Although the pandemic has altered our lives substantially, it has also created new opportunities. We now live in an online world and ecommerce is imperative to our lives more than ever.
Thanks to this shift to digital, the ecommerce market in Asia experienced significant growth during the coronavirus pandemic and the numbers indicate it will continue to do so.
At a time where online success is crucial for businesses, it’s beneficial to understand the thriving Asian ecommerce market. So in this article, we’ll take a look at this vast market and its influential role in the competitive ecommerce landscape.
The Asian ecommerce market in numbers
We all know that Asia takes the crown when it comes to ecommerce — China alone is the largest ecommerce market in the world! But seeing the actual numbers might still surprise you.
Especially as the pandemic drove more customers to online shopping, the ecommerce industry saw unprecedented growth in the last year. According to an Ipsos survey, 50% of Chinese online shoppers have increased the frequency and amount of online shopping due to Covid-19.
“The coronavirus situation has materially accelerated a shift to online lifestyles that is broad, deep, and we believe, irreversible,”Zhou Junjie, the CCO of Singapore-based ecommerce platform Shopee
The projected growth rate of ecommerce in Asia between 2020 and 2025 is now a whopping 8.2%. This puts Asia ahead of the Americas and Europe — with projected ecommerce growth rates of 5.1% and 5.2% respectively.
According to Statista, Asia’s ecommerce revenues are predicted to reach $1.92 trillion by 2024. This means that by then, Asian economies will account for 61.4% of the global ecommerce market.
However, China is not the only reason behind this success. For example, India’s ecommerce revenue is growing at an annual rate of 51% — making it the highest in the world!
What’s more, Indonesia is set to surpass India in terms of ecommerce market growth, with 55% of Indonesian consumers claiming to buy online more than ever. So it’s safe to say that Asia will continue to dominate the ecommerce scene in the coming years.
The reasons behind Asia’s ecommerce success
This impressive ecommerce success in Asia is no coincidence. There are certain factors that make ecommerce work so well both for businesses and customers. From culture to economics, let’s look at the reasons behind Asia’s ecommerce success.
In the good old days, 10-day shipping at an added cost was the norm. Try making that offer today — despite the pandemic constraints — and see how many orders you’ll have.
“Almost half of the shoppers (46%) said that the choice of a convenient and personalized delivery service is a key factor in the online buying decision stage.”Sorted
It’s a challenging standard to reach but Amazon really set the bar high when it comes to rapid delivery. And customers don’t think twice when opting for businesses that can deliver faster. However, Asian ecommerce businesses don’t seem to struggle to meet the expectations.
Seeing the importance of logistics services, Asian countries rapidly improved their performance in the last decade. According to the World Bank’s logistics performance index, Asia now accounts for 17 of the world’s top 50 performers.
Within Asia, Japan and Singapore are the two top-performing countries, followed by the United Arab Emirates, Hong Kong, Australia, South Korea, and China. This robust delivery performance is one of the main reasons the Asian ecommerce market is thriving and the population is becoming more engaged with online shopping.
The Growing Middle Class
The middle class represents a vast amount of potential customers for online businesses. And since 2015, Asia has surpassed Europe and North America with its middle-class population.
According to the current growth, there will be 50 million new consumers by 2022, just in Southeast Asia. And it’s expected that Asia’s overall middle-class population will increase from 2.02 billion in 2020 to 3.49 billion in 2030.
This means that by that time, Asia will account for 57% of global middle-class consumption. And this new generation of middle-class will be crucial for ecommerce as they’re more comfortable with using technology and buying online.
What sets the middle-class in Asia apart from the rest is also their online luxury shopping habits. In a 2017 report, Brookings found that Asian middle-class consumers had outspent their North American counterparts.
Asian middle-class population is especially interested in foreign products, sometimes even traveling abroad for only shopping purposes. For example in 2018, 36% of the global revenues of the French luxury brand LVMH, came from Asia — more than any other region!
