November 27, 2013
We just published our new online retail forecast report for Asia Pacific (clients can read the report here). In our forecast, we look at top-line growth in five markets across Asia Pacific: China, Japan, South Korea, India, and Australia. China will be responsible for the lion’s share of growth in these markets, which, combined, will reach some $854 billion by 2018.
In the report, we note a number of trends across the region, including the following:
- The heavy dominance of web-only retailers in many countries. In many markets in Asia Pacific, traditional retailers do not play as strong a role in eCommerce as they do in the US, UK, or even Latin America. Internet Retailer’s Asia 500 list, for example, includes just one traditional retailer among the top 10 retail websites in the region (China’s Suning). And while some markets like Australia see traditional retailers now playing a bigger role in eCommerce, in fast-growing eCommerce markets like India as well as China, web-only retailers are very much dominant today.
- The increased focus on omnichannel functionality. The strong role that many traditional retailers play in eCommerce in the US and Europe often translates into robust omnichannel initiatives. By contrast, it’s taken a while for many retailers across Asia Pacific to launch offerings that link their online and offline channels. Increasingly, however, digitally savvy retailers in the region are focused on developing new offerings. In Australia, for example, where traditional domestic retailers were long notably lagging (or absent) when it came to eCommerce, there is renewed interest not just in the online channel but also in building out key omnichannel features.
- The rise of brands’ direct-to-consumer eCommerce sites. Many global brands have sold their products through traditional retail channels in Asia Pacific for years – now, however, they are trying to determine how best to leverage the online channel to increase sales. A large number of brands have launched online stores on marketplaces in the region, such as China’s Tmall or Japan’s Rakuten, but many are also launching their own direct-to-consumer websites. Brands today are looking to launch direct websites across the region that engage local online shoppers and that provide a different experience from their marketplace offerings.
- The growth in online shopping in smaller cities and rural areas. In the emerging eCommerce markets of Asia Pacific, there has been a shift toward focusing on growth outside the largest metropolitan areas. Indeed, consumers in wealthy tier one cities can seek out their favorite brands through both online and offline channels; in smaller cities, consumers are more reliant on the online channel for a broad product selection. In India, for example, it is not uncommon to hear about online retailers taking in more than half of their revenues from consumers in tier two, three, and four cities.
- The mobile commerce explosion. Finally, as in other parts of the globe, mobile commerce has expanded rapidly across the markets of Asia Pacific. This year, momentum has built in some key markets. In China, for example, Alibaba recently announced that 21% of orders on Taobao and Tmall on Singles Day were placed on mobile devices, compared to just 5% last year. India’s Snapdeal says 30% of orders now come from mobile devices, a 10-fold increase over the past year.
I'll be presenting at our Summit for Marketing & Strategy Professionals in APAC on the topic of online retail on March 19, 2014, in Shanghai, China. Save the date and follow updates of our Summits on Twitter at #ForrForum. I hope to see you in Shanghai!