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Shu Mei Chua: COVID-19 accelerating digital adoption among consumers in Singapore (Part 1)

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Shu Mei Chua: COVID-19 accelerating digital adoption among consumers in Singapore (Part 1)

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Author: SHU MEI CHUA

In the first of this two-part series, we examine how the Circuit Breaker period in Singapore has accelerated digital adoption among consumers, and how some tech-ready companies have been able to harness the shift.

The COVID-19 pandemic has severely disrupted the Singapore economy. It contracted by 13.2% year on year in the second quarter, the worst quarterly performance on record. For the man on the street, the pandemic up-ended many aspects of their lives and forced them to build new shopping habits as they stayed at home for much of the second quarter due to Singapore’s Circuit Breaker (CB) restrictions. This has resulted in an acceleration in digital adoption by consumers for their shopping activities, which has been mirrored in many countries around the world.

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Just before the CB started, there were news articles reporting a modest shift in Singaporean consumers taking to digital channels for products and services. In a consumer behaviour report by Nielson conducted between March 6-17, two in five consumers in Singapore increased their online shopping activities. In the same vein, DBS Bank saw 100,000 customers doing online purchases of its products and services for the first time in first quarter 2020. Notably, about 30% of these customers are above the age of 50 years, an achievement considering that this demographic profile has traditionally been perceived to be laggards at adopting digital.

 

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Changes in customer behavior

Meanwhile, it has been an uphill battle for companies to shepherd customers towards digital channels. Face-to-face interaction has traditionally been the preferred option. As the pandemic forced customers out of their comfort zones to experiment with new buying journeys, companies that have been championing the digitalization of their businesses, were able to see the silver lining amid the crisis and turn it into business opportunities.

For instance, sales of banking and wealth management products which have traditionally been sold face-to-face at bank branches saw a shift to digital channels. OCBC Bank moved its complex face-to-face wealth advisory service online in April 2020 and achieved quick positive results – the bank saw an 45% increase in sales in the first 10 days of launch, compared to the 10 days prior to the launch.

Elsewhere in the financial sector, iFAST, a fintech-driven wealth management firm, saw online sales of its exchange-traded funds (ETFs) and stocks soar earlier this year. The firm’s net profit surged 85% to S$4.5 million in the CB-affected second quarter, from S$2.5 million in the year-ago quarter.

In the retail banking industry, several banks also saw customers using digital channels to buy bank products. Standard Chartered Bank reported that digital sales of credit cards increased 71% year on year for the first four months of 2020. In the meantime, OCBC Bank saw time deposits placements online skyrocket by 150% in the first two weeks of the CB. There were also 14% more current accounts and savings accounts (CASA) opened on digital channels at the bank in April compared to January.  

Innovative engagement with customers

As customers increasingly use digital channels, businesses have also taken it upon themselves to find innovative ways to engage their customers. Apart from building a presence on online shopping platforms, businesses, SMEs and shopping malls are also hosting livestream shopping events to replace the physical shopping experience.

Such events have gained in popularity during this period. Lazada drew over 27 million viewers on LazLive, its in-app livestream feature, in April 2020, and by the end of the months its gross merchandise volume (GMV) had increased by 45% month-on-month. Getai--concerts that are staged during the Hungry Ghost Festival--have now moved online. Getai hosts and singers are taking the role of live-stream sales promoters to boost their income.

Cautionary tale with Gin Thye

There are also businesses that have paid a heavy price when customer expectations are not met. Gin Thye, a local confectionery shop specialising in Chinese and wedding pastries, received several customer complaints on its Facebook page about its Mother’s Day cake orders. According to customer reviews on Facebook, the cakes were either delivered late, in poor condition, or looked nothing like what customers ordered. Many were also angered by the poor customer service and lack of replies from the shop. The bakery did not respond to the press on the incident.

We reiterate that the COVID-19 pandemic has been the catalyst for digital adoption at scale in Singapore as well as in other countries around the globe. Now that consumers have got a taste for it, digital adoption is likely to expand. This means that it is critical for businesses to rethink how customer journeys have been altered within their industries and reformulate their sales and marketing strategies to align themselves with the shifts. If companies hesitate to have a digital presence for marketing, sales and customer feedback, they may be left behind.

In the second part of this two-part article, we delve deeper into how businesses can adapt to the new digital norms.

Posted by SHU MEI CHUA