Startups in Asia arise due to Changes in Consumer Behavior \\ COVID-19
It’s clear that the coronavirus pandemic has been immensely destructive to the retail sector. This is particularly true for retailers selling non-essential goods, who, in many countries, have been forced to close their doors. As a result, we’re now seeing drastic changes in consumer behavior. But, are these consumer changes here to stay, even after the coronavirus pandemic has passed? What business opportunities could develop from these changes?
To explore these questions, OnePiece Connect held a virtual event, Startups in Asia Arise Due to Changes in Consumer Behavior. The event brought together global business leaders, corporate executives, and investors who witnessed the impact of the COVID-19 pandemic in Asia. Speakers at the event exchanged their thoughts and ideas surrounding shifts in consumer behavior and the business opportunities that may arise both during and after the pandemic.
Introducing Speakers Ozan Sonmez and Richard Xu
Ozan Sonmez was a featured speaker at our virtual event. Sonmez has a varied background in international business ventures- having been the head of a large accelerator program in the Middle East and a small Global Investment Fund. He’s also highly experienced in the field of angel investing, with a valuable perspective on startups and entrepreneurial opportunities.
Our other speaker was Richard Xu, a successful entrepreneur and seasoned investor in consumer goods and eCommerce. He launched two brands while working in Boston for a China-based company, going on to develop several portfolios in Southeast Asia and Africa. Xu’s focus is on emerging markets and he’s currently Vice President of Grand View Capital in San Francisco.
Changes in Consumer Habits: Clear-Cut Demands
Sonmez noted that a habit is made in 21 days - a period that the crisis has far surpassed. So, following the crisis, brand consumption, and investment will all have shifted for good. Going forward, consumer demands will be more clear-cut. Businesses will need to take a definitive position to meet the demands of their target market. To thrive, businesses must also decide upon a market to sell within: luxury, mid-market, or low-market. The middle markets will not be successful post-crisis, Sonmez said. Impulse buying is a consumer habit that will outlive the pandemic, Sonmez also asserted. This means that the luxury, fashion, and tech industries will persevere.
Online Trends Are Surging
Many predict a rebound in spending after the crisis, as people put more of a focus on their health. But, as Xu explained, there has also been a prominent rise in online content. People are spending more time on their phones than they were before, namely on gaming and social media platforms like Instagram and TikTok. In response, brands and manufacturers are utilizing influencer marketing to sell their products. This trend of influencer marketing is especially rising in Indonesia, Singapore, and other Asian countries.
With this surge of online activity among consumers, brands will need to shift their focus to online sales:
“Online trends are growing - people are purchasing groceries online, online food delivery. People will have a different idea of efficiency. Many brands will need to adapt to the new market.” - Richard Xu
Post-Crisis Changes: Permanent vs. Temporary
The channels used to reach consumers will evolve, namely in the form of B2C startups and brands. Sonmez noted that while there will be significant periods of adjustment, some changes will return to the pre-crisis “normal”.
To survive in a post-crisis world, however, physical retail stores will need to find innovative methods for attracting in-person shoppers. These businesses will need to adopt a different mindset to not only bring customers into their stores, but also to incite online purchases. B2C brands and marketplaces will experience hardship due to a loss of income, or the need to adopt a more conservative lifestyle. Sonmez emphasized that while individuals may not have been impacted by the crisis financially, their habits will have changed significantly.
In response to the question of permanent and temporary changes, Xu asserted that consumer behaviors will be long-term changes. But, changes in consumption experience will be temporary. Xu explained that people seek out the experience of shopping in a physical store, but, people will fulfill their day-to-day purchases with their new online shopping habits. Many consumers will continue to use online grocery shopping platforms, which will accompany in-person supermarkets.
Comparing Consumption Patterns Between China and The U.S.
Xu brought up China’s comprehensive supply chain, which has been dramatically influenced by the pandemic. One significant sign of this influence is seen in C2C business and ecommerce. In the United States, C2C businesses are well-established. However, in China, people didn’t usually purchase second-hand products.
Now, C2C businesses and ecommerce are increasing in China and across Asia. Specifically, C2C business models are expanding in emerging Asian markets. This trend opens the opportunity for social ecommerce, namely the purchase of products on social media. On Craigslist, for example, cars, books, and electronics are being sold.
Sonmez stated that every startup must understand the importance of economic growth in both the U.S. and China. Economic growth in these countries would have an impact on a micro-level perspective, of which unemployment is a key indicator. Infrastructure is also an important factor for startup growth. From a cultural perspective, startups must stay relevant to the local market. For example, in the U.S., group buying isn’t culturally accepted. Startups must channel optimization going forward to access new markets and position themselves for growth. It’s an optimal time to create a new brand and tailor it to a specific audience.
Both Xu and Sonmez discussed anti-globalization as an effect of the pandemic. With no alternative to distribute products, many countries will tap into their dependency on China.
TikTok vs. Duoyin: Comparing Opportunities in China
Combined, TikTok and Duoyin have more users than WeChat. These platforms attract a wider audience and have realized that content is king.
TikTok continues to grow their users abroad to improve their ecosystem. In the U.S. and U.K., TikTok users are still rising. But, in countries like India, TikTok is struggling in terms of audience growth.
Travel Industry Startups: A Post-Pandemic Timeline
Following the crisis, any technology in the travel industry will grow. Technology developments that were previously overlooked will now drastically change post-pandemic.
Travel will not disappear, as it’s ingrained in a 21st-century lifestyle. But, companies must find ways to deliver the travel experience in some form (though it won’t be the full experience that travelers enjoyed before the pandemic). Additionally, the process of entering a country will evolve. The current situation will force innovation in the travel industry, asserted Sonmez.
Xu noted that VR will be a growing trend in the travel industry. Opportunities will emerge in healthcare for travelers. In China, in particular, privacy in the travel industry will shift. For example, take WeChat: If you previously contacted a COVID-19 patient, your code will turn red. Some restaurants will only allow green code users to enter. The government is using this technology to protect the health of their people, and this useful trend could likely expand in other countries.
International and Immigrant Founders: Will They Return Home?
For European founders, the expensive and poorly managed U.S. healthcare system will be an incentive to return home. This is just one example of how healthcare systems will be a key indicator for international founders as they decide whether or not to remain in a foreign country.
On the other hand, startups must adapt to survive. So, startup founders will travel to their resources, whether they’re in their home countries or not. Xu advises founders to access their own market opportunity in different countries. Then, go into that market in that country to find the best opportunity for your business.
#OnePieceofAdvice From Richard Xu and Ozan Sonmez
“Business leaders should consider the resources to find your destination. Startups that utilize the existing ecosystems will experience growth. In the future, it will be possible to rebuild commercial markets.” - Richard Xu
“This is the time to be hopeful to survive. Energize yourself to keep your hopes high and surround yourself with people who are hopeful.” - Ozan Sonmez
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