Leveraging ShopBack’s proprietary database that spans major economies in Southeast Asia as well as Taiwan and Australia, we identified key elements that shaped the e-commerce industry in 2018. Our findings reaffirmed 2018 as the year of smartphones, where the e-commerce industry moved towards greater heights on the back of the ever-advancing mobile space.
In the following paragraphs, we will focus on insights gleaned from our database and give our take on what can be expected in 2019.
A premier player with an established presence in Southeast Asia (Singapore, Malaysia, Indonesia, the Philippines, Thailand), Taiwan and Australia1, ShopBack has been working with leading e-commerce merchants since 2014, rewarding consumers with cashback whenever they shop via ShopBack.
Data and Methodology
At the time of publication, ShopBack is helping over 2,000 merchants such as Lazada, Shopee, Tokopedia and Expedia to deliver over three million orders, totalling over US$70M per month, across a multitude of major categories including online travel bookings, online transport and food delivery.
All findings presented in this study were based on ShopBack’s traffic and transactional data gathered from over eight million shoppers across seven countries.
1Full 2018 data available for all countries except for Australia which was launched in May 2018.
2018: A year of growth
Growth in transactions more than doubled from 2017 to 2018
Overall trend mirrors key finding in the latest Google-Temasek report
Examining our proprietary data across multiple devices and merchant categories, we noted that the e-commerce industry enjoyed monumental growth in 2018, where sales directed via ShopBack more than doubled from the previous year. This is in line with the optimistic market projections underlined in the recently renewed Google-Temasek report. Their projections for Southeast Asia’s internet economy was revised upwards by 20%, to over US$240B in 2025, to account for the higher-than-expected growth momentum seen thus far.
Active adoption of mobile-first strategy steers e-commerce growth
Volume of mobile app traffic was five times that of desktop traffic in 2018
As shown in the chart above, mobile app traffic has grown exponentially over the last three years, far outpacing the growth of desktop traffic. As of end 2018, the volume of mobile app traffic was approximately five times that of desktop traffic. Our data also shows that over 70% of orders were conducted primarily on consumers’ mobile devices. This is a testament to the e-commerce industry’s active adoption of a mobile-first strategy.
“Are you an Android or iOS user?”
Users from emerging markets displayed a greater preference for Android devices while users from comparatively mature markets leaned towards iOS devices
Both Android and iOS users exhibited similar spending power
Our users’ mobile device usage allowed us to derive adoption rates of the two leading mobile operating systems, Android and iOS. We found that users in Australia, Singapore and Taiwan preferred iOS devices while users in Malaysia, Thailand, Philippines and Indonesia typically opted for Android devices. Android’s dominance in the mobile space is especially apparent in Indonesia, with an overwhelming 87% of users shopping online via Android devices.
Contrary to popular opinion2, we found that Android and iOS users have comparatively similar spending power. We computed the average basket size (average dollar value spent on a unique merchant3) based on the mobile operating system used to conduct a given transaction in 2018. As evident in the chart below, the average basket size (ABS) of Android and iOS users was generally quite similar, although the ABS is slightly higher for iOS users in iOS-dominant countries (Australia, Singapore and Taiwan). When measured in terms of their estimated spending power, users are equally valuable regardless of their preferred mobile operating system.
2 iOS mobile devices are generally pricier and regarded to be premium as compared to Android devices. As such, there are many articles and even research done (here, here and here) suggesting that iOS users are more well off than Android users.
3 This is to adjust for the difference in order-accounting between merchants.
“This is when I do my window shopping.”
Mobile app users and desktop users shopped at different times of the day
Indonesians displayed an inclination to shop during office hours before lunchtime on both platforms
We also looked into mobile app and desktop traffic data to identify patterns in shopping frequency across time and platform in 2018. To this end, we found that users on ShopBack exhibited a strong habitual preference to browse at specific intervals of the day.
The charts below show the distribution of country-level traffic by the time of the day on ShopBack’s mobile app and desktop platforms. To facilitate cross-country comparison, all traffic data is normalised at country-level to address the disparity in traffic volumes across the countries.
In general, we observed that users engaged their mobile apps and desktops at different times of the day. This device-specific behaviour means that marketing pushes should be targeted at the device level to reach users at the opportune moment when they intend to shop.
Across all countries, we observed that mobile app traffic tended to peak twice a day, typically before and after office hours. Indonesia was the only exception where we saw twin peaks in close succession before lunchtime. We urge merchants and marketers who want to better engage the Indonesian market to take advantage of this golden window of higher-than-usual traffic.
