Companies, which will invest in digitization keeping this futuristic view anticipating the evolving consumer behaviours, are sure to stand out and come out as market leaders in future.
--BY SAURAV POUDYAL
Evolution of Consumer Behaviour- A Global Perspective
Commerce has come a long way since the evolution of mankind and has evolved keeping pace with mankind, if not faster. From the barter system in ancient days to the invention of currency in more modern era and the current digital age, commerce has seen constant evolution. Throughout this journey of commerce, consumer behaviour has been the driving factor. In today’s world, with the tech savvy generation increasing at an exorbitant rate, a lot of changes in the consumer behaviour is being observed. Transactions using hard currency are on the path of being soon extinct. Initially when the digital revolution was at its infant stage a few decades back, e-commerce was almost non-existent. But, gradually with technological advancement, consumers started adapting to the digital platforms. Now, the thus evolved consumer behaviour is actually driving the technological advancements. Companies in order to keep pace with this rapidly evolving consumer culture need to improvise to stand out and sustain the competition. In other words, advancement in e-commerce and consumer behaviour both compliments and drives each other.
With the technology at the tip of our fingers, we have become more demanding. The traditional method of trade where we had to settle for the near approximate of goods or services when we could not find the exact good or service that we were looking for is becoming history. With technology, today’s consumers have the choice of discovering products in store, websites and even social media. They then have the choice of comparing available products via various online reviews, blog reviews and online feedback. And finally again for the purchase, they have the option of using online or offline methods depending on convenience, time and price. Brand loyalty among today’s consumers is fast waning. Today consumers are more concerned about convenience, value for money, quality and time factor. In today’s digital era, consumers can shop from food to the latest gadgets from the comfort of their couch without visiting physical outlets.
Companies face the challenge day in and day out due to this demanding consumer mentality which is quickly evolving. They have to come up with ideas that stand out to serve their customers. Every shopping experience of a consumer is crucial to the sustainability of any company as every shopping experience either good or bad, greatly influences the next purchase decision of the consumer. Today, consumers expect to get what they want when they want it. In no time this behaviour can shift to what they want and how they want it. Hence, companies need to think of the future now. They need to invest today such that they are ready to cater to the demands of the consumers in future. Those who get entangled in the consumer behaviour of today’s commerce will get left behind as they will not be able to evolve at the same pace as the consumer behaviour is evolving. Some of the renowned brands such as American Eagle, Ralph Lauren, Guess Inc., etc. to name a few have already fallen victim to this shift in consumer behaviour. These brands were once thriving with a huge customer following but due to their inability to move ahead anticipating the shift in consumer behaviours, these brands lost their market share.
Traditionally, a company would go to any extent to secure a marketing space to put up their collateral such as huge hoarding boards, digital displays, flashy adverts, etc. within the retail commercial hubs of cities. But in today’s digital age, any forward thinking company will know that the most valuable marketing space is the mobile screen of their target consumers. Companies, which will invest in digitization keeping this futuristic view anticipating the evolving consumer behaviours, are sure to stand out and come out as market leaders in future.
In parallel, a robust ecosystem of suppliers and vendors who have a strong foothold in the digital space also play a critical role for a strong e-commerce environment. Companies like Flipkart (India), Alibaba (China) and Redmart (Singapore) are vibrant examples of thriving ecosystem. As debated above, in the market that is being redefined by digital advancements, consumer loyalties are shifting away from brands. On the other hand, platforms like Amazon are already capitalizing on this consumer behaviour by launching their own labels. Such labels are backed by the company’s own vibrant ecosystem where everyone from the manufactures to retailers is closely tied.
Nepali E-commerce Market - Where do We Stand?
Digital market on both fronts of products and services is evolving through an infant stage in Nepal as compared to the global scenario. There are many factors contributing as hindrance to the full-fledged growth of e-commerce in Nepal. About a decade ago, online trading would have been a very futuristic affair in the context of the Nepali digital market. However, the Nepali market has come a long way in a short span of time and is trying its best to fit in the global digital arena.
Low digital literacy rate contributes as a major factor to the slow growth of digitization in the Nepali market. Although the general mass using mobile phones in Nepal has seen a dramatic growth in the recent years with over 30 million subscribers in the country, the number of subscription is over 100 percent of population as many users have subscribed to more than one mobile service providers. However, this number seems not to reflect in the internet penetration which is just around 50 percent of the total subscriptions.
Another major factor hindering the e-commerce growth in Nepal is the limited integrated payment gateways. Majority of the online service providers still rely on methods such as pay upon delivery or payment by cash. Platforms such as PayPal, card payments, etc. need to be seriously looked upon by the respective stakeholders who should regulate them without delay. Similarly, proper regulatory guidelines seem to be missing or inadequate to create a culture where the e-commerce environment could thrive. Convenience is the key that drives consumer satisfaction in today’s world. Hence, companies need to innovate and improvise to enhance the consumer experience.
There has to be a collective approach from all stakeholders in both the service and e-commerce industries to alleviate access of general public to the digital platforms. With the recently introduced digital payment platforms in the banking industry such as the Electronic Cheque Clearing (ECC) and Interbank Payment system (IPS), the traditional payment methods using physical cash has to some extent migrated to these digitised platforms, but still there is a long way to go to make the Nepali economy digitally competitive. In a traditional market culture, disruptive ideas and technology may not be easily accepted. But this non-acceptance is just a temporary hindrance as in due course of time the digital evolution is certain to take over. A very good example is the recent regulation whereby the central bank mandated that all transactions above Rs 1 million should be performed either through above mentioned digital platforms or account payee cheques. This was not well received by the public initially, but in due course of time this regulation is now being praised as banks no longer have to deal with bulk physical cash volume day in and day out while the general public no longer have to risk carrying bulk cash from one bank to another. Also, not to mention the transparency this has brought in cash transactions.
Apart from these few regulatory initiatives, there has not been any additional substantial leap in embracing the digital age in Nepal. Except for the usage of digital platforms where the general public is required to be convinced for the usage, there has been no substantial initiative from the government to digitize its services to the public. From vehicle tax payments to utility bill payments, denizens still have to waste their time queuing up at respective offices’ counters.
Once the momentum is set, there is no looking back. Hence, it is just about the time lag, but Nepal is also joining the digital revolution with the world in the near future. Nepal already has that firm foundation and just the building up is awaited. With already 30 million subscribers of mobile services and internet service penetration of around 50 percent with these subscribers which will only grow substantially in days to come, there is a potential and sustainable e-commerce market waiting to be exploited. The recent acquisition of Daraz.com by Alibaba is a welcome development in the Nepali e-commerce industry. With this we can hope some substantial changes in the Nepali e-commerce market. As Alibaba is one of the largest e-commerce platforms globally, the Nepali e-commerce market can reap the benefits of innovation that Alibaba might bring to Nepal. Not to mention this may in future open the gates for more international players penetrating the Nepali market.
Given this fact, companies need to start being forward looking and be ready for the future of Nepali digital market. It has already been discussed above that the companies that are not forward looking and those which do not anticipate the changing consumer behaviour will be left behind. Hence, companies need to start investing and preparing themselves for the coming future. They need to explore the developments in the global arena and look for ways to replicate the advancement in the local contexts. Building infrastructure for a robust digital ecosystem, improvising service delivery in local context and improving digital penetration shall be the standing agendas for companies that look forward to thrive in the upcoming digital scenario in Nepal.
The author is the Head-Bancassurance, Nepal at Standard Chartered Bank Nepal Limited. The views presented in the article are of the writer himself and do not represent the organisation that he is associated with.