Asia takes centre stage for ecommerce by Katrin Jaehnke, posted on 24 May, 2013 at 8:19 am, filed under E-commerce and tagged china, E-commerce. Bookmark the permalink. Follow any comments here with the RSS feed for this post. Share
According to a recent global survey by eMarketer, 2012 saw B2C ecommerce sales in the Asia-Pacific region grow more than 33% to $332.46 billion.
The same report predicts that this year, the region will see another sharp hike with sales increasing by more than 30% to over $433 billion—accounting for over one-third of all global B2C ecommerce sales. This will put the Asia-Pacific in pole position in global B2C ecommerce sales, for the first time, surpassing even North America.
As an interesting barometer for how quickly the Asia-Pacific region is growing, sales in North America grew 13.9% to $364.66 billion in 2012—and this figure is expected to increase 12.2% to $409.05 billion this year. However, North America will see its share of global sales drop from 33.5% last year to 31.5% in 2013 as the Asia-Pacific surges ahead.
The eMarketer report puts Asia’s rapid growth down to the fact that three key markets – China, India and Indonesia – will all see faster B2C ecommerce sales growth than all other markets worldwide this year, while Japan will continue to take a large share of global sales.
Unsurprisingly, the giant driving Asia star e-commerce performance is China. The country is projected to overtake Japan as the world’s second-largest B2C ecommerce market this year, taking an expected 14% share of global sales, as its total reaches $181.62 billion, up 65% from $110.04 billion in 2012.
While the US will remain the single country with the largest share of worldwide B2C ecommerce spending, at 29.6% in 2013—down from 31.5% in 2012 despite relatively strong growth, China is closing the gap fast. By 2016, China will have 22.6% of the worldwide market, compared to the US’s 26.5%.
What’s helping China’s rapid rise is that it boasts highest number of people who buy online—nearly 220 million—and is also benefitting from increasing internet penetration; a burgeoning middle class with growing trust in online shopping; government-driven campaigns to promote consumerism; and improved infrastructure, product selection and services offered by online sellers and retailers. To put all of this into context, in 2012 China’s e-commerce was worth an estimated 1.3 trillion RMB ($190 billion US dollars) according to a report by the China Internet Network Information Center (CNNIC), which amounted to an increase of 66.5% year on year. Meanwhile the Internet Society of China announced earlier this year that China’s e-commerce accounted for 6.3% of total retail sales in 2012.
If this is not enough to highlight China’s status as an emerging ecommerce powerhouse, then consider that it is also home to one of the world’s most impressive success stories for an online store.
One giant firm dominates the market: Alibaba. Last year two of Alibaba’s portals together handled 1.1 trillion yuan ($170 billion) in sales, more than eBay and Amazon combined. The company is on track to become the world’s first e-commerce firm to handle $1 trillion a year in transactions. Research into the Top 400 online retailers in the region, by FACT-Finder puts the store clearly ahead of the pack. In fact, it’s 18 times the size of its nearest domestic competitor. It’s a clear indication that the Chinese market is lapping up ecommerce.
Some key yardsticks, taken from the Top 400 retailers report, reveal just how savvy the Asian market is. For example, web only retailers are astonishingly wide spread in Japan, Korea, China, with 283 of the Top 400 retailers region being web only. Compare this with the European Top 400, where only 25% are web-only stores. Bricks and mortar retail does not have such a long or strong tradition in the region, which means there are many more new businesses opening up all the time that are web only – this phenomenon will continue to drive ecommerce rates across the Asia-Pacific in the coming years.
Conversion rates are already very high in comparison to European shops. Europe’s Top 400 shops showed an average conversion rate of only 2.5%, whereas Asia is already showing average conversion rates nearer to 3.7%. The vast majority of stores are already using product recommendations to achieve basket size optimisation. This is a key focus for the region’s online retailers and the tools to achieve this are already wide spread. Furthermore, guided navigation is already used by half of the shops in the Top 400; this is just 10 shops less than in the European TOP 400 Retailers survey.
Perhaps unsurprisingly, the top merchant types are exactly the same in Asia as they are in Europe: Apparel/Accessories; Mass Merchants; and Computer and Electronics. What of course is unclear is whether Asian customers are interested in the same offering, or the shops are orienting themselves at the offerings in other countries. But what is abundantly clear is that the Asian market is far from a backwater for online retail and may well very soon be leading what we now see as the leading ecommerce economies.
Katrin Jähnke, Head of International Business at FACT-Finder
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