Retail Asia 2018 RA September.October 2018 (Online) | Page 47

E-COMMERCE
What’s powering Asia’s
stellar e-commerce growth?
S
outh-east Asia’s retail and the
digital revolution is converging
and growing — opening
countless opportunities that were
previously dormant.
Point in case: Alibaba’s major
acquisition of Lazada and Amazon’s
growing footprints in the region are
classic harbingers of the e-commerce
opportunity that waits to be consumed.
Even the numbers do point to the same:
Internet giant Google and investment
company Temasek Holdings reported
that South-east Asia is the fourth-
largest e-commerce market in the world
with 260 million active Internet users.
Making this data even more significant
is the fact that 70% of this population is
under the age of 40.
With research reports pointing
towards imminent growth of Asia’s
e-commerce market at an annual
average of around 20% over the next
three years, sourced through market
research company eMarketer, it is hardly
surprising that the e-commerce market
is expected to reach US$88 billion by
2025.
So, what is fuelling this e-commerce
explosion? While research reports point
to a number of varying factors, I keep
stumbling upon the real reasons in my
regular deliberations with e-commerce
heads and retail brand managers.
n APAC’s soaring internet
connectivity
APAC contributes over 40% of global
active Internet users. Consequently, the
Chinese and South Korean markets are
already witnessing a retail growth rate
that overtakes bricks-and-mortar shops.
With the increase in number
of buyers, the average value of the
purchases has also increased. This has
helped retailers to bolster their top and
bottom lines.
n Logistics players jumping on the
e-commerce bandwagon
Evolving logistics continues to be at
the core of e-commerce growth across
ASEAN and APAC. As I always say, we
live in a customer-centric world and
there should be no confusion regarding
who wears the trousers in today’s supply
Whether you are a brand,
distributor, retailer, third-party
logistics (3PL) company — or
any entity that is part of the
e-commerce ecosystem — Asia
is the place to conduct business
right now, according to
Vaibhav Dabhade, CEO of
software company Anchanto.
chain world. If you do not provide what
the customer wants, the customer will
leave you and go elsewhere.
And it seems like logistics players
have started realising this, given that the
region has experienced a sudden rise in
timely and reliable delivery mechanisms.
Post-purchase experience, an initial
hiccup for e-commerce growth, is now
being recognised by retailers and is being
worked upon through partnerships with
logistics players, government bodies and
logistics associations.
This has led to the rise in number
of e-commerce logistics start-ups.
Subsequently, this has pushed traditional
3PLs to adopt technology and
digitise, modernise and optimise their
e-commerce fulfilment operations.
n Transforming supply
chain actors
Logistics and supply giants in the
region such as DHL, FedEx and UPS
have shifted focus, and reformed their
processes of handling and transporting
goods. They have prioritised delivery
of small parcel volumes over their
traditional process of handling and
transporting larger goods, giving an
opportunity to the e-commerce industry.
n State-led support
South-east Asian governments have
been extending unprecedented support
to local e-commerce bodies in order to
boost regional and national economies.
Policies such as the Digital Free Trade
Zone (DFTZ) and eUsahawan in
Malaysia have encouraged small and
medium-sized enterprises (SMEs)
to kick-start e-commerce operations
without worrying too much about taxes
and other complexities.
n Power of Millennials
Millennials now represent more than
45% of APAC’s population and almost
60% of world’s population is expected
to live in Asia by 2020. According to
a research by management consulting
company Accenture, millennials in Asia
will have an estimated disposable income
of almost US$6 trillion by 2020. This
will heavily influence online purchasing
patterns and augment e-commerce
revenue in the region.
n Start-ups: providers and adopters
Many e-commerce providers and
logistics start-ups have become adopters
of emerging technologies and platforms
themselves, helping to further open
the e-commerce ecosystem. Being
agile, on both technology and business
fronts, these start-ups have led a
major disruption across every facet of
e-commerce supply chain. Right from
innovation in payment and one-click
ordering to cash-on-delivery and free
turns, start-ups have pioneered in
improving the customer experience.
The key to align with
opportunities
The APAC region has its own distinctive
set of challenges and barriers. The biggest
ones include socio-political and language
differences, as well as complex and
fragmented tax laws.
E-commerce organisations have
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