Introduction
Asia is expected to become the second leading region for B2C eCommerce sales globally by the year 2018, second to North America, with an average sale of approximately 37.4% (Econsultancy Asia, 2014). The significant growth in this sector would be attributed to the high rate of urbanization within Asia, an increase in the number of active internet users within the Asian continent as well as mobile technological development. Other factors include an increase in the level of social commerce, growing consumer spending, changing trends in eCommerce payment solutions and cross-border trade.
Assumptions underlying the future development of a successful e-commerce business in Asia.
Asia is a densely populated continent with an approximate population of 4,021 million people. To ensure a successful development of electronic commerce business within this region, a system that can penetrate the whole Asian market and the population is required. The assumptions underlying the future development of a successful e-commerce business in Asia would include the assumption that Asians have an appetite for consuming digital things. Besides, the growth in internet penetration across all Asian markets, growth in consumer spending and an upward shift in the number of Asians using social media contribute to the development of eCommerce in Asia. Other contributing factors include increase in the use of mobile phones, constant advancement in e-commerce payment methods and increased cross-border trade.
Growing Internet penetration across all markets
Development of Internet infrastructure within the Asian economy has guaranteed further penetration of these markets by internet service providers. This growth in the number of internet service providers has opened up more markets for eCommerce. The online market audience within the continent is growing at a rapid rate. Vietnam, which has the largest online audience within both the North and South Asian markets, added over two million internet users within the past two years and had a growth rate of 14%. Another good performer in this market is the Philippines, which is the fastest growing in the region at an average of 22%.
Surging economic growth within Asia
Asia contains some of the best economies such as China and Japan. The surging economic growth levels in these states coupled with advanced technological development has led to a fall in internet costs making eCommerce cheaper and quicker. Therefore, given an assumption of increasing economic growth, Asia will realize a successful development in the e-commerce business within their economy. The Chinese economy had been growing at a high rate until June 2015 when it slowed down. However, the economy is slowly recovering and the slump is expected to end soon. Opportunities are also provided by the growth in emerging economies such as India, Indonesia, among other Asian countries. High economic growth supports the demand for e-commerce products and services thus contributing to the growth of the industry.
Growth in consumer spending
South East Asia possess an insatiable appetite for consuming all things digital. This constant online presence will lead to an increase in online trade. Since most Asians have a tendency of consuming more of digital goods, the standard of eCommerce will increase with an increase in the number of frequent online users. Therefore, given assumptions of a constant increase in the number of online users, there will be a growing level of consumer spending that will directly translate into an increase in eCommerce sales within Asia thus the emergence of a thriving eCommerce business in the market.
Increased use of social media
A large population of Asians is on various social media sites with Facebook having the highest number of users at 48%. Twitter, Wechat, Line, and LinkedIn follow at 12%, 11%, 8%, and 5% respectively. This frequent use of social media has opened up the Asian market to business through online shops, blog shops, and Facebook business pages. In Singapore, there is the use of blog shops websites which has catapulted the advancement of the e-commerce within Asia. And therefore assuming that all Asians frequently use these social media sites there would be successful development of the eCommerce sector in Asia.
Mobile Commerce
Mobile phones are the most used means of accessing internet in Asia. The continued growth in this sector guarantees the development of eCommerce. To increase its eCommerce sales, the Asian economies will need a large investment in mobile-optimized transactional websites. These will ease the business transaction procedures thus making e-commerce more efficient (Econsultancy Asia, 2014).
Logistics and Warehousing
Asian economies have seen the growth of the retail sector. Retail companies have expanded their warehouses and established various supply chains. This makes their operations complex and difficult to manage without appropriate structures. To ensure there is timely delivery of products to customers as well better customer service, retail firms must invest in technology. ECommerce will be key to the successful operation of these large retail stores and warehouses. Besides, firms are developing online stores and online marketing platforms to enhance the convenience of customers (Econsultancy Asia, 2014).
The rise of the middle class
The rising middle class in India, China, Vietnam, Indonesia, among other countries, contribute significantly to the growth of E-commerce in Asia. In countries like India, there has been an increase in urban migration. The urban areas constitute over 40% of the total private consumption. This is expected to increase hence will drive the use of E-commerce. Besides, a large number of people using the internet are in urban areas. Businesses can therefore exploit market opportunities created by the middle class. Besides, e-commerce firms will also experience a growth in the demand for their products and services.
