How Asia Is Shaping the Ecommerce Industry

The more connected the global marketplace becomes, the more opportunities and challenges retailers face. It means access to new and bigger markets, paired with a litany of new competitors.

One market of particular interest is the Asian market. It’s a huge market, one that encompasses nearly 50 countries, each with distinct consumer groups with different behaviors and preferences. The Asian market isn’t isolated, either. What’s going on in this region is affecting the global marketplace, and retailers of all sizes are taking note.

For American retailers, half of the top foreign cities of expansion are in Asia, with Hong Kong attracting the most penetration. Amazon Prime Now has expanded to serve the market in Singapore.

These expansions are well-guided: Many Asian-Pacific markets are experiencing GDP growth rates higher than 5 percent. China, for example, has the biggest eCommerce marketplace in the world. How exactly do these Asian markets affect the retail landscape on a global scale?

Omnichannel Shopping

Generally, consumers in the Asian markets are more tech-savvy and considered to be early adopters compared to western consumers. This increased connectedness has also led to the adoption of omnichannel shopping at a more advanced rate.

In China specifically, nearly three-quarters of consumers in the middle class shop online at least once a week, and 79 percent make purchases via mobile device at least once a month (compared to just 32 percent in the U.S.) In Japan, an outlier, only 29 percent make monthly purchases via mobile device — proving that each country, region, and city in Asia has a unique consumer group.

Business Insider has named India an emerging market for retailers to keep an eye on — the eCommerce industry is expected to have a compound annual growth rate of 31 percent through 2021.

Related Stitch Labs content: https://www.stitchlabs.com/blog/5-steps-to-building-an-omnichannel-brand/

New Shopping Channels

The region has introduced new online shopping channels, perhaps the most-known of which being Alibaba. Alibaba, sometimes referenced as Asia’s Amazon, has made a big footprint on eCommerce.

Alibaba has dubbed November 11 a shopping holiday (11.11), which has turned into China’s biggest eCommerce day of the year. In 2013, 11.11 generated more than $5.8 billion in sales on Alibaba’s owned eCommerce sites — compared to American retailers’ $3.64 billion in revenue on Thanksgiving, Black Friday, and Cyber Monday combined. Today, there are more than 60,000 international brands selling on Alibaba eCommerce channels, reaching a group more than half a billion Chinese consumers.

While international retailers can leverage the platform, Alibaba is also expanding overseas. Alibaba owns nine eCommerce sites, including Taobao, Tmall, and AliExpress. Tmall has introduced 100 Chinese brands to other countries, as well as partnered with New York Fashion Week.

Alibaba isn’t the only channel to keep an eye on. The number of Chinese sellers on Amazon has continued to grow, and other Asia-based eCommerce sites are gaining traction, too.

Also China-based, JD.com (formerly known as 360buy) is an eCommerce giant that has gained a ton of traction in the consumer electronics space. They’re looking to make a big move with the acquisition of Vipshop (vip.com), a major online discount retailer also based in China.

Flipkart, headquartered in India, has more than 100 million registered users. There are speculations about Flipkart’s use of artificial intelligence and how that will give them an edge over Amazon in the coming years.

Consumers in the Asian markets also use social media as a more integral part of their purchase process. Half of online shoppers in China use social media to conduct research about products — a number far greater than in the U.S. These social media savvy consumers are looking not only at your brand on social media, but at what others are saying about your brand and products.

Messaging apps are also widely popular in Asia — and they’re becoming sales tools for retailers. 31 percent of Chinese consumers have made purchases through WeChat in 2016 (double the rate in 2015). Apparel and personal care retailers take note: WeChat is mostly for impulse buys in those verticals.

New — and Different — Customers

The connectedness of the Asian consumer market also opens the doors for foreign retailers to sell across international borders. Almost 20 percent of online shoppers in China purchase items from vendors outside of their national borders, totaling $128 million USD in 2015 alone.

This shopping abroad from home behavior is largely driven by the desire to purchase hard-to-find or expensive items. If you have such items, highlight their exclusivity in marketing and advertising targeted towards this consumer group.

With this increased access to new consumer markets, retailers have new consumer behaviors to learn, too.

One study examined the impact of celebrity endorsements in advertising, and how it differs between the United States and some countries in Asia. 59 percent of prime time TV commercials in Korea had celebrity endorsements, 70 percent in Japan, and 9.6 percent in the U.S.

Chinese consumers also respond positively to celebrity endorsements — especially when they’re athletes. It’s not uncommon for the celebrity athlete to be American.

Northwestern University also looked closely at the cultural differences between Chinese and Western consumers, and how that has impacted purchasing behavior. The importance of children means they’re more likely to pay a premium for things like baby food, and a hierarchical society has led them to place great value in luxury items that signify status. What’s important to the Western consumer may not be important to the consumers in China and the rest of Asia.

Consumers in China are also more reluctant to trust brands and online stores. More than 80 percent of online purchases happen on credible marketplaces like Alibaba, likely due to the prevalence of fake goods, insecure payment methods, and poor customer experiences. This means brands have quite a bit of work to do to establish trust and nurture the relationship.

Outsourcing the Manufacturing Process

The growth in Asia’s manufacturing sector has been rapid: In December 2013, 34 million items were exported from Asia. That number grew to 278.5 million by December 2015. China especially has become a manufacturing epicenter — its international sales were five times greater than Japan’s in 2015.

The reason behind this is because it’s financially appealing for retailers to outsource the manufacturing overseas to China and other countries in Asia. Manufacturing costs in this region are far less expensive than many western countries.

Fulfillment can also be outsourced overseas to Asia, especially for retailers that sell on Amazon. In China, logistics companies are building warehouses for direct-to-consumer retail. The number of warehouses providing these services is expected to rise. 

Related content:
https://www.stitchlabs.com/resource/reports/when-to-outsource-retail-operations-to-a-3pl-provider/

Ellie Kulick

Ellie is an experienced Marketing Communications and Content Specialist based out of San Francisco, CA. Passionate about technology and health, she is constantly looking for new challenges in effective communication and creative content development to help businesses grow and engage with current and prospective customers.

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