What Has 2020 Revealed About the State of Digital Transformation in Asia
As many grapple with the challenge of reimagining their businesses in this post COVID-19 world, it’s clear that adapting to the new normal consumers and accelerating digital transformation should be the two top priorities in order to drive uncommon growth in these uncommon times. In our earlier articles, we already identified the consumer experience trends impacting growth and also the major enablers that are accelerating digital transformation in Asia. What’s next? Businesses must now evaluate their level of digital maturity and determine their crucial opportunity for growth and transformation.
Every company is moving at a different pace when it comes to digital transformation. Companies that were further along in their efforts before the pandemic outbreak were able to accelerate faster and create new value. Here, we have identified four key clusters of where we believe companies and industries sit along the digital transformation journey. Each one of these clusters can provide an assessment of where you are as a business and pinpoint opportunities of where to go next in order to realize uncommon growth.
Cluster 1: Protection & Adaptation
Traditionally offline businesses that reactively adjusted their operations and offers in order to increase their presence online
Businesses that have traditionally been operating offline, small businesses and retailers (think of your local restaurants, hairdressers, small fashion boutiques), but also department stores, insurance providers, real estate companies, or fitness centers, all suffered immensely during COVID-19 with the forced closure of their operations. These businesses are for the most part, in the very early stage of digital transformation as they heavily rely on physical stores, human sales forces, and they have yet to make a deliberate pivot to rethink their operating model and customer experience delivery in a more digital way.
In order to sustain their businesses during the lockdown, many were forced to rethink their offers and value propositions to meet new consumer needs. For example, Pure Fitness, a premium fitness studio chain prominent around Asia, offered live-streaming personal training classes to deliver their service online and engage their customers when studios had to be closed. We saw hairdressers in China using livestream to offer up beauty advice to their customer base, moving into a ‘content and advisory’ business online in order to survive.
Some other industries have evolved the role of digital in their customer engagement during the confinement, and many of these changes may well likely become the norm and best practice in the post COVID-19 era. One stand-out example is Chinese real estate company Evergrande Group (恒大集团) that introduced an online real estate sales app to enable house-viewing 24/7 through VR and panoramic technologies. This greatly eliminated a major roadblock during lockdown, while enhancing their services at the same time. In turn, they set a trend and have become a must have for many property buyers in China.
Cluster 2: Expansion & Penetration
Companies that had built digital capabilities pre-COVID-19 and were able to acquire new users and expand usage thanks to their digital channels.
Many of the companies that had already started to invest in digital transformation initiatives ahead of the pandemic were still dependent on existing core revenue streams especially the traditional channels. However, the change in consumer behavior has helped them acquire new users and drive more usage not just among current customers but new ones through their digital platforms. Grocery, healthcare, telecom and CPG companies feature heavily in this cluster.
For example, when COVID-19 hit, Indonesia’s online telemedicine platform Halodoc quickly launched a free online medical consultation supported by a chatbot service with free drive-through rapid testing. They achieved this by utilizing their existing infrastructure but strategically partnered with super app Gojek, other insurers and local hospitals to quickly add relevant digital features to their channel.
Chinese restaurant chain Xibei Youmiancun (西贝莜面村) has been developing its e-commerce platform over the past few years, but has always relied heavily on its traditional offline channels. During the outbreak, Xibei was able to proactively expand its offers via its e-commerce platform and explored additional digital avenues, such as WeChat Work, to expand its customer base.
Similarly, Sheng Siong, a large supermarket retailer in Singapore, had only started to launch its e-commerce platform and supply chain to offer enhanced services of same-day delivery to customers. The pandemic allowed Sheng Siong to effectively leverage its big data to optimize its sales and operation mix across omni channels and O2O to derive more efficiency gains in its supply chain. As a result, its Q1 profits grew by 50% on the back of COVID-19 demand.
Cluster 3: Integration & Propulsion
Companies that effectively capitalized on the various digital assets they already had in place to integrate them in new ways, elevating the value their ecosystem delivers to customers, and propelling their business forward.
These are businesses that had effectively invested in and capitalized on various digital initiatives, addressing various objectives – although somewhat siloed – across the firm’s operations: loyalty program, promotions, ops, e-commerce, content and media. COVID-19 gave the spur to further accelerate, integrate and mesh these initiatives together more seamlessly. The sum of these parts, combined more effectively, created new value for customers and helped reap the benefits of a more integrated brand ecosystem and customer experience. Leading brands in QSR, apparel, retail banking and consumer electronics, were on the leading edge of this integration, providing more comprehensive, digital-enabled platforms for their consumers.
