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Could Free Shipping Be the Key to Higher Customer Retention?

Dec 16, 2021
Could Free Shipping Be the Key to Higher Customer Retention?

Just like many other regions in the world, Southeast Asia’s e-commerce growth took off at an accelerated pace in 2020. Since the pandemic onset, around 70 million additional people have shopped online across countries in Southeast Asia. The number is expected to grow five times in the next five years.

With such amazing growth, there is a huge opportunity for e-commerce brands that are looking to enter the Southeast Asian market. As with expanding into any new market, it is important for retailers to first understand the shopping behavior and preferences of consumers in that market. As important as understanding the shopping behavior and preferences of consumers is, it is also essential that retailers focus on post-purchase and email marketing for better branding and engagement. Email marketing is one of the most commonly used tools for customer retention, which makes it a lot more vulnerable when it comes to hackers and bots. Retail brands can opt for Google DMARC for proper authentication to protect both the customer and their interests.

Additional branding pieces also matter, including using a logo maker for a professional design, naming, business slogan, etc. So, which factors have the most influence on Southeast Asian consumers’ purchasing decisions? 

In this report, we partnered with Rakuten Insight to take a deeper look at consumer behaviors across six SEA countries.

Download the full report with country breakdown here (exclusive to Parcel Monitor members).

More Than Half of Indonesian Shoppers Expect Below 4 Days Delivery Time Even with Free Shipping

55% of shoppers in Southeast Asia’s largest economy, Indonesia, consider up to four days to be the acceptable waiting time to receive their free shipping orders.  Despite these high expectations from Indonesian shoppers, Indonesia seems to be handling these demands pretty well. In the first quarter of 2021, the country had an average of 1.9 days parcel delivery time. 

 Moreover, the outlook of Indonesia’s e-commerce market looks very promising, with revenue projected to reach US$53,808m in 2021. Its e-commerce industry is largely dominated by e-commerce marketplaces such as Tokopedia and Shopee. 

Malaysian Shoppers Are the Most Price Sensitive

There is ample research proving that product price plays a major role in the decision-making process of shoppers. However, it seems that the effect is even stronger amongst Malaysian consumers. A whopping 85% of them indicated price as one of the top factors that affect their decision to purchase online while 81% also said it affects their likelihood of repeat purchases. 

This could be due to the fact that the pandemic has adversely affected Malaysia’s economy, thus causing a sky-high unemployment rate — the highest in a decade. This unfortunate combination of circumstances may have hence pushed many Malaysian consumers to become even more price-sensitive than before.

Thai Shoppers Value Customer Service More than Its SEA Counterparts

With all things moving online, it is more important than ever for e-commerce businesses to provide good customer service. In Thailand, for instance, 60% of consumers consider customer service as the top factor that would motivate them to make repeated purchases.

It has been said that bad customer service is worse than none at all — but what exactly does a good customer service strategy constitute?. As for the Parcel Monitor team, we found Disney’s HEARD Framework for customer service particularly insightful. Do check it out! 

Singapore is the Least Likely to Increase Basket Size to Qualify for Free Shipping

On average, 59% of shoppers are likely to increase their Average Order Value in order to get free shipping. However, only 19% of Singaporean shoppers indicated that they would do the same; of which 51% of them expressed that they may consider increasing their basket size depending on the minimum amount.

In 2020, the average e-commerce basket size in Singapore was US$62. Although Singaporean shoppers are the least likely to increase basket size to get free shipping, by analyzing consumer purchasing habits, retailers can experiment with a suitable minimum amount based on customers’ average basket size.

Every Consumer is Unique

We hope you have found this guide useful in understanding the preferences of online shoppers in the SEA market! Nevertheless, it is still good practice for retailers to conduct market research to understand the intricacies of each market, demographic, and industry. As for those who missed out on our previous analysis on how free shipping affects consumers’ purchasing decisions, check it out here.

About Rakuten Insight

Over the last two decades, Rakuten Insight has remained at the forefront of consumer market research data collection in the region. Rakuten Insight’s online panels have been developed throughout 12 major Asian markets and regions, all of which are managed by dedicated local support teams and meet the highest standard of the industry.

For more exclusive reports, insights, and interviews on the latest updates in e-commerce and logistics, follow us on LinkedIn or join our community as a member.

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