E-COMMERCE
E-COMMERCE
The expanding appeal behind drop-shipping
More online merchants are choosing to utilise dropshipping — a retail fulfilment method where an e-store purchases merchandise from a third party and ships directly to the customer — according to online payments company PayPal . Muneerah Bee gets more insights from Rahul Shinghal ( right ), managing director , PayPal South-east Asia and head of Merchant Support , PayPal APAC , on why some Web retailers have transitioned into this business model as their primary method of order fulfilment .
Why is drop-shipping important for retailers in South-east Asia ? Rahul Shinghal : As e-commerce is on the rise around the world , consumers are starting to trust the online buying experience and appreciate its convenience . Cross-border B2C e-commerce is projected to reach US $ 424 billion by 2021 , according to Forrester Research . At the same time , mobile is consolidating commerce around large e-commerce sites .
PayPal ’ s study , Beyond networking : Social commerce as a driver of digital payments , found that in Asia , smartphone ownership reaches 88 % and Internet access is at 92 %, making it inevitable that more people will start buying online , and less from traditional bricks-and-mortar retailers .
Many established retailers in the region developed before the digital / mobile revolution and struggle to compete in a digital world . Dropshippers — who sell on online marketplaces such as Lazada and social media platforms Facebook , Twitter , and WeChat — help retailers to adapt and cater to the change in consumer behaviour , essentially enabling them to survive in this evolving retail landscape in South-east Asia .
Drop-shipping has also enabled a new generation of entrepreneur retailers in the region as increased digital connectivity lowers the barriers to online selling . Social commerce has empowered individuals to embark on their entrepreneurial journey , without the usual risks ( such as the risk of holding inventory ) that are associated with traditional retail models .
How can digital payments play a part in drop-shipping ? Shinghal : Digital payments are a key facilitator of this new world of commerce as merchants look to expand their retail strategy to include social commerce , drawing regular social media users to begin selling goods or services through their accounts .
“ Drop-shipping has also enabled a new generation of entrepreneur retailers in the region as increased digital connectivity lowers the barriers to online selling .”
Digital payment solutions can provide the swift and seamless experience that both consumers and merchants desire by making payments disappear into the platforms , facilitating intuitive and userfriendly checkout flows online . They are also key in safeguarding transactions and the personal data of both buyer and seller .
How has the rise of social commerce impacted drop-shipping in the region ? Shinghal : It has opened doors and created more opportunities for dropshipping in the region . As drop-shipping is still a nascent phenomenon in South-east Asia , data for increased dropshipping activities isn ’ t readily available . However , in our interactions with our merchants , we have noted that more of them are choosing to utilise this business model because the increasing prevalence and ease of use of social media platforms is transforming social media from just a networking platform to a digital marketplace . Among the merchants we surveyed in our social commerce report , 80 % of those in the region said that they sell through social media platforms / messengers with the majority in Thailand ( 95 %) and the Philippines ( 87 %).
In short , the rise of social commerce has turned social media into a viable business platform for drop-shippers and is especially useful for drop-shippers to appeal to the “ impulse ” buying tendencies of consumers because of the highly visual aspects of social
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