E-COMMERCE IN ASIA
E-commerce is a topic that everyone is talking about. It gives companies, even the smallest ones, the ability to expand their business globally and operate it 24/7, without the need to set up costly stores with employees in a foreign country. Those who still haven’t included it into their business portfolio should start thinking about and making the necessary plan how to break into this sector. Because one thing is sure: e-commerce is here and it won’t go away.
On the contrary, the use of e-commerce has even accelerated over the past years, particularly here in Asia. For example Alibaba, Amazon’s rival from China, accounts for more than 80% of all online purchases in China, which is the world’s biggest e-commerce market with a 40% share of the global e-commerce retail transaction value. In 2019, Alibaba’s 11.11 Global Shopping Festival “Singles’ Day” generated USD 38.4 billion in revenue during the 24 hours, of which the first billion in sales was achieved in just 68 seconds, even though the e-shopper penetration and share of internet users in Asia is lower than in North America and Europe. By contrast, Amazon sold “only” USD 7.2 billion worth of goods on Prime Day in the same year. The reason for these differences is certainly the huge population in Asia but it clearly shows the future potential for companies in this fast-growing market.
Although the e-commerce share in 2019 only accounted for 15% of all retail sales worldwide, it is expected that it will reach 25% within the next 3-4 years. However, the longer a company waits, the lower the chance will be to succeed due to the increasing saturation of markets over the next years which will be dominated by the competition who took this important step earlier with a well-considered and structured approach.
The biggest mistake that most companies still make is to believe that a few minor adjustments on their websites will be sufficient, but unfortunately it requires more than that, and we are not talking about SEO, social media or content marketing alone. A company that wants to succeed needs to put the focus on the targeted customer, its brand awareness and development, distribution, continually analyze and test the rapidly changing market with regard to technology trends, the competition as well as consumer behaviors and expectations.
In most cases a company will have only one shot to succeed. Take Amazon as an example which entered the Chinese market in 2004 and closed its domestic e-commerce market place in July 2019 after its market share declined year after year and reached only 1% in 2018 because it didn’t keep up with the user experience that was offered by the local competition. Some argue that it was due to the reluctance of Chinese consumers towards foreign companies, however, this argument could not explain why other foreign companies, such as IKEA, Starbucks and McDonald's are still so successful in China.
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