The future of online retail in Singapore is looking bright especially with e-commerce sales in Asia Pacific tipped to nearly double to S$2.69 trillion (US$2 trillion) by 2025. Over the next few weeks, consumers will be splurging on new clothes, food and gift items, entertainment activities, and more during the Lunar New Year festivities and online retail businesses will be upping their game to ‘pounce’ on these opportunities and claim the tiger’s share of sales. The following are more key e-commerce trends that I expect to come true in 2022.
1. E-commerce regulations gain teeth
In the year of the tiger, regulation will play an increasingly important role in shaping e-commerce in the region. As open banking takes off in Asia Pacific, the region has become a hub for real-time cross-border payment. Singapore linked their domestic fast-payment system to permit cross-border payment with both India and Thailand last year. Singapore also has similar initiatives underway across ASEAN, with negotiations with countries like Malaysia, Indonesia, and the Philippines ongoing.
Cross-border payment systems allow for more efficient and smoother cross-border e-commerce, which has spiked since the start of the pandemic. On the flip side of the coin, these systems have also opened up more opportunities for cross-border fraud.
One in three consumers in Southeast Asia have experienced online fraud in 2020. As a result, we may see tighter e-commerce legislation and regulation in the region as governments seek to guard shoppers and online retailers against fraud.
However, as businesses adjust their operations to comply with stricter regulations, they risk adding complexity and friction to their e-commerce funnel and alienating customers. High-friction funnels can drive cart abandonment up as much as 30 percent, according to Forter research, and they can even turn away potential lifetime customers. Hence, leaders who understand the regulation ins and outs can capitalize on exemptions and claw out a competitive advantage for their businesses.
2. Going up against the crypto beast
Cryptocurrencies have skyrocketed in popularity in Asia – as much as 31 percent of all transactions of the different cryptocurrencies happen in this region. Singapore, ranked as the world’s ‘most crypto-friendly economy’, is seeing widespread acceptance of crypto in everyday life. Corporations like Microsoft and Starbucks, and even traditional Singapore businesses such as Kopitiam, are jumping on the bandwagon and are accepting crypto as payment.
However, many often overlook the risks involved in crypto payment. For instance, the risks of credit card fraud are known, and e-commerce brands are prepared for a certain level of chargeback. However, crypto’s unregulated nature poses risks, with digital payment tokens such as crypto not subject to consumer protection measures in Singapore. Cryptocurrency is also highly volatile, and prices can fluctuate widely – meaning values could well plummet to nothing. With high risks such as these, businesses need to exercise caution in abundance when deciding whether to accept cryptocurrencies as a form of payment.
In January 2022, the Monetary Authority of Singapore (MAS) warned of the high risks involved in crypto investment. It also issued new guidelines to discourage cryptocurrency trading by the general public.
3. Differentiated customer experience reigns supreme in the retail jungle
Individualisation and customisation will continue to pave the way to consumers’ hearts. According to a survey by OpenText, 71 percent of Singapore consumers are more likely to buy again from brands that treat them as individuals. It is important for online retailers to strike a balance between protecting their business and customers from fraud, and preserving an excellent customer experience.
To stand out, brands will have to offer differentiated and unique experiences, such as limited-edition merchandise or creating personalised recommendations via their websites. Ultimately, the end goal of smooth fraud management is a seamless, holistic customer experience that keeps customers coming back.
Fraud prevention will remain a key priority for e-commerce businesses in the Year of the Tiger amidst further developments in digital payments and regional legislations. Online retailers will also need to balance beefing up on security measures with ensuring a friction-free experience for customers.
Ultimately, the right fraud management mindset will allow retailers to focus more on optimising their customer experience and earn their e-commerce stripes.
Author: Monica Acree, VP, APAC at e-commerce fraud detection company Forter
Disclaimer: The views and opinion expressed in the article belong solely to the original author and do not represent the views, opinions and position of Retail in Asia.