Asia E-commerce: Where the Opportunities Lie
Asian markets contain some of the fastest-growing economies in the world. As a result, the continent’s vast population has a higher percentage of disposable income to spend than ever before. China and India are Asia’s rising giants of electronic commerce (e-commerce), with these markets presenting a lucrative opportunity for overseas retailers. Yet each country brings with it individual challenges that need careful consideration if merchants are to capitalise on the potential.
China’s increasingly mobile population means that its citizens’ exposure to western goods has risen, presenting an opportunity for merchants to sell to this market. The population of China is enormous, nearly 1.35 billion according to the 2010 census, but never before has the country’s spending power been aligned with its density. However, last year the number of Chinese online shoppers reached 194 million, a 21% increase on 2010 and representing more than a third of all its total internet users.
According to WorldPay’s 2012 Global Online Shopper Report, despite the global recession China’s e-commerce spend has grown by 58% over the last year, and WorldPay agreed a partnership with China UnionPay in February 2012, to assist merchants seeking to tap into China’s enormous spending power.
Second only to China in size, India’s vast population stands at 1.25 billion according to World Bank statistics. The country’s economy is expected to grow annually by more than 6% over the next few years, as Indian businesses and industries begin to cement their place as global leaders. The Internet and Mobile Association of India (IAMAI) reports that the total value of e-commerce transactions in India is expected to reach at least US$70bn by 2024-25, a massive market for merchants to engage with.
The rapid-growth economies of China and India present merchants with a new generation of enthusiastic shoppers. In the US just under a quarter of disposable income is spent online, with users spending an average of 23% via the web. That figure rises dramatically for consumers in China and India, who are spending almost a third of their outgoings online. Furthermore, Asia not only has a higher number of heavy spenders, but a much higher percentage of shoppers apparently willing to spend a large portion of their income online in the future. A consumer survey suggests that only 9% of Indian and Chinese respondents claim that they would never spend more than half of their disposable income online, against 50% of Britons who say they would not. Not only are Asian economies already spending more of their disposable income online, but there is a much greater willingness to spend even more if retailers can meet their needs.
Opportunity and Challenge
Mobile shopping arguably represents the biggest opportunity for retailers looking to enter Asian markets, and also the biggest challenge. According to research house IDC, 472 million smartphones made their way to shop shelves during 2011 and a large percentage of these were bought by Asian consumers. For many, a lack of infrastructure makes access to desktop computers impossible, and the mobile phone is quite simply the only way of accessing the internet. WorldPay’s report found that 72% of Indian respondents are owners of a smartphone, while a further 40% have already purchased a product using their device – double the global average of 19%. OnDevice’s recent report ‘The State of the Mobile Web 2012’ states that over half of India’s population are mobile-only internet users, demonstrating the importance of a successful mobile strategy. With so many Indian consumers looking to browse and purchase products through mobile devices, it is essential that merchants consider optimising their websites or offering bespoke platforms to accommodate this type of shopper.
Smartphone ownership in China is also soaring at 75% of the population, with shopping on these devices a highly popular pursuit for 46% and owners averaging 5.7 shopping apps on their devices. Mobile use in the US is, by contrast, well below the global average. Survey results indicate that only 27% of US respondents intend to use a smartphone or tablet for buying goods over the next 12 months, stating a lack of need as the top reason.
While mobile technology clearly has a role to play in Asia’s e-commerce boom, there are certain barriers that merchants must overcome if they are likely to succeed in these growing economies. Nearly four in five (79%) Indian consumers are apprehensive about shopping online because of concerns over security, and 54% of Chinese consumers express concerns about fraud and identity protection. Merchants are understandably keen to provide consumers with a seamless transaction; therefore careful consideration is needed of their fraud and security strategy. A popular option is to use the 3D Secure services Verified by Visa and MasterCard SecureCode, supported by mobile payment pages and have the same robust security measures as are available on standard hosted payment pages. Risk screening tools can help bridge the gap, by using environmental factors to screen transactions. Additionally, merchants can take advantage of additional authentication tools for mobile commerce (m-commerce). It is clear that shoppers in developing markets have an appetite for mobile shopping, so it is important that they are not held back by security concerns.
As e-commerce takes hold and web-enabled devices become ever more sophisticated, it is logical to assume that this way of shopping will continue to gather pace in developing markets. However, the success of an e-commerce and m-commerce strategy is highly susceptible to local norms, rules and regulations. The cross-border opportunity is an attractive one and large global corporations may look to roll-out their existing platforms to emerging markets, although they should proceed with caution. Consumer preferences differ greatly by region and merchants need to understand these cultural nuances. Merchants should ensure they are providing Asian shoppers with bespoke payment pages where they can browse and pay for products in their own regional language using locally recognised ways to pay.
By anticipating the needs and expectations of the emerging market shopper, merchants will be able to tap into this considerable revenue opportunity.