E-commerce big force behind Zalora’s growth year-on-year

E-commerce big force behind Zalora’s growth year-on-year

DESPITE consumers cutting back on discretionary spending in the face of rising inflation, Southeast Asia’s e-commerce scene is still a bright spot from global fashion group, Zalora’s standpoint.

Southeast Asia’s leading fashion, luxury, beauty and lifestyle e-commerce player said it saw continued year-on-year growth in resilient categories against a backdrop of a slowing economy.

This could be attributed to Southeast Asian consumers, even those in remote and rural areas, being more digitally connected than ever before and having incorporated technology into their daily lives.

According to the e-Conomy Southeast Asia 2022 report, e-commerce adoption is high across urban and suburban consumers with 98 percent of affluent users and 74 percent of suburban users making an online purchase in the last three months.

Additionally, as travel resumes, so does online spending on travel essentials. Zalora saw an uptick in consumer demand for swimwear (four percent) and sunscreen (eight percent), while winter wear saw a spike of 71 percent as compared to 2021.

Another critical contributing factor has been the success of shopping festivals, in particular double-digit campaign days, when brands offer special deals and discounts. Known for driving sales and marketing impact in the region, Zalora’s shopping events on these dates also saw the highest sales numbers as compared to any other day in 2022.

Given the region’s growing mobile-first community, cashless payment options such as credit cards, e-wallets and Buy-Now-Pay-Later (BNPL) method are rapidly gaining momentum. With over 70 percent of Southeast Asia’s population unbanked or underbanked, offering alternative digital payment methods can open new opportunities for online retailers while improving financial inclusion for millions across the region.

According to marketing intelligence firm IDC, inclusive payment options are set to power e-commerce spending to US$179.8 billion by 2025, with digital transactions accounting for 91 percent of total e-commerce activity.

Likewise, Zalora saw use of digital payment options grow substantially from 75 percent in 2020 to 81 percent in 2022 while cash transactions steadily declined. Singapore and Hong Kong are inching closer to being fully cashless with 98 percent of transactions in Singapore and 89 percent transactions in Hong Kong made via digital payments and credit cards.

Buy-Now-Pay-Later growing popular

In particular, BNPL had a positive influence on consumer spending on Zalora, as seen in the year-on-year rise in basket size net merchandise value (NMV) of 74 percent from 2020 to 2021, and 26 percent as of the third quarter in 2022. With BNPL giving greater accessibility to high-value items, the most popular BNPL product categories are luxury (21 percent) and home and lifestyle (21 percent). In the Luxury category, purchases paid using BNPL options grew from 13 percent in 2021 to 21 percent in 2022.

As BNPL payments skyrocket across the region by 226 percent in central areas and 190 percent in the outskirts from 2021 to 2022, it is quickly becoming a preferred payment method with its flexibility and interest-free monthly payments, together with the use of e-wallets as the convenience and the use of e-hailing rides and food delivery services will continue to fuel the popularity of e-wallet payments, which increased by 22 percent in central areas and 12 percent percent in the outskirts. BNPL is also most popular among Millennials and Gen Zs.

Biggest spender

Zalora’s data showed that millennials are this year’s biggest spenders on its platform, specifically those aged 36 to 40 years old. Gen Zs are also a rising powerhouse, making up about 24 percent of Southeast Asia’s population. Diving deeper into Zalora’s data, this generation is spending the most on sports-related products (29 percent), followed by apparel (25 percent). They also favor footwear—Millennials too—particularly sports lifestyle shoes and sports performance shoes, for fitness and investment as they capitalize on the sneaker resale market. On the beauty front, skincare is the most popular product category among female Gen Zs while fragrances lead the charts for male Gen Z consumers.

Consumers across all ages are also investing in more sports-related products such as sports electronics (e.g., fit-tech wearable devices), which enjoyed a positive growth of 15 percent from 2021 to 2022. This reflects how wellness remains a top priority in a post-pandemic world. As for the biggest spenders of wellness products in Southeast Asia, Zalora’s data shows they come from Indonesia and the Philippines. Across the region, adults above 40 spent the most, followed by millennials aged 26 to 30. (KOC with PR)


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