Describe what is currently happening in the industry. How are the industry players positioning themselves to benefit from this development?
The current trends in the market include; retailer mind set shift, multichannel commerce, meeting customer expectations, Showrooming, and off-shoring.
Retailer mind set shift
Consumers in the South East Asia still prefer to go to their physical shopping centres, thus many firms have benefited from having developed relatively sophisticated infrastructure in their shopping malls. Retail shopping in shopping malls has become a common trend among most Asian consumers, especially in Singapore. However, due technological development, gadgets have been developed that is pervasive across most of the South East Asian market. Most of the young people in these countries are willing to adopt and experiment this technology.
Multichannel Commerce
Multichannel commerce means the use of several channels in eCommerce. Industry players are currently subscribing to as many channels as possible so as to take advantage of this new development.
Meeting (and exceeding) customer expectations
Expectations around eCommerce in the Asian economy is becoming more and more complicated due to the advancement in technological levels. The use of social media is already highly sophisticated in the Asian market. Therefore, to remain relevant and competitive, eCommerce companies will need to become socially savvy quickly to earn any degree of credibility.
Showrooming
Showrooming gives the consumers an option of choosing among several products and services before making the final purchase. Many companies have embraced this trend to enable them to avail more goods and services to their customers.
What strategy would you recommend in this context a premium Swiss brand producer of home supplies, which is already selling its products in Asia via normal retail shops?
I would recommend a cross merchant enablement strategy in this case. This approach will enable the Swiss premium brand producer to partner with service providers such as Shopex to allow them to reach a global market. With a cross-border enablement strategy, the firm will be able to expand its retail business transaction to other international markets other than Asia (Econsultancy Asia, 2014).
This approach will enable the Swiss firm access a global market without setting up local business operations within those countries. This would result in an increase in global sales and a further increase in the profits of the firm. With such a setup, the firm will be able to minimize its costs of production as it maximizes its profits.
What do you think of SingPost's business development strategy?
SingPost's business development strategy offers the best ship cross-border entry strategy and business development strategy. By partnering with SingPost e-commerce, your company gains access to a full suite of services including enterprise-grade eCommerce technology, regional warehousing, delivery and returns management. Other services include local customer care supporting all relevant languages and dialects 24/7, as well as performance marketing to drive traffic and sales for your e-commerce store (Econsultancy Asia, 2014).
This development strategy also offers cutting edge technology that has led to rapid expansion of eCommerce. This technology allows businesses to scale their businesses across Asia Pacific while providing a highly localized and customer-centred shopping experience.
The strategy also offers excellent warehousing and logistics services for cross-border trade. Therefore, it is perfect for improvement of eCommerce businesses development. This state of the art warehousing will enable the trader to keep the items of trade and deliver them as soon as they are ordered for.
Through well-established mail and courier services, SingPost eCommerce gives retailers the opportunity to deliver their e-commerce promises to their customers while maintaining good business relations and maximizing their profits. With such a system, delivery of goods by mail will be timely.
This strategy is also perfect as it provides store operation services dedicated to providing and managing the day to day business operations. This way delivery of goods is efficient, and a record of the items of trade are easy to keep.
Through a network of customer care centres across Asia, SingPost eCommerce provides the best multilingual customer service. Adoption of such a strategy is necessary for increased business transactions and maximization of profits.
SingPost's strategy will help a retailer to expand her business activities to a wider market without having to set up a local firm in the new country. Therefore, they would be able to enjoy large economies of scale in the new market.
How would you advise SingPost to plan its e-commerce strategy?
I would advise SingPost to increase their business operations to several other countries, set up more postal offices and expand the choice of goods they deliver. By creating more local offices globally, SingPost eCommerce will be able to attract more global customers thus increasing their annual revenue from postal service deliveries. By increasing their choice of goods and services to offer, the company will be able to attract more global customers thus expand its operations in the global economy.
The company can also lower the charges levied on international parcel deliveries. This will attract more customers to use SingPost as their key parcel forwarding corporation as they participate in international trade through electronic commerce. A reduction in the exorbitant shipping costs would be the ideal approach by SingPost to help her expand her electronic commerce market (Econsultancy Asia, 2014).
References
Econsultancy Asia. (2014). State of Ecommerce in South-East Asia in association with SAP
and hybris software. Singapore
