A new report by advertising and marketing data and analytics firm WARC examines crucial factors that will impact consumers’ brand and category purchase decisions worldwide, featuring regional highlights for APAC, Europe, and North America.
Due to the high cost of living in APAC, individuals are reevaluating their spending habits and turning to more cost-efficient ways of living. And Asia’s social media-savvy shoppers are quickly driving growth for the social commerce market, especially as more and more users go online.
Below, key takeaways from the report.
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Consumers are prioritising essentials and delaying big-ticket buys
APAC shoppers today are focusing on essential items like groceries, household goods, and personal care products, as disposable income dwindles.
“Even in these categories, however, roughly a quarter of consumers would trade down by buying the same items elsewhere for a cheaper price. Big-ticket purchases such as electronics are more likely to be delayed,” says Stephanie Siew, research executive at WARC.
Emerging trends in sustainability and mental health have been affected by economic uncertainty. Consumers are finding it challenging to afford environmentally-friendly products due to the cost-of-living squeeze and the premium pricing associated with such products.
As an alternative, more affordable ways to live sustainably are being sought, leading to a growing interest in second-hand shopping in the region. According to GWI data, over a quarter (27 percent) of APAC respondents have shopped for a second-hand item online in the last six months.
While consumers in APAC are cutting back on non-essential spending, treat-related purchases are experiencing growth, with dining out being the top category. In the last six months, 38 percent of APAC consumers spent on a meal out as a treat. This uptick in treat spending implies that consumers are seeking ways to indulge themselves, despite tightening their budgets.
Brands must reconsider value, pricing to deliver maximum impact
“As consumers cut down on spending, brands should re-evaluate their value propositions and pricing strategies to emphasise how products can deliver value to the customer,” Siew says.
This could include exploring alternative service or product formats such as bundles or tiered pricing.
“For example, IKEA Taiwan’s ‘Dollar Catalogue’ featuring various products ranging from USD1 to USD100 helped the brand to showcase low-priced household products when customers were putting off bigger purchases such as furniture,” Siew continues.
Brands must also acknowledge and address the financial anxiety weighing on consumers’ minds. Marketing and communications will need to strike the right tone, in the context of inflationary pressures.
Social commerce could soon overtake e-commerce platforms
The social commerce market is thriving, fueled by rising social media usage and effective influencer marketing. Analysis by Kepios reveals there were 4.8 billion social media users globally in April 2023, equating to nearly 60 percent of the world population, with users spending over two hours on average per day on these platforms. As a result, the social commerce market is expected to grow, reaching around USD2tn by 2025, according to Deloitte.
APAC, in particular, has long been regarded as a social media-savvy region, driving much of the global growth in the social commerce market – especially among younger generations.
“In Indonesia, TikTok Shop has risen fast and is proving to be a threat to major e-commerce platforms Shopee and Lazada,” Siew shares.
“With over 100 million users and 5 million businesses on the platform in Indonesia alone, TikTok plans to quadruple its gross merchandise value (GMV) to USD20bn this year. Conversational commerce has also taken off in this mobile-first region, particularly in countries including the Philippines, Vietnam, Indonesia, and Thailand where there is a high level of adoption of messaging apps.”
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According to Cube Asia co-founder Simon Torring, local apps such as Zalo and LINE have become key channels for purchase, integrating in-app check-out flows with payment and order tracking. While social commerce is expected to continue growing in this part of the world, brands must understand how each market engages with social shopping and the platforms that users find most engaging.