#Asia Why brick-and-mortar businesses have an advantage in the digital economy


Traditional businesses actually have a distinct advantage and can mix brick-and-mortar experience with digital enterprise

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If a company finds a way to maximize profit and expand customer base for the business, the owner would be silly to shun such an opportunity.

But, to some extent, the rise of ‘Internet economics’ has created an ‘us versus them’ mentality. Traditional versus new, taxis versus Uber and brick-and-mortar vs. e-commerce.

Even though they are still in the majority, brick-and-mortar businesses are facing a solid competition from online businesses. Retail e-commerce now accounts for 10.2 per cent of all retail sales in Asia-Pacific and is predicted to rise to 20.4 per cent of the total by 2019.

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Physical retail stores are in direct competition with notable ecommerce websites such as Lazada and Zalora. Taxi drivers around Asia have been protesting companies like Ola and Didi Kuadi for disrupting their market.

So in the midst of rising popularity in the digital era, it begs the question, can physical stores survive and advance? What are some ways that traditional businesses can do to keep and grow their customers?

First things first, it is not the end for physical retailers

At least in Asia, the outlook for the region’s consumer goods and retail sector is actually trending in a positive direction.

According to PwC, the sales progression in Asia-Pacific will be the fastest in the world over the next five years, expected to total over US$10 trillion, almost half of the sales generated by the world’s largest economies.

The majority of the population in Asia is still dependent on physical stores for consumer goods — especially in developing countries such as Indonesia, the Philippines, India, and Thailand.

Although e-commerce is growing in the region, it will still take some time for the infrastructure and connectivity to be optimized. By the time technology has matured, it should not be surprising to find that many retailers and physical business have already incorporated digital channels into their businesses.

Don’t hate the apps, use them instead

Instead of business owners shaking their heads and worrying about the fate of their brick and mortar business, embrace the technology and take advantage of a new audience.

The challenge, however, is there are many e-commerce websites and apps around, making discoverability a huge challenge.

Being part of a marketplace or a sharing economy will solve that issue. The Millennial Generation grew up as the Internet matured and had social media at their disposal from a young age. It is be hard to find young adult who doesn’t have a Facebook or a phone.

However, in the same breath they want things fast and immediate. Most will head to a marketplace to discover, compare products, prices and reliability of the merchants.

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That is why marketplaces and the sharing economy work even better these days — people can simply log on to the app on their phones to order food or a cab.

It is not a bad idea to partner with these disruptive companies.

For instance, hawker.today is a Singapore-based company enabling anyone to get food from the city’s famous hawker centers delivered to their doorstep.

The marketplace creates beneficial opportunities for traditional hawker centers to get more customers. Not only that, hawker.today also recruits its own Go-jek-style riders to deliver the food.

Other companies such as Redmart and HappyFresh partner with local sellers and grocery stores to list items on the platforms. For a traditional store, these apps create opportunities beyond the conventional customer model.

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Rather than shutting the doors of traditional business, it is more appropriate to say digital technologies are transforming the way they operate.

The fusion of the digital and physical aspect of a business creates new opportunities that did not exist as recently as a decade ago.

Traditional businesses have the advantage of being the frontrunner in their industry and should mix long-established experience with the digital reality that today’s consumers seek and expect.

If the model is well executed, the incorporation of an on-demand economy with traditional business will result in profitable growth that will benefit not only both facets of the business, but everything in between.

About: Sten Ivan is a content writer for Arcadier, a SaaS company that powers next generation marketplace ideas. Follow Arcadier on Twitter, Facebook, and LinkedIn for news and updates.

Photo courtesy of Unsplash.


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