How COVID-19 Changed Consumer Behaviour and Accelerated Digital Payments
I still remember when Lazada entered the Southeast Asian E-commerce market in 2012; more specifically, when it entered Indonesia. Online shopping back then was subject to scrutiny due to consumer behavior patterns at the time.
SP E-Commerce stated that “Selling online also poses the challenge of a lack of tangibility. 21.5% of consumers were not comfortable making a purchase before they could touch and feel the quality of the items they were buying. While the average European fashion website receives customer queries on only 5% of orders” (Singapore Post, 2014).
Tangibility plays a huge role in consumer behavior, especially during a time when this kind of innovative technology had just begun to emerge. Consumers were living in a period of transition and found it hard to buy goods online without the ability to touch them and/or receive them instantaneously like they would have been able to if they were shopping in-store.
According to SP E-Commerce, “With its large population, increasing affordability of the internet and usage of mobile devices, Indonesia has the highest volume of internet users compared to other Southeast Asian countries. As of 2013, there were a total of 74.6 million users in Indonesia with the next country, the Philippines, with about half the number of users (34.8 million)” (Singapore Post, 2014).
In addition to this, the payment landscape for E-Commerce in 2012 proved to be extremely challenging due to the fact that the majority of those residing in Indonesia at the time did not have access to a credit card and/or access to online debit features. When E-commerce entered Indonesia, although it considered the gap and allowed for payment in cash on delivery, payment at a local convenience store and/or ATM transfer, options were still only limited — nothing like what is available in present day. This is because the process towards owning a credit card in many Southeast Asian countries including Vietnam, Indonesia, & Philippines was long and difficult.
Fast forward to present day, the boom of E-Commerce has triggered the need for alternative digital payment solutions: for example, e-wallets. E-wallets allow consumers to purchase everything they desire online with ease and acted as a catalyst in the transition from traditional cash to digital payments.
In 2019, The Coronavirus (COVID-19) pandemic hit globally and as a result, escalated the digitalization process at a rapid rate. According to research conducted by Mastercard, “30% of customers in Australia, 49% in India, 55% in China and 34% in Japan have all stated they plan to make more purchases online moving forwards, and 38% in Australia, 68% in India, 57% in China and 40% in Japan believe that the reduction in brick-and-mortar shopping will continue — even after the pandemic.” (Patel, 2020). Therefore, digitalisation will be inevitable in the future, and based on the data it will continue to grow rapidly.
Post-COVID-19, consumer behavior has evolved more than ever. Worldwide lockdowns pushed people towards shopping online for daily essentials, this highlighted its efficiency as more realized they could safely make purchases online with only a few clicks and receive their item at their doorstop; even as soon as the next day with Amazon Prime. In addition to this, online shopping reduced the chances consumers becoming infected with COVID-19, as there is no human contact involved during the process.
Sandeep Maholtra, Executive Vice President, Products & Innovation, Asia Pacific, Mastercard stated that, “Our shift to digital commerce is here to stay as people embrace the benefits of safety, security and convenience. Consumers now want on-demand products and services — whether it’s food delivery, groceries, fitness courses, telemedicine, conferencing, learning or entertainment. This demand and these expectations will continue to drive e-commerce long after COVID-19 subsides,” (Patel, 2020). Hence, COVID-19 is changing consumer behavior globally and familiarises the consumer’s lifestyle with digitalisation, apparently, this trend is here to stay.
As for digital payment evolution during COVID19, due to its convenience and fast processing, people yearn for the comfort and flexibility to do transactions digitally. Patel stated that “E-commerce and contactless payments continue to grow in popularity as people make the move to digital by default and we reduce our use of cash.” (Patel, 2020). Online shopping has become today’s norm, in-fact we shop more online than we do in-store.
If E-Commerce platforms and/or payment providers want to evolve to the next level; improve their features & capabilities and ensure a seamless user experience, they should know the next step towards that goal is blockchain technology. By integrating blockchain technology to their ecosystem, E-Commerce platforms can unlock improved payment performance and other advantages, including safety, secure verification processes, and fast and low-cost transaction fees.
The comparison between a Blockchain-enabled marketplace and traditional marketplace is shown below:
Source: Advancing Global Trade with Blockchain (IBM, 2020)
In Summary, the advantage of using blockchain technology for the future of-e-commerce will benefit consumers by giving more security, and fast & rapid transactions with lower admin fees. One other benefit is that blockchain capabilities can also identify the authenticity of whether their seller/buyer is valid. At the same time, it helps to prevent fraud by enhancement of data security. Those benefits that blockchain technology has to offer in the E-Commerce & payment industries are complementary to current consumer behavior where nowadays we are going digital on everything in our lives & blockchain technology offers safety, flexibility, and rapid transaction which lead to better user experience, the sense of consumer’s safety that will impact to consumer’s loyalty.
At the end of the day, in the long run, leveraging blockchain technology will also impact E-commerce growth in so many positive ways & its credibility because they put their consumer’s and users’ convenience as well as their data protection & secured transactions first.