Meanwhile, traffic volumes on desktop seemed to coincide with office hours. We found that the first peak happened before noon for all countries, albeit earlier in the morning for Indonesia. This was followed by a hiatus in traffic volumes during lunchtime before recovering post-lunchtime. The activity level generally dropped after office hours, though shopping traffic in Taiwan and Singapore would peak again later in the night.
“This is when I buy the most.”
Users purchased the most between the months of September and December
Peak shopping days with at least two to five times more sales than an average day coincide with ShopBack’s ShopFest
Over the years, we have consistently observed a seasonal pattern — shoppers tend to make the most orders in the latter half of the year. This phenomenon could stem from habitual consumer behaviour that is propelled by e-commerce merchants’ concerted efforts to drive purchases.
ShopFest is an example of such an industry-wide effort. Encompassing six shopping events from September to December, we saw a more pronounced uplift in orders directed via ShopBack during this period as compared to previous years. This could be attributed to the combined effect of e-commerce marketing initiatives.
Across all countries, 11.11 Singles’ Day (11 November) generated a huge uplift in purchase volume, with 10 times more orders than an average weekend in 2018. This is largely attributed to Alibaba’s concerted efforts which elevated the day to global fame.
The next shopping day that has made waves in most countries, with the exception of Australia, is 12.12 Online Fever (12 December). This day contributed almost a third of December's sales transacted via ShopBack, translating to sales figures that were much higher than recorded on Singles' Day.
We also noticed that not all days had the same impact in every country. For example, while Black Friday Cyber Monday (BFCM) was huge in Singapore and Australia, the post-Thanksgiving period (end November) did not create a significant uplift in purchase volume for Malaysia, Philippines, Thailand, Indonesia and Taiwan.
9.9 Rewards Day (9 September) and 10.10 Perfect 10 (10 October) are two other shopping days in Southeast Asia where we saw significant spikes in sales last year. In fact, these two days have seen consistently strong year-on-year growth since 2016. This could be a telling sign of shoppers starting their year-end shopping as early as September.
“This is what I’ve bought and how much I’ve spent.”
General Marketplace, Transportation and Pulsa were among the top three categories based on the volume of orders
Users can access a diverse range of merchants across various categories via ShopBack. In the following chart, we grouped the orders categorically to get a sense of what most users have been buying over the past year.
*Pulsa applies only to the Indonesia market.
We also classified the categories by their purchase frequency rates and their ABS. While Food Delivery, Groceries, Pulsa (mobile reloads) and Transportation were low in terms of ABS, these categories enjoyed high consumption frequency which demonstrated strength in volume of orders.
All in all, the diversity and range (in terms of categories) of purchases over last year has pointed towards the growing sophistication of a typical e-commerce user. Merchants could either drive growth via product differentiation or partner with omni-channel marketers to engage users who might not have tried buying from their category.
What to expect in 2019
As the mobile-dominant growth of e-commerce reflects the secular shift towards mobile devices, the industry is well-positioned to reap further gains from their mobile-first strategy in the coming year.
As e-commerce becomes more intertwined with the proliferation of mobile technology, there is an increasing addressable market to be captured. In 2018, the region made great strides in improving connectivity rates (number of mobile connections compared to population). As mobile ownership increases, e-commerce players gain more customer entry points.
With better connectivity within a larger market, e-commerce players are better positioned to attract virtual footfall through the enhancements of their mobile apps. This includes AI-driven personalisation and the introduction or proliferation of gamification features. This should increase users’ engagement and usage frequency which will add to overall platform stickiness.
More importantly, we observed that mobile traffic and orders have been accelerating on a quarter-on-quarter basis, consistently exceeding their past year levels.
While mobile takes the spotlight in e-commerce growth, we believe that an omni-channel strategy, rather than a mobile-only strategy, remains the optimal strategy for the e-commerce sector.
As previously discussed here, we found that while desktop accounted for a smaller share of shopping traffic as well as transactions, the ABS for desktop purchases tended to be higher than that of mobile. Furthermore, the conversion rates for purchases are also more efficient on desktop for certain purchases, such as long-distance travel and multi-day hotel bookings. For merchants who offered such services, pursuing a mobile-only strategy may mean sidelining a significant pool of potential customers who may continue to prefer transacting from the comfort of their desktops.
We hope you enjoyed reading this piece and we look forward to bringing more interesting insights to you in the coming months. Let us know what you think. And cheers to a prosperous Year of the Pig!