According to Freda Ng, Watsons International’s chief digital officer, the company fast-tracked its implementation of cloud-based e-commerce technology to handle the exponential growth in traffic. “Consequently, we saw a strong growth with orders and sales doubling in 2020 compared to the year before,” she told Inside Retail.  At the same time, customers’ expectations of the online shopping experience have risen, particularly around delivery. “With the uptake of online shopping especially during the Covid-19 pandemic, customers’ demands and expectations of [their] online shopping experience has been surging rapidly,” Ng said.  “Customer research showed that in Asian markets, our customers have [an] expectation [of] fast and reliable delivery for online shopping.” Last-mile logistics have traditionally been a challenge in Southeast Asia, particularly in markets like the Philippines and Indonesia, which are made up of islands. But that is changing, thanks to the rise of on-demand delivery platforms like Grab, which operate large and affordable networks of transport workers, and omnichannel retail solutions that enable online orders to be fulfilled from store inventory. Fulfilment from over 2,200 stores Watsons’ large store network is critical to its new two-hour delivery proposition, according to Ng.  “With an extensive network of over 2,200 stores across Southeast Asia, Watsons has the unparalleled ability to drastically reduce lead time by using nearby stores as the fulfilment centre,” she said, calling it a “critical foundation for making fast delivery possible”. Customers can shop for over 62,000 health and beauty products through the Watsons app, or Grab’s e-commerce platform, GrabMart. In both cases, Watsons fulfils the online orders from its store inventory, and Grab delivers the orders to the customer.  Available Singapore, Indonesia, Malaysia, Thailand, Vietnam and the Philippines, the two-hour delivery service is just the latest example of A.S. Watson’s omnichannel retail strategy, which it refers to as O+O (offline and online).  “A.S. Watson Group has embarked on its journey of digital transformation since 2012, integrating its O+O platforms seamlessly,” said Ng.  “Investment has since then been dedicated to building capabilities on CRM, online experience, machine learning and data science. All these have kept us at the forefront of retail development, such that moving between offline and online becomes truly effortless for customers and they can enjoy the most out of O+O worlds.” The retailer’s current digital projects include using artificial intelligence to provide better and more personalised recommendations, enabling customers to virtually ‘try on’ beauty products using augmented reality and providing beauty advice and other virtual services through the Watsons app. The importance of human connection For A.S. Watson, physical stores and online stores are “perfectly complementary”, according to Ng, which is why the retailer continues to invest both in growing its online presence and improving the in-store shopping experience through its retail technology, displays, demonstrations, themed zones and advisory services. “Our bricks-and-mortar stores serve as a ‘third space’ that is not only about transactions, but also about human interaction with customers, online and in-store,” Ng said.  This is backed up by A.S. Watson’s recent survey of over 22,000 customers in 20 markets, which found that respondents by and large plan to go back to physical stores for shopping, including Gen Z.  “One third of those surveyed said they will even shop more often in stores,” Ng said. “This really underlines people’s desire for a human connection and these bonds will become even more important in the future.”