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 SEA 2022 report, e-commerce adoption is high across urban and suburban consumers with 98% of affluent users and 74% 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 (4%) and sunscreen (8%), while winter wear saw a spike of 71% 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.
Maturing of cashless payment services such as BNPL will revolutionise Southeast Asia’s retail scene
Given the region’s growing mobile-first community, cashless payment options such as credit cards, e-wallets and BNPL are rapidly gaining momentum. With over 70% of Southeast Asia’s population unbanked or underbanked, offering alternative digital payment methods can open new opportunities for online retailers whilst 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 USD 179.8 billion by 2025, with digital transactions accounting for 91% of total e-commerce activity.
Likewise, ZALORA saw use of digital payment options grow substantially from 75% in 2020 to 81% in 2022 while cash transactions steadily declined. Singapore and Hong Kong are inching closer to being fully cashless with 98% of transactions in Singapore and 89% transactions in Hong Kong made via digital payments and credit cards.
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% from 2020 to 2021, and 26% as of Q3 in 2022. With BNPL giving greater accessibility to high-value items, the most popular BNPL product categories are luxury (21%) and home and lifestyle (21%). In the Luxury category, purchases paid using BNPL options grew from 13% in 2021 to 21% in 2022.
As BNPL payments skyrocket across the region – by 226% in central areas and 190% 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% in central areas and 12% in the outskirts. BNPL is also most popular among Millennials and Gen Zs.
Consumers of tomorrow: Millennials and Gen Zs
ZALORA’s data shows 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 per cent of Southeast Asia’s population. Diving deeper into ZALORA’s data, this generation is spending the most on sports-related products (29%), followed by apparel (25%). They also favour footwear – Millennials too – particularly sports lifestyle shoes and sports performance shoes, for fitness and investment as they capitalise 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.
