regardless of the method of payment or fulfillment; excludes travel & events

If CPG companies do not take actions now, they are at risk to miss the growth potential in Indonesia.Therefore, to grab business opportunities, companies need to shift from conventional to digital models.

How Aminah lives in Indonesia ?


12

Today: How Aminah buys in 2015? Meet Aminah!

Looks for price, discount & quality

Too much effort in process of browsing online and looking in offline stores

Search process is digital with social media but still looks for offline consultation

Dislikes long queues in supermarket. But delivery in online shopping is uncertain

Prefers paying when she can inspect and receive goods

Aminah is very detail & plans for purchase in advance

Shopping is the time for family bonding

Lives in Jakarta,Works as High School teacherMother of two kids

Source: Online communities research – by Accenture & IPSOS; APAC Expert Interviews; Accenture Research: Accenture eCommerce Digital Research,


Awareness Consideration Purchase

Future - Truly Omni-Channel, path to purchase can start at any interaction with the product.

Compare

Discover

Purchase

Consider

Loyalty

Now - Linear consumer journey – straight steps from need to purchase

Aminah is similar to other shoppers across Asia, not following a linear shopping journey. She uses multiple devices and multiple channels to interact with the products.

From Linear to Omni-Channel

15

The New Path to Purchase


Might ofMicro-moments





16

Ecommerce in Indonesia is not evolved yet…. And consumers expect some BASIC fixes

Unmet Needs of Aminah

She values convenience but wants to play safe

Is Online trustworthy ?“I want to be sure about the quality. I want to inspect the product before paying”

Secure Payments “I wish online shopping was reliable & online payment more secure”

Convenience“I wish shopping was more convenient & engaging”

Seamless Shopping“I want to enjoy my shopping time bonding with family. I wish purchasing was less time consuming. Offline (checkout)Online (fast delivery)

Source: Online communities research – by Accenture & IPSOS; APAC Expert Interviews; Accenture Research: Accenture eCommerce Digital Research


The Asian Consumers Expectation


The Asian Expectations

Copyright © 2016 Accenture All rights reserved. 18

The new Asian consumer expects seamless shopping experiences that

save time and make life easier.

These expectations are evolving in a dynamic new marketplace that creates

huge opportunities for consumer packaged goods (CPG) companies.

But they must move nowto capture them – or risk ceding control to the digital commerce players that have enabled the region-wide upsurge in digital commerce.

Copyright © 2016 Accenture All rights reserved. 19

Today…2016

Give me what I want

When I want it

Tomorrow…2020

Give me what I want

When I need it

Beyond: “Nirvana”

Give me what I want

Before I want it

Basic Shopping + Experience

Product + Convenience = Value

All at a best price!

Smart Enhanced Shopping

All at a best price!

Shopping List

Personalized

Assistance

Shopping =

Chore

Death of

shopping list

Automated list

Shopping =

Digital +

Automatic

Smart Lifestyle: Integration Focused

Shopping fully integrated into life’s

moments

Shopping List on

Smart device

Expert guidance

Shopping = Fun

From Shopping List to Death of Shopping List

20

What Consumers Want


I wish… I had aSMART Assistant

Power of Micro-moment“ I don’t get the product when I want it…I want it NOW”

Solutions to Real-Life Problems“I need expert assistance along the way.I don’t want to master household chores; wish somebody could do that for me”

Personalized & Niche“I wish I could have products and solution tailored to my needs”

Seamless Shopping“Shopping is not seamless –I am constantly worried if the quality will be as promised and if it will be delivered on time”

The Future Of Commerce:New Platforms & Technology


22

CPGs need to relook at their overall digital commerce strategy and integrate itwith their strategic vision

Imperatives for Success: Define Digital Commerce Strategy


Develop e-Vision

*FMOT refers to first moment of truth

Apply e FMOT* principles on three “purchase journey” moments – Stimulus, Moment of Truth, Purchase

• Partner with ecommerce platforms – reach new consumers / new markets and retain existing

• Leverage crossborder ecommerce

• Invest in brand engagement:integrating online& offline to lead the consumer to purchase online seamlessly

• Integration with digitalto source ideas and test product innovation

• Digitize supplychain to “delight”at fulfillment

• Leverage big datafor efficient andeffective targeting

Source: Accenture Research: APAC eCommerce Digital Research Source: eMarketer

By 2020:

• Globally, 1/5 connected devices from China

• Connected devices in APAC up 3X @ 9Bn

• IoT top Strategic Trend: Gartner

Connected Devices in APAC (Bn Units)3

23

3X growth in Connected devices could accelerate shift to Digital Commerce

More to come… Next in shopping… Connected Commerce?


•78% buy online because of convenience

•91% consumers willing to shift to mobile payments1

•75% use loyalty card on smartphones1

•70% share purchase experience on social media1

When they talked? They said… I want More: “I want a single platform to search, to buy, to share my experience and be rewarded2”

3Bn

2015

2020

3X 9Bn

Source: 1DigitasLBi’s China 2015 Statistics; 2Ipsos Survey; 3IDC IoT Report – includes wearables, sensors, smart meters etc

24

Three Core Consumer Engagement Imperatives for CPG Companies


It’s the Micro Moments

Deliver unique experiences that delight and enable loyalty, seamlessly, NOW

Enable the Purchasing DecisionDeliver the best products to consumers – before they’ve even asked for it

Be Omni-Channel

Stay connectedand on, always


Direct to Consumer

Connected Products

Smart Home

Artificial Intelligence

Digital Assistant

Future of

eCommerce

Immersive Store Experience

Virtual Commerce

Micro Moments

Seamless Retail

Smart Packaging

Appendix


27

Year 2020: Consumers want to be delighted.....want everything in a MICROMOMENT


2015

Research (online + offline) very time consuming & tiring. Exhaustive information not available

Online platforms aggregating data all required information across retail data…..scientifically combined with consumer’s purchase history gives best deals in ONE Click

2020

Discover…compare… consider in one Click No need to wait!

Long queues take up time.Slow unreliable deliveries often ruin plans

2015

2020

Virtual carts means easy quick check outs. Retailers have been evolved to integrate the best of both world – offline & online

2015

Needs a personal assistant to help in scheduling

Connected devices & wearables help her schedule, alert her about what she needs to do2020

Fewer things to think about ?

Is online shopping safe & reliable ??

Ecosystem has evolved to provide a secure experience to consumer & win their trust with flexibility in payment options, better quality &On time fulfillment

Online = Offline

2015

2020

2015

2020

Lack of multi-sensorial immersive experience for trying beauty products online

How has life changed for Aminah in 2020 ???

Virtual reality & 3D fitting rooms help them to experience the products the same way they do in stores

Experience anywhere anytime?


28

Year 2025: Consumers want to take things off the thinking list…LIQUID consumer experience !

Beyond nirvana: Potential evolution of Indonesian shopping landscape with technology


How Aminah lives in 2025 ???

Truly connected livesAminah no longer makes a list. Her wearable prepares a list with the information available from her connected devices…..connected fridge, connected wardrobes

Online shopping goes social

Aminah likes to involve family while shopping… Merge social with shoppingShop together to get discounts

Click and choose

Aminah clicks a picture of products with her glasses and gets the best deal on product.On sharing her purchase on social media, she gets redeemable points / cashback

…..Not your screen. The implantable measures what personal care products she needs to use, swimwear that absorbs pollution, shirt that measures heart beat The real time data has altered and influenced her decision making

Skin is the new interface

Secure, reliable online ecosystem

Aminah finds online payments are more secure with retinal scans & biometrics.All formats have integrated to provide unique LIQUID consumer experience…across formats
