2022: Making the year of tiger a roaring success for payments
The beginning of February marked the Lunar New Year celebrations, and the ushering in of the year of the Tiger. With each new year comes a new meaning and new beginnings, a timely message as the world continues to recover from the pandemic and usher in a new normal. So what might this look like for Southeast Asia’s payments sector?
Off to a roaring start
Given the volume of people who celebrate Lunar New Year (LNY) around the world, it’s no surprise that sales figures beat those of the Christmas holiday season. For comparison, in the five-day period from Thanksgiving to Cyber Monday last year, online sales in the US were projected to total about $39 billion USD. In 2021, Chinese retail sales during the Lunar New Year totaled over $129 billion USD.
For retailers this is a huge opportunity to drive sales, and win new customers for the rest of the year.
Sellers keen to seize this opportunity often get creative with Lunar New Year sales and auspicious discounts featuring the number 8, the luckiest number in China, driving shoppers to purchase and transform retailers fortunes for the year ahead. But once the discounts have ended, and the celebrations are over, the question all sellers will be asking is: what will consumers be spending their hard earned money on?
Consumer behaviour during LNY
The tradition of giving hongbao (auspicious red packet) to wish prosperity and good fortune to the recipient was revolutionised in 2014 with the invention of digital e-hongbao, which became popular when WeChat allowed users to send virtual red envelopes of money to their contacts. Now, seven years later, about 80% of survey respondents say they prefer to send digital e-hongbao to physical envelopes.
This soar in popularity was well timed. In the past, LNY has prompted huge masses of people working away from their hometowns to travel back to celebrate. The world’s largest annual migration means that as many as three billion trips would be made each year across China. But the pandemic and national lockdowns changed things dramatically in 2020, 2021 and for many, this year too with restrictions continuing to be in place across Southeast Asia.
However, for those who were able to make it home to celebrate, festivities centered around gathering with family and friends to eat were plentiful. In fact, according to a survey ahead of LNY last year, around 77% of Chinese respondents said they planned on buying food for the 2021 holiday. About half of the respondents decided to buy alcohol or wine. Beyond this, many decided to send a gift with e-commerce supporting those who are still social distancing. According to Alibaba’s Spring Festival Consumption Report 2021, tech products, such as sweeping and window cleaning robots exceeded 300% YoY.
Customising the checkout is the key to cashing in
Research conducted in 2018 in China, India and Indonesia asked consumers to identify the main obstacles which prevented them from using online services to their fullest extent. The number one obstacle, singled out by 76% of correspondents, was language and even today, lack of language localisation continues to be an issue across digital platforms.
But localisation can’t stop at language localisation alone. According to PPRO’s own research, most consumers will abandon a transaction if they reach the checkout and cannot pay with their preferred payment method. To ensure maximum consumer acceptance and the best possible conversion rates, merchants must ensure that their site offers a range of familiar and trusted local payment methods. And with so many local payment methods in APAC, and new ones emerging every day, this couldn’t be more true. To serve today’s Chinese consumers, at a minimum it is best practice to accept all three of the most popular Chinese payment methods: UnionPay, Alipay, and WeChat Pay.
To realise roaring success in the year of the Tiger, merchants must think local first, and tailor their payment offering to their customers, wherever they may be.
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