Lifestyle Business

Meet the Centennials (and their online buying habits)

COMMONNESS - Bong R. Osorio - The Philippine Star
Meet the Centennials (and their online buying habits)
A white paper called “Here Comes the Centennial: Southeast Asia’s New Generation of Shoppers,” developed by Dentsu Aegis Network, a multinational media and digital marketing communications company, in collaboration with econsultancy, a strategic consulting group, was launched recently.

Centennials — also known as Generation Z — are those who are born between 1995 and now. Accounting for about 277 million of Southeast Asia’s population, 50 percent of them spend more than US$30 a month on online shopping, while nine percent spend over US$100 monthly. The size of this new generation alone makes them attractive for retailers, but the behaviors of this group make them lucrative in terms of its online shopping and ecommerce potential. They are the consumers of the future.

A white paper called “Here Comes the Centennial: Southeast Asia’s New Generation of Shoppers,” developed by Dentsu Aegis Network, a multinational media and digital marketing communications company, in collaboration with econsultancy, a strategic consulting group, was launched recently. It investigates the online buying behavior of centennials — a generation described by Merrill Lynch as those who grew up with a smartphone in hand, and for whom active social networks engagement is a way of life. They communicate in real time with messages and emoticons and have no memory of a once-disconnected world.

The research is based on a survey of 3,055 consumers in Southeast Asia aged 16 to 23, within the centennial age bracket, carried out in August 2018. Respondents were sourced via a survey panel from Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam. Those that had not shopped online were disqualified. Below are some of the interesting findings:

• Despite being digital natives, the concept of a cashless society has yet to fully take off for centennials in the six countries surveyed. Fifty-six percent of survey respondents still prefer paying cash on delivery for their purchases. The next generation of online shoppers also enjoy having a variety of payment methods, as 43 percent will readily abandon their purchases because their preferred payment option is not available.

• Centennials use social media platforms differently compared to previous generations in their buying journey. Social media applications such as Facebook and Instagram are the second most popular place for centennials to shop (47 percent). Close to half of the survey respondents (49 percent) also turn to social media when they are researching for more information on their future purchases, rather than asking friends (45 percent) and family (27 percent).

• As part of their online shopping experience, centennials understand the benefits technology brings to them. Eighty-two percent state they are “excited about futuristic shopping technology, such as virtual reality,” while 76 percent are “happy to share data with websites if it makes recommendations from them more relevant.” Eighty-eight percent of centennials “expect to be able to find products online easily.” Eighty-six percent state that they “will not use an app or website that takes too long to load” while 82 percent agree that they “will not use an app or website that is difficult to navigate.”

• Use of the internet is part of the buying journey for centennials. But the route is so much more converged than other generations. Centennials like to use both online and offline: 97 percent browse for products online before purchasing online (“webrooming”) and 90 percent look for products in store before buying online (“showrooming”).

At the end of 2017 Southeast Asia had 330 million monthly active internet users — an increase of 70 million users from just two years earlier. This makes the region the third largest in the world in terms of internet users, with research by Google and Temasek revealing that more than 90 percent of the region’s internet users are on smartphones with an average usage of mobile internet being 3.6 hours per day.

• Brand name and image is no longer a priority of centennials. This makes the end-to-end brand experience more important than ever for retailers. Only 11 percent cite having a prestigious or famous brand as one of their top three attributes when choosing where to shop. This means retailers need to work harder to get their brand experience perfect to capture the attention of tomorrow’s consumers.

• Centennials will be the world’s most demanding consumers. They will set high standards and expectations of the online shopping experience. Technology will be an integral part of this experience, as 82 percent of centennials are excited about futuristic shopping technology such as virtual reality. Personalization is key as well, as 76 percent of respondents are happy to share data with websites, if it makes more relevant recommendations.

• E-commerce within Southeast Asia has made an incredible expansion in a short period of time. In 2017, estimated e-commerce sales in the region totaled US$10.9 billion in gross merchandise value (GMV), which is almost double that of the US$5.5 billion GMV in 2015. This growth not only presents an opportunity for those selling online, but also a risk for traditional retailers that do not move quickly.

• Centennials are buying an array of products online. These products range from electronics and beauty to travel and entertainment. However, fashion is by far the most popular product that centennials are purchasing online.

Centennials are demanding a more seamless shopping experience across channels and devices. They are always on their mobile devices and are making purchasing decisions in between places. Every store in the world is literally in the consumers’ pockets; they can hang out with their friends, sip lattes and shop online — all at the same time. Alin Dobrea, head of brand marketing for Zalora, stated: “As a fashion e-retailer we need to be present in all the different touch points and continue to capture them while they’re on the go. Consumers of the future want to have options anywhere and everywhere.”

• Retailers of all types of products must act quickly. Not only is the size of the market substantial, but the environment for consumers is highly likely to shift to an “online first” model where most of purchases begin and finish online in the decades to come. For those that continue to sell only in-store, diminishing profits will be a near certainty.

• Centennials are socially and environmentally conscious. As such, brands need to show that they are good corporate citizens and are contributing to the welfare of society to get most of the support. This also means that communications and political correctness count as image builders, so be sure to have a point of view on issues.

• The centennials’ buying journey is now accepted as no longer being linear. Consumers are bouncing around the different aspects of the buyer’s journey — discovery, consideration and decision — as new information is revealed. Consumers today are likely to interact with many sources of information online, from their initial “Zero Moment of Truth” that initiates a search for information, right through to an online purchase. Centennials are impatient and expect that all information should be available as quickly as possible.

• Retaining customers is a major challenge in an environment where choice is ample. There are four takeaways from our survey for their reasons for becoming a return customer — price, quality, delivery and customer service. It is not surprising that having the best prices (82 percent) is the main reason centennials return to an online store to make further purchases.

“Centennials are coming of age in an era when high-speed internet is always available, and they expect technology and brand experiences that are fast, responsive and seamless,” says Jefrey Gomez, managing director of Econsultancy Asia Pacific. “This means that retailers can no longer just provide well-designed stores or rely solely on brand campaigns to drive sales. Instead they need to focus on the utility of their online offering to make the purchasing journey easy to complete.”

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