As global trade grows, all stakeholders in online industries are facing new challenges, for instance, how to make cross border e-commerce profitable. Global e-commerce has been growing, on average, 19% each year and in China, e-commerce sales grew 130% in 2011. According to jp morgan, by 2015, e-commerce will have grown to $1.4 trillion. in developing, emerging, and maturing markets, mobile e-commerce is providing consumers with new payment methods to purchase goods and services online. Mobile e-commerce is expected to grow at a faster pace than e-commerce and juniper research predicts that by 2014, 580 million consumers will purchases goods and services online with their mobiles.
Trends in the Asia-pacific region (apace)
Asia and the pacific are culturally, historically and linguistically extremely diverse. This reflects in an online retail landscape, varying from developing India, to maturing markets such as South Korea and Japan. China and India are giants in terms of population volume, but there are enormous challenges to overcome. Even though internet penetration is still relatively low, China already has the highest amount of internet users in the world.
while South Korea and Japan, where online retail has developed through e-commerce and m-commerce, have developed ahead of Europe and the US. These markets have developed to such extent, that consumers are comfortable to make online payments through contactless QR-codes, NFC and other innovative mobile payment methods. Not with standing its maturity-level, Japan’s online retail market is still growing at 12% a year. 70% of Japanese internet users already shop online, which means future growth in Japan will have to come from greater spending per person.
South Korea is amongst the countries with the highest internet penetration in the world, with broadband internet and an early introduction of 3G services at relatively low pricing, thanks to South Korean government initiatives. Consumer confidence index of 99.0 and high disposable income stimulate online retailing in South Korea, where “Generation Z” scrolls through social networking sites and blogs as research tools to support smart online shopping. B2B sales transactions helped boost South Korea’s e-commerce, it reached $236.9 billion in the first quarter of 2012. Online sales, contributes 8.5% of total retail sales in South Korea. Global research and advisory firm Forrester, expects online retail in Japan, South Korea, and Australia to grow at rates more in line with those of the US and developed e-commerce markets of Europe. These three APAC markets are attracting increased investment as a growing number of both domestic and foreign players launch new online offerings in these countries. Australia and New Zealand are especially appealing for US, Canada and the UK, due to the fact that they share a common language.
China currently has 130 million online shoppers. Chinese e-commerce grew with a 130% in 2011. Online retail generated $121 billion in sales in 2012, 66% growth, compared to 2011. The size of China’s online retail market is expected to triple over the next three years, with sales reaching $360 billion by 2015. China’s middle-class is estimated to grow from 200 million to 800 million people over the next 20 years and by 2015, 700 million Chinese Internet users – twice the online population of Japan and the U.S. combined will surf the worldwide web, engage in social media and search for attractive deals. China is becoming the biggest online market of the world.
Chinese online shoppers, including those in Hong Kong, are quite unique when compared to online shoppers in other countries. Chinese multichannel shoppers purchase 60% of their clothing, footwear, books, music and films online, while figures in the rest of the world lie around 45%. 60% of Chinese online shoppers directly buy from Brands, bypassing Retailers. Interestingly, Chinese online shoppers seem to skip online shopping via PC and move straight to online shopping on mobile devices. 58% reported using smartphones to browse social media sites.
Chinese consumers distrust official news sources and local advertisement agencies and rather rely on recommendations from peers. 90% of Chinese online shoppers use social media during their selection and decision- making process and over 40% of online shoppers in China read and post reviews online — about twice the percentage of online shoppers in the US, says Boston Consulting Group. Retailers and PSPs with plans to expand their footprint into China and Hong-Kong should consider the impact of social media and integrate this factor into their business plan/model.
India‘s online trade is expected to grow fivefold in 2016, due to its sheer number of inhabitants, a growing middle-class and the interest global brands show for a country in the early stage of e-commerce development. Low banking penetration, a rather high mobile penetration, a large rural class with poor access to a developing infrastructure is delaying India’s e-commerce boom. These factors could prove to become the perfect conditions for m-commerce to pick up speed in a country in which 100 million surfs the web and 30 million Indians search for online bargains.
Having said this, Giants such as China and India are still developing, compared to leaders such as Japan and South Korea and “the tigers” Hong Kong, Singapore and Taiwan.
Tends in EUROPE
Europe’s multilingual, multicultural landscape is rather complex for international retailers, with ambitions to expand their global footprint, but the European Commission has taken measures to reduce this complexity by unifying initiatives such as SEPA. The big advantage of the Euro- pean market is that the EU enjoys a very high credit & debit card penetration, combined with a high banking penetration, a high internet and a high mobile penetration. This has created the perfect online payment landscape for e-commerce to thrive.
IN GERMANY, SWIT- ZERLAND AND FRANCE, MORE THAN 50% OF CONSUMERS SHOP ONLINE. Even though the Western European average still lies around 40%, the percentage of consumers which shop online in the UK and in the Netherlands is expected to have reached 70% by 2015. In most of Western Europe, making online payments transactions from PCs, tablets or mobile phones has become a welcome alternative to the traditional “brick and mortar” shopping in busy department stores.
ACCORDING TO FORRESTER ESTIMATES, ONLINE RETAIL SALES IN WESTERN EUROPE WILL HAVE INCREASED BY 7.84% OVER 2014, FROM $169.31 BILLION (€123.92 BILLION) TO $182.53 BILLION (€133.64 BILLION). THE PROJECTED COMPOUND ANNUAL GROWTH RATE (CAGR) FOR EUROPE OVER 2010-2015 IS 12.47%.
European Union online retail sales will grow from US $112.1 billion in 2010 to $184.6 billion by 2015, a compound annual growth rate of 10%, Forrester Research predicts. The number of online shoppers in the 17 EU nations will grow from 275 million to 303 million in that period. Source: ForresterResearch, February 2011
Total UK online retail spending reached £31.2 billion in 2012. Consumers aged 55+ are an underestimated audience, while this group may well outpace all other age groups between 2011 and 2016. Smart online retailers can benefit from this undervalued age group, by targeting 55+ consumers through marketing campaigns which highlight the convenience and transpar- ency of online shopping, and e-groceries. This accounts especially for rural European areas, where credit card and internet penetration is high. Verdict forecasts a 31.9% rise to almost 10 million online shoppers aged 55+ between 2011 and 2016.
ONLINE RETAILERS HAVE TO BEAR IN MIND THAT THE 55+ AGE-GROUP IS MORE CONCERNED ABOUT FRAUD AND ID-THEFT THAN ANY OTHER AGE GROUP. A VERDICT RESEARCH SURVEY FURTHER REVEALS THAT 7.4% OF ALL SURVEYED 55+ ONLINE SHOPPERS USE A TABLET.
Scandinavian market leader IKEA is a perfect example of a European retailer which has quickly adapted its business model, across the different age-groups. IKEA has understood the power of multichannel marketing, distributing hard-copy catalogues, combined with a transparent website, online catalogues and tools by which their audience view, reviews and plans their home interior. Their website provides both online and in-store buyers with detailed and updated information regarding product availability.
As we expect department stores to become showrooms, as an extension of online sales, IKEA has set an example for other European retailers who are converting their stores into fulfillment centers.
Russia is not part of the EU, but with 60 million internet users and 15 million potential online shoppers, Russia has the largest online population of Europe. With a very high mobile penetration, but an underdeveloped financial and logistic infrastructure and a population of which only 20% possesses a credit card, m-commerce offers Russians the ideal payment solution for an online retail market, expected to grow to $16 billion by 2016. Russia is also an interesting market for alternative cash-based payments, such as VISA Qiwi and WebMoney.