APAC has emerged as the world’s ecommerce hub in recent years. While much of the emphasis has attended the rise of China, where private consumption is set to reach $US6.4 trillion by 2020, the story is much wider.
A report by Research and Markets released in October 2105 revealed that the Asia-Pacific region is already the global leader in B2C ecommerce.
- Subscribe today: Sign up for Which-50’s Irregular Insights newsletter
According to the study, its share of total retail sales exceeds that of Western Europe and North America.
The findings are consistent with other studies such as that by the Ecommerce Foundation which identified the region as the world’s biggest B2C ecommerce market with $US770 billion in turnover.
And as the authors of Research and Markets’ “Asia-Pacific B2C E-Commerce Market 2015” note, “Asia-Pacific is home to three of the top seven countries with the largest B2C E-Commerce sales worldwide. The largest of them, China, vies with the USA for global leadership as the biggest B2C E-Commerce market.”
APAC’s share of global B2C ecommerce is set to grow further still in the next five years. Within APAC, markets such as China and India will gain share at the expense of more advanced markets like Japan and South Korea.
“While countries such as Japan, New Zealand and Australia were ahead of others in Asia-Pacific in terms of Internet penetration, China, India and Thailand demonstrated significantly higher mobile shopper penetration rates than these advanced markets.”
See also: How savvy, social shoppers are transforming Chinese e-commerce by By Kevin Wei Wang, Alan Lau, and Fang Gong
The study also revealed that Australians are the biggest cross-border online shoppers in the region, while social commerce is especially pronounced in markets such as Indonesia.
“Overall, B2C E-Commerce sales in Asia-Pacific are projected to increase at moderate double-digit rates through 2019, with India and countries in Southeast Asia especially standing out in terms of forecasted growth rates, as the report explains.”
The success and popularity of ecommerce in the region has also caught the eye of investors. Last year, for instance, Indian companies including Flipkart and Snapdeal, and Chinese platforms like Meituan and Dianping, accounted for nine out of the top ten ecommerce investment deals in the region, according to the report.
“Alibaba Group and JD.com, both based in China, remain the leading E-Commerce companies in Asia, while international players such as Amazon, Wal-Mart and eBay also maintain significant presence.”
Meanwhile, cross-border ecommerce is set to surge, according to a study by PayPal. Its “PayPal Cross Border Consumer Research 2015” report found that China was the world’s second-biggest market for inbound online shoppers, while India is on track to experience the strongest cross-border spending growth this year.
China’s importance in all this is well documented, and due to the success of events of Singles Day — which already dwarfs the American equivalent, Cyber Monday — recognition of APAC ecommerce is growing strongly. (Less well understood is how truly global Singles Day has become, with Which-50 revealing last year that while the biggest volume of activity is driven locally, the three biggest spenders are Americans, Brits and Russians.)
However, it is important to recognise what is happening in the rest of the region.
Take Indonesia, for instance. Last year the country made some very significant changes that should help spur ecommerce and digital growth.
As we reported in April this year, “Indonesia has been plagued by a protectionist approach to foreign investment and as late as 2014 had imposed a ban on foreign investment in its digital sector. Late last month, in a reform statement that is so far not detailed, the government announced that 35 of the 100 industries that were refused foreign investment would be released. One of those is ecommerce.”
Subsequently, the Communications and Technology Industries Ministry revealed proposed new laws for Internet-based services operating in Indonesia, which suggested the government was thinking carefully about the impact on its local economy. “The proposals would require ecommerce operators to incorporate in Indonesia. Content-based companies would need to self-censor in line with Indonesia’s existing regulations and use Indonesian payment gateways. Those with representative offices (Facebook, Google, Twitter among others) would have to upgrade to a local company.”
And in recent disputes, such as with the taxi industry, the government has generally sided with the insurgents.
With its population of 255 million, Indonesia’s economy is creating a growing middle class. “Broadband has taken a while to take off, but a rise in competition and a sharp improvement in the mobile broadband rollout is seeing a rapid rise in smartphone distribution that is a great underpinning of innovation,” noted Michael Gill, former CEO of the Australian Financial Review and now a keen observer of ecommerce trends in the country.
For APAC’s digital marketers, there are unique issues to consider. Mobile devices offer far more ubiquitous channels in APAC than in many western economies, having skated over the desktop era. But infrastructure remains an issue, especially outside of major urban areas.
And capabilities and talent vary considerably, making it harder to exploit the latest advances in adtech and marketing technology fully.
APAC’s digital consumers are also driving the adblocking phenomena. Of the more than 408 million users of adblocking browsers worldwide, a huge 93 per cent of them live in the APAC region.
It is not hostility to advertising that drives this. Rather, it is a reflection of broadband infrastructure and connectivity costs.
According to a report by PageFair called Mobile Report, “Adblocking browsers improve page speed and reduce bandwidth consumption on mobile. Accordingly, they are most rapidly adopted in markets where mobile data infrastructure is less developed and therefore slow and/or expensive relative to income.”
That report found that China, India and Indonesia are the biggest geographies for adblocking, accounting for 319 million active adblocker browsers between them.
About the authors
Andrew Birmingham is the director of the Which-50 Digital Intelligence Unit. Will Griffith is RVP Sales APAC Oracle Marketing Cloud, which is a corporate member of the DIU. Members contribute their expertise and insights to Which-50 for the benefit of our senior executive audience. Membership fees apply.