A notable example is Nike. While its physical stores in China were closed, Nike was able to shift its inventory to digital sales channels. With the stay-home order, the brand further leveraged its Nike Training Club app, and was able to form a new engagement experience with its community. This further drove more sales to its e-commerce platform. As a result, Nike emerged as one of the strongest brands to soften its drop in retail sales, and further integrated its already robust digital ecosystem to deliver new value to its operations and customers.
YumChina, running thousands of KFC and Pizza Hut locations across China, has long been aggressively investing in digital to enhance its members’ O2O experience across brands. Leveraging its well-established digital capabilities across loyalty, retail and delivery, YumChina was able to execute contactless delivery and take-out extremely well. Its Tmall stores further promoted digital coupons for shareable meals to drive even more traffic to its loyalty apps. YumChina’s sales revenue via delivery services grew by 40% in Q1 2020.
Another stellar example is DBS Bank in Singapore. With the lock-down, DBS Bank, widely regarded as one of the world’s best digital banks, was able to leverage an industry-first with its newly launched digital financial planning tool NAV Planner. Its retail customers were able to continue receiving financial advisory digitally by leveraging DBS‘ fintech capabilities, giving further confidence to customers to utilize more of its digital banking tools now and in the future.
Cluster 4: Disruption & Creation
Digital platforms and super apps that leverage their tech, scale and data, and their access to massive customers/users to disrupt industries and categories, and to create new markets.
These digital platforms that have for so long led the way when it comes to digital transformation in Asia continued to disrupt and innovate during COVID-19 and will continue to benefit from their scale and their unique access to customers’ data and insights in the new normal. These businesses leverage technology, big data and AI to provide highly individualized solutions and expand their reach from one category to the next.
Companies in this cluster should continue to expand their platforms as a “destination” and drive more cross-selling. A case in point is Grab, which started off as a ride-hailing app, but developed its ecosystem to slowly become a super app, offering more services such as GrabPay and GrabFood, catering to large middle and lower market segments as well as the underbanked in Southeast. More recently, Grab also launched GrabHealth in partnership with China’s Ping An Good Doctor (平安好医生) to venture into the telemedicine category, an apt time to strengthen its proposition via this new contactless platform in the post-COVID-19 era.
In China, Meituan-Dianping (美团点评) has been scaling its mega-platform as a “one-stop shop” to connect consumers to services across categories. Through the Meituan app, users can order food, hail taxis, find shared bikes, buy groceries and more. At the peak of the COVID-19 outbreak when customers had concerns about shopping offline, Meituan actively expanded its ordering services to include high-demand items such as smartphones and cosmetics.
E-commerce player Pinduoduo (拼多多) has been innovative in harnessing the power of social networks and integrating social into the online shopping journey. To further engage its community during the outbreak, Pinduoduo successfully launched several new services, including a WeChat mini-program Pin Neigou (拼内购) that allows its employees and customers to promote products and obtain new customers directly on WeChat.
Alibaba continuously finds new ways to create value for customers by expanding its ecosystem. The pandemic gives this internet giant further impetus to do more. It will invest 10 billion yuan to further strengthen the artificial intelligence and Internet of Things (IoT) ecosystem around its smart speaker Tmall Genie (天猫精灵) by integrating more content and services from entertainment to healthcare, education and online shopping.
Final Thoughts: How Might You Reimagine Your Business for Uncommon Growth?
2020 has certainly been a disruptive time for businesses and consumers alike with COVID-19 imposing a new normal. At the same time, it has also enabled an unprecedented number of opportunities for companies to reimagine and reinvent their business and customer experience and explore how and where to find uncommon growth for the future. To get started in your own journey to reimagine and reinvent in the “new normal”, here are four questions businesses can and should ask themselves today:
- How is digital both changing and enabling consumer behaviors and habits?
- What partnerships can help extend the brand to new areas to deliver the better experience desired by consumers?
- What ecosystems and experiences can deliver new value and therefore be loved by consumers and win in the market?
- Which new models are required to excel, and what experimentation and un-learning will allow them to succeed?
By focusing efforts on understanding the “customers of the new normal,” rethinking core value propositions, and deploying the right digital transformation to meet consumers where they are, business leaders can reinvent and reimagine their companies to win in the market in the post COVID-19 era.
If you’d like to understand what levers you can pull to seize transformation opportunities and achieve uncommon growth in the post COVID-19 era, get in touch today.