More people are doing their holiday shopping online and this trend is here to stay

Tech

Pedestrians cross a street decorated with Christmas lights in Orchard road shopping district in Singapore on December 8, 2020.

Roslan Rahman | AFP via Getty Images

SINGAPORE — The last three months of the year are typically synonymous with malls and stores teeming with customers who stand in long, snaking queues to pay for their holiday shopping hauls.

But due to the coronavirus pandemic this year, which forced countries around the world to either go into lockdowns or enforce strict social distancing rules, a lot of the holiday shopping is being done online, according to multiple research reports.

One recent report from McKinsey & Company found that 37% of respondents said they intended to spend more online during the holidays this year than they did in 2019. The report, which surveyed 3,500 holiday shoppers in September from the U.S., U.K., China, Germany and France, also found that only 10% said they intended to increase their time in physical stores.

Since the survey was done, U.K. and parts of Europe went into further lockdown as Covid-19 cases surged. Consumers in those countries were likely to return to digital shopping, the firm predicted.

Traditional retailers are increasing the investment and engagement on online channels as this is something they can’t ignore forever.

Satish Meena

Forrester

With safety and uncertainty on shoppers’ minds, McKinsey said how shopping is done and what consumers are going to buy are changing.

“Instead of door-busting crowds, 2020’s holiday shoppers will turn to apps and websites in record numbers and will take advantage of click-and-collect as an option that provides both safety and convenience,” the consulting firm said in the report. It added that shoppers are likely starting early on their purchases to avoid potential delays in receiving their orders due to Covid-related supply chain disruptions.

Record online sales in November

Data reported by e-commerce firms from several major online shopping events last month already point to more people buying online.

Chinese e-commerce giants Alibaba and JD.com set new records by racking up around $115 billion in sales across their shopping websites during the Singles Day event in November. Southeast Asia’s Lazada, which is owned by Alibaba, reported more than $100 million of sales in the first hour of the shopping event, between midnight and 1 a.m. on Nov. 11.

Online spending over Black Friday this year surged nearly 22% to hit a new record of $9 billion while Cyber Monday online sales reached $10.8 billion, the largest U.S. online shopping day ever.

“Traditional retailers are increasing the investment and engagement on online channels as this is something they can’t ignore forever,” Satish Meena, a senior forecast analyst at Forrester, told CNBC. He said while he expects the number of online shoppers to increase next year, retailers are still not yet prepared to deal with the shift.

2020 has been a year of accelerated (digitalization) and we believe that it is a shift to online lifestyles that is broad, deep, and irreversible.

Terence Pang

Chief Operating Officer, Shopee

“But now they are exploring additional investment, acquisitions and partnerships with marketplaces to sell goods via online channel,” Meena said, adding, “We expect more partnerships between traditional retailers and brands with marketplace to increase the exposure to online channel.”

E-commerce here to stay

While physical retailers have struggled this year, including the closure of iconic department store chain Robinsons in Singapore, e-commerce players in Southeast Asia are thriving.

“The year-end period is always peak season for e-commerce platforms, because it’s the traditional holiday season where people are buying more for themselves and their loved ones to celebrate festivities,” Jessica Liu, co-president and regional head of commercial at Lazada Group, told CNBC.

“For this year-end season (Oct-Dec), orders have doubled as more people are shopping online and more frequently,” Liu added.

Experts have predicted that shifts in consumption patterns observed due to the pandemic such as a growing preference to shop online is set to stay even after things become relatively normal. E-commerce growth is expected to continue and at least in Southeast Asia, it is predicted to be the main driver of the region’s internet economy, according to a commonly cited industry report.

“2020 has been a year of accelerated digitalisation and we believe that it is a shift to online lifestyles that is broad, deep, and irreversible,” Terence Pang, chief operating officer for e-commerce firm Shopee, which is owned by the Sea Group, said in a statement.

Shopee saw “strong growth” among buyers and sellers on its site throughout the year and sold 200 million items during its Nov. 11 shopping event, according to the company. Pang said he expects to see e-commerce growth outside major cities next year as customers become more familiar and comfortable with e-commerce.

They “have come to expect reliable deliveries (and) ease of mind when making purchases,” Pang told CNBC.

Lazada’s Liu added that not only will more people be shopping online next year, more companies – especially local small and medium businesses – will be selling through e-commerce sites.

Gunjan Soni, CEO of e-commerce start-up Zalora, told CNBC’s “Squawk Box Asia” on Monday that her firm saw its online shoppers were making repeat purchases even in places where lockdown restrictions have relatively eased.

“That’s what the research from many other platforms also seems to indicate,” she said. “That a whole new base of customers who had not yet experienced online has come and I think definitely not all of them are going to stay.”

“But, definitely, we believe a large proportion of these will continue to stay online whether it’s for the ease of access or some of the exciting access to brands that you often don’t get offline,” Soni added.

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