Around the globe, COVID-19 has heightened retail’s shift to a digital future. Research shows that Asia-Pacific will get there ahead of the pack. The APAC region accounted for two-thirds of the global eCommerce market this year, with a value of over US$3 trillion. A fascinating region representing three-quarters of the world’s retail growth, APAC’s eCommerce is rising exponentially.
Research from Bain & Company shows that in the last five years, the compound annual growth rate for Asia-Pacific retail sales was more than quadruple that of the rest of the globe. Ecommerce growth was almost double. Covid-19 has sped up the process this year, and although there isn’t a single path for the entire region to follow, there are generalities across.
Said Melanie Sanders, Bain & Company Partner, “The current pandemic has sped up disruptions that have impacted the retail sector, but the industry as a whole has already begun its shift towards digital innovation and ecommerce anyway. Asia-Pacific markets were able to jump ahead by skipping development stages that the US and Europe once toiled through, allowing them to now be the industry growth engine and leader in all things digital. Other markets should be taking a step back and learning from what’s happening here.”
Additionally, this year, the APAC region alone made up 63% of eCommerce sales around the globe. Chinese consumers, who make up the majority of APAC, spent US$2.1 trillion online. 66% of consumers in APAC purchased online this year.
Growth Drivers in the APAC Region
This year, Asian consumers were number one around the world in digital usage. There is a growing gap between the rich and the poor, which led to an increase in online shopping and a mix of value propositions between basic and premium retailers. An increase in middle class offers helped increase growth.
COVID-19 saw a large increase in the use of digital channels. Bain & Company claims a 35 percent growth increase in consumers who buy via live streaming. China’s Singles Day brought $72.11 billion on the Tmall of Alibaba, which has full live streaming capabilities in place. Said Arnold Ma, founder and CEO of digital creative agency Qumin, “We are just seeing the tip of the iceberg here with live streaming. So, an investment in livestreaming is an investment in the future.”
Retailers seek out new partnerships to strengthen digital capacities, achieve scale virtually and respond to online ecosystems. COVID-19 has made the need for partnerships in these areas necessary and doable.
Advanced analytics and technology are being invested in. Many retailers are responding to the growth in ecommerce and leveraging their data assets. COVID-19 has pushed investments to compete in a fast-changing environment.
China’s growing space (sq m) per capita is only at 1 percent. Only retailers in Australia, Japan, and South Korea are building physical stores as prolifically as their counterparts in the US and Western Europe but APAC’s retailers have enough online growth.
Southeast Asia’s e-wallet landscape is ruled by Grab and Go-Jek, who battle for market share. Momo is the largest mobile wallet company in Vietnam with 10 million downloads, while in Thailand, PromptPay rules. Out of a population of 70 million, it has more than 50 million registrations. Merchants are truly getting a large piece of the eCommerce pie.
Southeast Asia is the fastest-growing region in the global eCommerce landscape. Online shopping is at an all-time high, with Vietnam at 76% and India at 52%, according to a global study by Criteo of over 15,000 respondents. Logistics and transportation need to keep up with changes to stay competitive.
If this isn’t enough to get you excited about Southeast Asia’s eCommerce growth, consider this: almost 40-50% of shoppers in India and Taiwan shop online. Services such as food and grocery delivery and video-on-demand (VOD) saw a significant rise in 2020 – and these habits are here to stay.
Asia Pacific is the largest growing region in the world today in the eCommerce landscape. Out of all the factors such as growth in third-party logistics, increase in mobile wallets, online shopping and smartphone users, perhaps nothing is more important in driving exceptional eCommerce growth in 2020 as COVID-19. It shows no signs of slowing down soon, even as vaccines become available.
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