AI, data and sustainability: Trends and opportunities shaping the era of seamless commerce

In an interview with CNA398’s Work It, co-hosts Chew Wui Lynn & Cheryl Goh, KPMG in Singapore’s Guillaume Sachet discusses the key trends in seamless commerce and strategies for businesses to stay ahead of the competition amid changing consumer spending patterns.

CNA938: Tell us a bit more about the key findings of the report “Navigating the future of seamless commerce in Asia Pacific," which explores how businesses and consumers in the region are embracing seamless commerce strategies.

Guillaume: Seamless commerce is about providing customers with a consistent experience across different platforms. It's like moving between devices while watching a TV series on a streaming platform—starting on your TV, continuing on your iPad, and finishing on your phone without any disruption. Similarly, in commerce, customers want a seamless transition between in-store and online experiences. The digital acceleration during COVID-19 has led customers to share more data online, and in return, they expect hyper-personalisation and for businesses to understand and meet their needs. This creates a value exchange where consumers are willing to share their data in return for a better customer experience.

In our report, we interviewed 6,000 people across 14 markets, and the findings highlight the key priorities for consumers. Competitive pricing is at the top of the list, with 57% of respondents emphasising its importance. This is followed by the availability of a wide variety of products at 54% and fast and reliable delivery at 46% . For retailers, it's crucial to focus on their price strategy to remain competitive in the market and also prioritising delivery solutions to meet consumer expectations for speed and reliability.

CNA938: You talked about interviewing 6,000 people across 14 markets. Who are the biggest shoppers out there? How old are they and what are their shopping habits like?

Guillaume: Fifty percent of our respondents were Gen Z, and we see them as key to the future growth of the retail sector. This is the first generation of consumers that has grown up with digital devices and smartphones, and they are constantly connected. Interestingly, Gen Z also value experience. They often prefer to save their money for traveling, interactive dining experiences, or participating in adventure sports, rather than shopping at fast fashion stores.

What is important is to understand the trends on social media, because Gen Z are following these key opinion leaders around the globe. For instance, a Vietnamese retailer has used Artificial Intelligence (AI) to create a virtual live streamer to promote premium infant formulas to mothers tending to their infants in the early hours of the morning. This example illustrates how AI is becoming important, as Gen Z are starting to dominate the world of seamless commerce.

CNA938: How else can retailers harness AI to get more customers, both online and offline?

Guillaume: We have observed a significant and rapid uptake of AI, faster than any previous technology adoption. This is happening on two fronts. Firstly, on the front of the house, which is customer-facing, where AI is being used to refine customer experiences. For example, the use of automated chat platforms to develop a better understanding of consumer expectations and behaviour, so as to provide more accurate responses and information.

Secondly, on the back of the house, where AI is becoming an indispensable tool in functions, such as demand forecasting, supply chain management and also in developing marketing content. Here, AI is used to predict demand, guide product development, and avoid issues like out-of-stock situations or overordering. Some case studies in the report highlight, for instance, a Chinese digital retail technology company that uses AI-driven algorithms to identify the root causes of out-of-stock issues. This enables them to address the issues across the supply chain, from IT to the commercial aspects and store operations.

CNA938: Do younger generations not mind being influenced by virtual influencers rather than real and authentic people? Are they not afraid to share their data in order to get that personalised experience?

Guillaume: I think a growing number of organisations, when they create virtual avatars or virtual companions, do try to make them as human-like as possible. You're right; people still expect a human touch and empathy. There is an anecdote from the US, involving an experiment where generative AI was used in writing medical prescriptions. They found that the AI-generated prescriptions had more empathy than those written by the doctors. So, I think we can recreate some form of human touch through AI.

On data privacy, it is indeed an interesting issue. There is still a concern about data privacy, and we often discuss ethical AI and what kind of data can and cannot be used. But at the same time, I feel that the Gen Z are more inclined to share data, because they have grown up in a world of constant connectivity. However, this poses a challenge, as it is important to ensure that people do not share too much information. Data privacy is a critical issue that retailers need to tackle as well.

CNA938: Let’s turn to payment methods now, Guillaume. What kind of trends are you seeing in this area?

Guillaume: We have 14 markets in the region, and as you can imagine, there are cultural differences in the way people view payments. Some of these markets have a large number of unbanked individuals, where cash remains integral. For instance, cash is the preferred payment method for online purchases in India and ranks second in Indonesia, the Philippines, Taiwan, Thailand, and Vietnam.

At the same time, we see digital payments rapidly gaining popularity across the region, even in markets with high rates of unbanked individuals. This trend is particularly notable with the growing adoption of digital wallets, especially in Southeast Asia. In contrast, more developed economies like Australia, New Zealand, Japan, Singapore, and South Korea still predominantly use debit or credit cards. Hence, a one-size-fits-all approach would not work, and retailers will need to tailor their approaches to the various digital payment ecosystems.

CNA938: Is cash on delivery posing significant challenges for retailers, particularly with missed deliveries and potential fraud when customers refuse payment upon delivery?

Guillaume: We do not see that as much from our research. However, I think this will change very quickly because we see that digital payments are gaining ground so quickly, even in markets where cash has been dominant for many years.

CNA938: Is the Buy Now, Pay Later retail model, popular among Gen Z for its flexibility, a potential downside for retailers?

Guillaume: Certainly, retailers need to consider their cash flow management. But at the same time, they are looking to build customer loyalty through the Buy Now, Pay Later model. According to our survey, at least a third of the consumers surveyed said that they have used Buy Now, Pay Later services in the past 12 months and would continue to do so. For instance, we see high adoption rates in China, where 55% of respondents have utilised this option. This model is gaining ground across the markets we surveyed, and consumers appreciate having convenient payment options, flexible payment terms, and the ability to budget and plan payments effectively.

CNA938:  Do green credentials and sustainability claims from brands really pay off, and are they legitimate? How important is sustainability to today's shoppers?

Guillaume: In the past, Gen Z was the primary driver of sustainability, but in recent years, we've seen this concern extend beyond the Gen Z. In our survey, 64% of respondents expressed willingness to pay a premium for sustainable products. There is a growing alignment of the willingness of consumers to pay a premium and their desire to understand how these products are made. It's less about the final product itself and more about transparency in production methods and sustainability practices.

CNA938: With consumer spending slowing down due to inflation and tightened budgets, how successful do you think retailers will be in convincing people to spend, even with all this knowledge?

Guillaume: I believe that the flexibility of the platforms and various business models, such as the Buy Now Pay Later, along with transparency in product information, are key thrusts for retailers in sustaining growth. Gen Z, in particular, demand seamless commerce across all fronts. Retailers who can offer this flexibility and transparency are likely to be successful.