Retail Ecommerce in Asia
Over the past five years, major disruptive events have occurred and impacted significantly the global economy as well as the retail ecommerce scene. Ecommerce has been playing a pivotal role in the retail sector worldwide ever since, and has ramped up its volume significantly, especially during the pandemic until the drop of 2022.
Indeed, as lockdown measures and restrictions were gradually lifted, most consumers returned to physical stores and inevitably ecommerce suffered a setback. Digital shopping gradually weakened, brick-and-mortar shopping scaled up, and the initial gap between the two was about to narrow. However, the situation is recovering.
Despite a temporary slowdown in the retail ecommerce market, the online channel is on the rebound, and this is especially the case of South East Asia and China. Between now and 2026, the South East Asian market is projected to triple at a compound growth rate of 22% and will reach around $230 billion in gross merchandise volume. As of January 2023, South East Asian countries' online retail sales are expected to grow by 14,3% and to cross the $100 billion mark within the end of the year. Singapore, Malaysia, Indonesia, Vietnam, and the Philippines are forecast to have a much higher number of active users than the US and Japan combined, without taking into account the sales total. And unsurprisingly, China still accounts for the largest digital market share, currently set at 46%, outpacing any runner-up in terms of both market size and active users.
Asian retail ecommerce is a diverse and complex environment and here we will provide some useful information and guidelines on how to approach the market. And if you are interested, here is extra content about ecommerce in Asia.
Top ecommerce platforms in South East Asia and China
- Shopee: largest online marketplace in Southeast Asia, with 343 million visits per month.
- Tokopedia: leading ecommerce platform almost exclusively Indonesian.
- Lazada: part of Alibaba Group with 128 million monthly visits, it operates across the South East Asian region.
- Qoo10: Singapore’s platform for ecommerce, it sells a wide range of merchandise to countries across the South East Asian region.
China alone comprises a huge number of ecommerce platforms, and here are the most popular:
- Taobao: largest C2C platform in China with a monthly traffic of 240 million users.
- JD: one of the biggest retail platforms within the country.
- Alibaba: largest and no. 1 wholesale (B2B) platform in China.
- Pinduoduo: competitor of both JD and Alibaba. Great innovator in terms of technology as it is the first to set a C2M business model allowing direct contact between consumer and manufacturer.
- TMall: as a spinoff of Taobao specialised in B2C. Find out more at this page.
- Xiaohongshu (Little Red Book): fashion, beauty, and lifestyle marketplace.
- Douyin: original version of the Western TikTok, it was originally a short video social platform until it introduced a shopping cart feature together with live streaming and live stream sales functions to provide the live ecommerce experience. Currently among the most popular apps in Asia.
- Weixin: Chinese name for Wechat, it started primarily as a messaging app, but today Chinese people use it for almost all their day-to-day activities, including shopping. With new app features such as WeChat Store, WeChat Pay, and WeChat Mini Program, the platform provides the most convenient form of Ecommerce for brands as well as buyers.
Asian consumers rank first in the chart of global active users of social media and internet-based platforms accounting for 26% of the total. It is mainly younger generations that spend most time on social apps, and if initially it was a matter of messaging and communicating online, now big changes are happening. With the integration of ecommerce in social apps, the whole ecommerce ecosystem has revolutionised all over the world, but in Asia the trend saw a massive effect on its audience.
Asian users rely more on these kinds of platforms given the success of social media entertainment and digital marketplace services like live ecommerce and KOL (Key Opinion Leaders) influence on purchases. As customers are getting more accustomed to shopping online, they are likely to extend their digital purchases range beyond apparel and low-value consumer electronics. Food and beverage, beauty products, and home and living goods are going to be included.
Tips to approach the Asian market
The retail scene is now being shaped by numerous factors as many are the current trends. Brands should be approaching the market by equipping themselves with a proper toolkit and set of know-how.
- Be prepared
Before starting to approach the Asian market, as it is for other foreign markets, it is essential for companies to provide at least a bilingual service with English for all the corporate material including the corporate website, social media, catalogues and collaterals. It is recommendable to rely on professional translators or interpreters.
- Invest in marketing
Another element to succeed is investing in local marketing and advertising campaigns to increase visibility and strengthen brand awareness.
- Review your pricing strategy
At the moment of moving abroad, a global price strategy has proved to be more effective in the long run since consumers are more informed and require honesty and transparency when it comes to prices.
The Chinese market
In addition to the above-mentioned indications, it is useful to know that as for the Chinese market some peculiarities require special attention.
- A bilingual service featuring English only is not sufficient to engage with any potential customers in China. Chinese must be the language to use to do business in China, therefore any type of communication must feature a Chinese version.
- Using the right apps and Internet services means being visible and recognisable in the market. As a consequence, being unable to register website page IPs (Internet Protocols) in China or failing to display brands on the exact platforms used locally (see above) results in having no chance of success.
- As for the apps to use in China, not only should companies be present, but they also need to be active, especially for WeChat and Little Red Book. So, they would need to frequently update profiles, publish contents, share news and events, create interactive Mini Programs and try to engage with local partners to establish a presence locally. Finding KOLs would be ideal to involve great masses.
- Also, it is of utmost importance to have qualified personnel to offer continual high quality and fast customer service and a strong logistics centre. Asia moves fast, and so should you.
Going international nowadays requires time, energy and plenty of resources to effectively penetrate the market and data suggest challenges will make it harder for small to medium businesses to expand their presence. Embarking on international operations projects by yourself is not as easy as it seems, especially when it comes to approaching a vast market like Asia. If you are planning to start your business abroad and are unsure of the strategy, we can help you formulate and implement the best action plan. Our team of skilled consulting professionals will assist you in expanding the business and provide an all-round tailored service.
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