Due to the travel constraints this year, Asian consumers spent even more on luxury goods online. According to a Bain report, China’s luxury online penetration increased from about 13% in 2019 to 23% in 2020 — indicating big opportunities for luxury ecommerce in Asia.
The tech-savvy consumers
Another important reason behind Asia’s ecommerce success is the customers’ openness to embracing new technologies — may it be ecommerce, mobile usage, or digital payment methods.
China accounts for 63.2% of online shoppers in the Asia Pacific followed by India (10.4%) and Japan (9.4%). And the pandemic only enhanced these online shopping habits.
According to a study, many shoppers in Asia — 38% of shoppers in Australia, 55% of shoppers in India, and 68% of shoppers in Taiwan — discovered at least one form of ecommerce during the pandemic that they will continue using.
And when it comes to digital payment, research also shows that there has been an increase in the number of transactions taking place online, particularly in Singapore, China, Malaysia, Indonesia, and the Philippines.
In fact, digital wallets account for more than 50% of Asia Pacific’s ecommerce sales. For China, this share is even higher, with nine out of ten consumers using Alipay and WeChat Pay for online purchases!
“The adoption of digital payments has finally reached the inflection point and is expected to cross $1 trillion by 2025, accounting for almost one in every two dollars spent in the region.”e-Conomy SEA 2019 Report
Asian consumers are also at the forefront of mobile internet usage. According to Google, Southeast Asians are the most engaged mobile internet users in the world. And this results in mcommerce dominating the online shopping scene in Asia.
For example, in Hong Kong, 50% of all ecommerce transactions made between January 2019 and January 2020, were on mobile. And one of the fastest-growing ecommerce markets in Asia, the Philippines, saw an increase of 28% in mobile connections last year.
Top ecommerce players in Asia
Asian ecommerce platforms have a huge impact on the online shopping scene — both in Asia and internationally. Looking at their record-breaking performances, there are lessons to be learned from these ecommerce giants.
It’s impossible to talk about the Asian ecommerce market without mentioning Alibaba. The Chinese ecommerce giant is the world’s largest B2B ecommerce marketplace and it currently covers 80% of online sales in China.
However, China is only one of the 200 countries Alibaba operates in. The ecommerce platform also significantly contributes to the country’s economy, as it helps connect wholesalers based in China with nearly 200 businesses around the world.
And it’s not uncommon to hear Alibaba yet breaking another ecommerce record. With the boost in ecommerce sales last year, the company racked up around $115 billion in sales across their platforms during Singles Day — an unseen performance for the shopping event.
JD.com — also known as Jingdong — is the second-largest Chinese B2C marketplace and a major competitor to Alibaba-run Tmall with over 300 million registered users. In addition to China, JD.com also operates in Spain, Russia, and Indonesia.
Remember the part where I mentioned the impressive logistics services in Asia? Well JD.com definitely proves my point as it has the largest drone delivery system, infrastructure and capability in the world. It has even started testing robotic delivery services, building drone delivery airports, and operating driverless delivery — talk about innovation!
Lazada is an ecommerce marketplace owned by Alibaba Group and it operates in Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam. Despite being one of the biggest players in Asia, lazada.com was only founded 9 years ago.
And an impressive fact about Lazada is its huge following on social media platforms like Facebook, Twitter, and Instagram. The ecommerce platform knows how to use the power of social media by promoting products, distributing vouchers, and engaging with its audience through games and quizzes.
Considering that social commerce is one of the top ecommerce trends of 2021, you can expect to hear more about Lazada in the future.
“Ecommerce is changing and we’re leading the charge.”-Lazada Group
Founded in 1997 in Japan, Rakuten — also referred to as “the Amazon of Japan” — is one of the largest ecommerce platforms in Asia and has over 105 million members in Japan. In 2017, Forbes listed Rakuten among the World’s Most Innovative Companies.
Just like Amazon, Rakuten is also operating worldwide. The Japanese ecommerce company has expanded globally over the years by acquiring well-known names such as Play.com in the UK, PriceMinister in France, Buy.com in the US, and many others.
