From PH to SEA: LOCAD projects 56% rise on D2C web stores this 2022

E-commerce brands in the Philippines and Southeast Asia are growing their Direct-to-Consumer (D2C) presence by opening their own web stores. As these businesses build on their existing marketplace to take control of customer journeys, the number of web stores in the country is expected to increase by 56% this year. This is just one of the key business trends reported by LOCAD, the leading Asian logistics platform that enables businesses to build, expand, and sustain their e-commerce operations.

This identified trend is supported by data from e-commerce data platform Storeleads: the Southeast Asian market has witnessed a monumental surge in the volume of web stores in Woocommerce and Shopify amounting to a 50% and 61% growth respectively from 2019 to 2021.

Philippine web stores’ estimated growth per platform

LOCAD CEO and co-founder Constantin Robertz elaborates why this trend is set to take full swing this year and the benefits of going D2C for e-commerce brands. “E-commerce has pushed the playing field wide open for the ‘rise of the many,’ with new brands popping up, offering strong product value in all categories, challenging incumbents,” he says. “For brands that get it right, a direct-to-consumer approach is a transformational opportunity offering higher margins, more customer insights, and a better control over the brand experience.”

Search volumes on merchant-and-seller related queries are continuously rising to up to 18 times versus 2017. This apparent rise on topics involving online selling, according to LOCAD’s report, can also be attributed to the boost in D2C brands joining the e-commerce bandwagon.

As consumers gear up for the eventual strengthening of the retail industry, leading fulfillment partner LOCAD rounds up the key D2C insights and trends to adopt this 2022.

Traditional brands dive into the D2C market

Owners are beginning to see their web store as a vital sales channel to boost their growth, on top of their marketplace stores. LOCAD notes that the D2C strategy can sharpen a brand’s competitive edge given the surge of new sellers into the digital space.

In detail, recorded web stores in Shopify in 2019 were only 3,341, but the platform saw a notable increase from 2020 and 2021 in web store tally with 7,792 to 8,562 respectively. The number of Woocommerce web stores followed the same trend as it more than doubled in the last three years with a record of 6,287 in 2019, rising to 9,554 in 2020, and then ending in 12,731 in 2021

More and more established and traditional retailers are expected to slowly grow their D2C channels to gain leverage over their competitors. Even though foot traffic is expected to slowly increase with the easing of the COVID-19 restrictions, LOCAD envisions that many retailers would still pursue the digital D2C path to build their brand and increasingly draw in online shopping patrons.

D2Cs expand reach and categories

LOCAD adds that the pandemic has allowed people to grow accustomed to mainly buying online. D2C brands satisfied their customers and retained their loyalty because the delivered product aligned with the perceptions created.

On another end, the pandemic also tested most brands’ growth capacity with reduced consumer expansion due to loss of jobs or income. To counter this, companies ventured outside of their local markets and went global with e-commerce platforms like LOCAD making this endeavor a better experience.

Another solution that brands took was expanding their reach to adjacent categories. Product diversification has allowed more D2C brands to sustain their business, despite a potential industry downturn or aggressive competitors.

Videos as drivers of online traffic and sales

With social media entering the e-commerce space, video content that drives online traffic will play a crucial role in consumer spending. It has dominated social media platforms such as Facebook, YouTube, Instagram, and most recently, Tiktok. According to networking giant Cisco, videos composed 81% of online traffic in 2021.

Video has also been identified as a pressing factor with up to 50% of customers surveyed saying that a video they watched has affected their purchasing decision. One rising global trend is video shopping, or video content to promote products and services. In the Philippines, this has become more apparent with the popularity of live selling, unboxing, and tutorial video content that D2C brands capitalize on either on their websites or on their social networking sites.

Infograph-50% of SEA customers say that a video affected their purchasing decision

Customers to establish service differentiator

Online consumers shop online primarily for convenience and accessibility. Apart from getting quality items, customers want to be assured that their packages will arrive safely and on time. LOCAD estimates that in 2022, customers will not only focus on fast delivery but also prefer online retailers who have a reliable return policy. LOCAD is gearing up for this emerging trend by spearheading partnerships with other brands who can make delivery more efficient, reliable, and secure.

As the Asian region and the Philippines slowly inch back to the new normal, the rising e-commerce industry will face challenges like supply chain issues and consumers’ more demanding expectations.

However, brands who conduct a D2C strategy can position themselves strongly to thrive in their markets.

Download LOCAD’s Key E-Commerce Trends of 2022 report to learn more.