Leveraging on lessons and opportunities from COVID-19
If there’s one thing the last two years has taught us about business resilience, it is the importance of a sound supply chain strategy. The unpredictability of the pandemic and the six-day grounding of the megaship Ever Given in March 2021, and subsequent blockage of the Suez Canal, have shown that a supply chain disruption can hit anytime and anywhere, with devastating spillover effects in our closely connected world.
The fragility of supply chains is also evident for Hong Kong businesses. According to PayPal’s Hong Kong SMB Survey Report 2021, among the 50% of small and medium-sized businesses (SMBs) that responded saying they have been negatively impacted by COVID-19, 40% of them had reported supply chain difficulties. The beginning of 2022 has also seen many companies have to raise prices to absorb higher costs from global supply chain bottlenecks.
One result of the pandemic is the accelerated e-commerce boom, where digitalized merchants have been capturing growth opportunities. Digital businesses were also rewarded with a record-breaking volume of e-commerce sales in the fourth quarter of last year in peak holiday season. In Hong Kong, the e-commerce market is projected to grow by 41% to US$29 billion by 2024, according to the Global Payment Report 2021 by FIS.
Now in 2022, there are plenty of growth opportunities for businesses to grab so it is also time for local SMBs to re-evaluate the soundness of their supply chains to make sure a resilient operation is in place to act as a buffer to potential disruption. It will continue to be a key to creating the competitive edge for SMBs.
Changes in consumer behavior that affect business growth
While consumption patterns are constantly evolving, we have observed over the past year several trends in consumer behavior that continue to persist in 2022, which SMBs should take note of.
For starters, increasingly digital-savvy consumers are gravitating towards businesses that offer an enhanced digital experience. According to FIS’s Global Payment Report 2021, digital wallets will become the world’s most popular online payment method by 2024. The Buy Now, Pay Later (BNPL) solution is also another payment method that is growing rapidly around the world, as it allows consumers with budget concerns to spread out interest-free payments that can work within their allotted spending over time. It is especially popular among millennial and gen-Z consumers in the US and Europe.
Businesses which intend to target overseas customers should stay ahead of the global trends and consider payment options that could help differentiate themselves from competitors across the world.
Personalized discounts have also proven effective to attract and retain customers. According to The Rise of Personalized Commerce study, 70% of companies that provide advanced personalization have already earned 200% ROI or more from doing so. It is a way to help online businesses to profitably sell to those who would not have bought otherwise.
To maximize the impact of a personalization program, businesses should focus on understanding the spending habits and preferences of their regular customers, building up a dynamic data set that could help SMBs to better target their products and services to the right people at the right time.
Consider sustainability to attract global customers
Sustainability is another important differentiator for global consumers to consider when they select an online retailer. They are willing to shop with brands that align with their values and priorities, among which sustainability is a differentiator, especially for younger consumers. In fact, research from IBM revealed that sustainability has reached a tipping point with nearly six in 10 consumers surveyed saying they were willing to change their shopping habits to reduce environmental impact, and close to eight in 10 saying sustainability is important for them.
Hence, SMBs should take note of the sustainability factor in their actions, products, services and choice of partners. Many businesses would consider UPS’ carbon neutral program that gives them the option to pay a small fee to offset the greenhouse gas emissions of any shipment, and these contributions would be reinvested in environmental conservation projects around the world.
An all-rounded logistics strategy to optimize customer experience and preference
It is imperative to partner with a reliable, efficient and safe logistics service provider to ensure a consumer experience that will help build brand loyalty. Hong Kong-based tech gadgets seller Native Union and online plant shop My Home Nature are two great examples of how local small businesses can navigate challenges with the support of a trusted logistics provider.
Since its partnership with UPS, Native Union no longer has to worry about the complexities, requirements and regulations that come with trading electronic products across multiple markets, including the different customs licenses and certificates required at each destination. For My Home Nature, shipping plants requires tailor-made solutions with a great amount of flexibility, timeliness, and consistency to ensure they always remain healthy from the time an order is placed until it arrives at the doorstep of a customer on the other side of the world.
The delivery process isn’t the only thing that matters – customers have varied preferences when it comes to receiving their goods. UPS Smart E-commerce Report 2021 revealed that 32% of surveyed European customers expect retailers to provide alternative delivery options, such as collection points and lockers. In response to consumers’ need for such flexibility, UPS is providing shoppers and SMBs better control of their incoming and outgoing packages with near real-time delivery updates. Even when the parcel is in transit, consumers and partners can reroute the package using the My Choice service.
But the package journey doesn’t end on delivery. E-tailers need to be able to offer a convenient returns solution through their logistics provider to complete the online shopping experience.
So while 2022 looks set to be a year full of growth and opportunities for SMBs, those who are the best prepared are the ones who will thrive. There is, therefore, no time like now to be well-planned and equipped with the right logistics partner to get the most out of the year ahead.