Author: CHUNG Yoon Ngan
Date: 04-21-12 02:28
By Arunava Das
April 20, 2012 - 2:48pm http://www.chinadailyapac.com
The steady increase in online shopping in Asia indicates the region is growing fast digitally, and its population’s disposable income is increasing, making people more sophisticated and eager to embrace technology to make life easier.
E-commerce is changing the face of retail of Asia’s 21st century digital generation.
It has already changed shopping habits across Asia — from Beijing to Bangkok, Seoul to Sydney, and Delhi to Dubai.
You can place orders with just a click, and items are delivered right to your doorstep.
For Indrayan Ganguly, a tech-savvy management trainee with a multi-national bank in Kolkata, e-commerce is a huge boon for his generation.
“There are so many websites these days,” the 25-year-old smartphone user says. “We can buy almost everything, from books, movie tickets to grocery items, online. The pricing is better, the hassle less and the payment option easier.”
Mahesh Murthy, founder of Indian digital marketing firm Pinstorm, and co-founder of Seedfund, an early-stage venture capital fund, says in most Asian economies, e-commerce has shown double-digit growth.
“Some sectors are even enjoying triple-digit growth,” he says. “It has survived the European and American financial crises with surprising resilience.”
The big driver of the region’s e-commerce growth is China, home to over 513 million Internet users, including 195 million shoppers.
Chinese shoppers buy online on an average of 8.4 times a month — about four times more than their European counterparts, 5.2 times more than in the United States and 4.3 times in the United Kingdom.
In Hong Kong alone, more than 50 percent of people shop online at least once. Most of the online purchases are for airline tickets, accommodation and travel agent services. Share trading and banking is also done online as well as buying electrical appliances, white goods and computer hardware, says yStats.com, a Hamburg-based research firm.
“Faster than in any other major economy, the Internet is becoming embedded in Chinese society,” wrote David C. Michael, a senior partner of consultancy firm Boston Consulting Group, in a report. “The rapid growth represents a once-in-a-lifetime opportunity for companies that figure out how to connect with China’s digital generations.”
E-tailers quick to seize opportunities are offering attractive models like group buying schemes, daily deal sites and by-invitation members-only shopping clubs to woo new customers.
Group buying, arguably the most popular strategy, enables customers to purchase goods at a high discount. But the condition is that a minimum number of people must buy the same items.
In 2011, the number of group-buying websites in China rose from 2,630 to about 4,000.
“All the emerging ways to buy online are tied by a single common factor — discounts,” Sam Yip, senior manager of Telsyte, a technology analysis group, told the Sydney Morning Herald daily.
On an average, group-buying customers were offered 70 percent discount in Australia in 2011.
Social media also play a big role in influencing online shopping habits. In China, about 90 percent of online buyers use social media, far more than any other country.
“All these exciting offers are irresistible for today’s consumers. And that’s why online shopping is here to stay in 21st century Asia,” says Manmohan Agarwal, CEO of Yebhi.com, one of India’s largest online stores for clothing, shoes and lifestyle accessories.
However, Indian consumers are yet to break free from the traditional touch-and-feel shopping mindset, says Agarwal.
Though India has a population of 1.2 billion people, only an estimated 11 percent used the Internet.
“As the number of Internet users grows, online retail in India is bound to pick up,” Agarwal says.
Internet users and online shoppers are growing across the region, including Indonesia, South Korea, Thailand, the Philippines, Singapore, Vietnam and Malaysia.
Japan’s e-commerce giant Rakuten has set up a joint venture online department store – Rakuten Belanja Online – with Global Mediacom in Indonesia. The aim is to make Rakuten Belanja Online Indonesia’s largest Internet shopping mall.
In Malaysia about half of the population made online purchases in 2010, mainly in travel, payment services and entertainment, according to yStats.com.
The growth of e-commerce in Asia has raised possibilities of generating more jobs in various disciplines.
It is predicted that there will be an increasing demand for online visual merchandisers, online customer service personnel, sourcing staff, delivery and logistics experts, online branding specialists, and a lot more across the region.
“Most of these jobs will be in the knowledge sector rather than in the blue-collar category,” Murthy says. “Through this entire revolution, jobs will change. Retailers who understand the online world, social media and keeping customer relationships through digital media will triumph over the more traditional-minded.”
E-commerce in Asia however has to grapple with a major challenge – language.
Unlike the US, where the “lingua franca” of the web world is English, in Asia, languages differ from country to country.
This can be particularly critical in Southeast Asian countries and in India, where there is a lack of sufficient web content in local languages.
The fact that not more than 350 million people speak English in India may restrict the use of the Internet, according to Murthy.
Web language is among the three key areas most e-commerce companies in countries like Japan, South Korea, Malaysia and India are now focusing on, says K. Vaitheeswaran, founder and CEO, Indiaplaza.com, India’s first e-commerce company.
The other problem areas are payments and last-mile delivery.
Vaitheeswaran says since different companies – like Taobao.com in China, Rakuten.com in Japan, and Indiaplaza.com in India – have different markets to cater to and different approaches to adopt, Asia cannot be treated as a single market.
“Even in a single country like India, you have 28 states, each with its own local tax laws. That makes things difficult for the market and is hardly an ideal scenario for entrepreneurs.”
Except for Taobao and Rakuten, no other Asian e-commerce company has built on an adequate scale to reach profitability, he says. “It will take a few years to reach that stage for Asian e-commerce firms.”
According to Harish Bahl, founder and CEO of the Gurgaon-based Smile Group in India, the overall growth of e-commerce will hinge on electronic payment systems, including credit and debit cards.
“At present, we are following the cash-on-delivery (COD) model as an alternative to online payment, but that is hardly a permanent solution,” he says. “It is an expensive and time-consuming format.”
COD allows shoppers to buy online and pay in cash when they receive the goods. But in many cases, it also gives them the option to refuse delivery of the product they ordered because they changed their minds.
The other format is called cash-before-delivery which enables e-commerce firms to cut returns to almost zero.
These are all tricky but vital issues which demand greater coordination between governments and e-tailers.
According to Murthy, Indian firm don’t spend enough time finding suppliers or focusing on inventory, delivery and logistics.
Providing secure payment solutions and encouraging more consumers to use the online option is another key issue.
Murthy says companies are becoming more innovative to encourage more online shopping.
“An interesting practice that I’ve seen in Japan, China and now India is logistics companies working with e-tailers. This allows overseas shoppers to buy from websites that don’t ship abroad. The logistics companies deliver the goods. ShopAndShip.com is one such company, backed by UAE-based logistics firm Aramex,” he says.
The global crisis, he feels, has had a positive impact on e-commerce companies.
“They are now looking closer at increasing earnings and decreasing losses by tightening purse strings and focusing on fundamental infrastructure, be it technology, customer service or logistics, delivery and cash collection.”