In addition to online retailing, the company also offers diverse services such as fintech, digital content, and communications services to over one billion members around the world.
Top ecommerce trends in Asia
Asia, being an innovative player in ecommerce, also has a huge impact on the industry trends. Let’s take a look at the current tendencies in the ecommerce landscape to understand the Asian market better.
Cross-border ecommerce has always been an important part of ecommerce in Asia but last year, numbers have skyrocketed. As traveling was no longer an option, cross-border ecommerce became the primary way of purchasing overseas goods. In February 2020, the transactions of Tmall Global —Alibaba’s cross-border e-commerce platform for the domestic market— surged by 52%!
Asian consumers’ interest in foreign goods mainly comes from the belief that Western products are superior. For example, 68% of Chinese consumers believe that foreign goods are of better quality. In terms of products, baby products, cosmetics, and nutrients are the top categories when it comes to cross-border ecommerce.
However, there is also a growing demand for pet products in recent years from the Chinese market. For example, imported cat food was among the best sellers on Alibaba’s cross-border marketplace during the 2019 Singles Day shopping festival.
On the other hand, there is also a growing demand from Western countries for products made in Asia — but for different reasons. Unlike Asian consumers that seek premium quality goods from overseas, European consumers are drawn to Asian ecommerce platforms for low prices. From 2014 to 2019, the EU online consumers who made purchases from sellers outside the EU increased from 17% to 27%.
As constraints like logistics and language barriers can be easily overcome in today’s world, cross-border ecommerce is quickly becoming an online consumers’ favorite.
Up until now, all of the cosmetics sold in China had to be tested on animals by law – it was the only country with such a regulation. This was a big constraint for cruelty-free cosmetics companies from other countries to sell in China.
However as the pressure on policy-makers is increasing, China has announced that from 2021, the country will end its policy of pre-market animal testing of “general” imported cosmetics such as shampoo, blush, mascara, and perfume.
This change opens up the market to vegan and cruelty-free beauty brands. For example, the UK-based skincare brand Bulldog is set to be the first cruelty-free cosmetics brand to sell in mainland China.
“At Bulldog, we have always challenged ourselves to make ethical choices when it comes to animal welfare. Even with the temptation of the huge Chinese market, we decided that we would never compromise our stance on animal testing. It is fantastic that this scheme has allowed us to enter mainland China while maintaining our cruelty-free status. We hope the success of this scheme will pave the way for more international cruelty-free brands to sell there.”Simon Duffy, Founder of Bulldog Skincare
This is also great news as it increases the awareness of the subject among Asian consumers. Just like in the West, ethical considerations are becoming an important factor for consumers in Asia. This will impact more beauty brands to go vegan and cruelty-free in the Asian market.
Live streaming and social ecommerce
As a result of the immense social media usage of Asian consumers, brands are looking for ways to capitalize on the concept. Live streaming first started becoming popular in 2016 as amateur singers and celebrities started sharing their daily lives on various platforms. An interesting concept is the “virtual gifts” that can be sent during these live streams and can later be exchanged for cash.
The first ecommerce company to turn this phenomenon into business was Alibaba. During the 2017 Singles Day, the company broadcasted a “See Now, Buy Now” fashion show for the first time which allowed shoppers to buy what they see in real-time on the Tmall platform.
The pandemic has given a major boost to this trend as consumers started spending more time on social media apps. Overall, the number of live-sales in the region increased nearly 13% to 67%, mainly thanks to consumers in Singapore and Thailand who spent more time engaging with merchants and buying through live-streams.
Live streaming is preferred by both consumers and businesses as it offers a real shopping experience remotely and reassures consumers about the quality and authenticity of the products.
When it comes to ecommerce, there is something to learn from every market in different parts of the world. Asia being the top player in the field keeps on influencing the industry and shaping the future of ecommerce. Hopefully, the stats, examples, and trends we took a look at in this article will inspire you in your own ecommerce journey.
If you’re ready to take a step and cross borders — like many other successful Asian ecommerce players — you can start today with a free 10 day trial of Weglot!