We just published our new online retail forecast report for Asia Pacific (clients can read the report here). In our forecast, we look at top-line growth in five markets across Asia Pacific: China, Japan, South Korea, India, and Australia. China will be responsible for the lion’s share of growth in these markets, which, combined, will reach some $854 billion by 2018.
In the report, we note a number of trends across the region, including the following:
The heavy dominance of web-only retailers in many countries. In many markets in Asia Pacific, traditional retailers do not play as strong a role in eCommerce as they do in the US, UK, or even Latin America. Internet Retailer’s Asia 500 list, for example, includes just one traditional retailer among the top 10 retail websites in the region (China’s Suning). And while some markets like Australia see traditional retailers now playing a bigger role in eCommerce, in fast-growing eCommerce markets like India as well as China, web-only retailers are very much dominant today.
The increased focus on omnichannel functionality. The strong role that many traditional retailers play in eCommerce in the US and Europe often translates into robust omnichannel initiatives. By contrast, it’s taken a while for many retailers across Asia Pacific to launch offerings that link their online and offline channels. Increasingly, however, digitally savvy retailers in the region are focused on developing new offerings. In Australia, for example, where traditional domestic retailers were long notably lagging (or absent) when it came to eCommerce, there is renewed interest not just in the online channel but also in building out key omnichannel features.
We’ve been having a series of conversations with brands and retailers recently about how to effectively plan for global online expansion. While approaches vary, eBusiness leaders cite similar challenges. In particular, two hurdles to successful international expansion tend to come up repeatedly in conversations:
“Our ROI scenarios are unrealistic.” In a survey of eBusiness professionals in the B2C space, we asked how quickly they expected to see a return on their investments in new global online initiatives. Over three-quarters said either in less than one year or in one to two years. By contrast, leaders of successful global eBusinesses frequently highlight the fact that payback on new initiatives takes at least two years, with many citing three years and up. As a result of this disconnect, eBusiness professionals overseeing new global businesses often find themselves falling short of expectations and struggling to secure the funds needed to succeed. Today, the mismatch between ROI expectations and performance is one of the leading reasons why new global initiatives fail.
I returned yesterday from a short trip to Brazil - I spoke at eTail in São Paulo on Monday and spent a few days meeting with retailers, vendors and agencies. Some of the takeaways from our conversations:
Omnichannel initiatives are gaining momentum. Omnichannel integration has been a topic of conversation among retailers in Brazil for several years, but it’s now slowly starting to happen. Today, most of the large Brazilian online retailers have established mobile sites or apps; by contrast, initiatives that integrate the online and offline channels are more nascent. Tactics like click-and-collect or ship-from-store, for example, are early stage but being explored by the more innovative players in the market. And while some forward-thinking Brazilian retailers have been quite advanced in terms of understanding cross-channel behavior, most have not taken major steps in this direction. Interestingly, retailers in Brazil have a particularly big opportunity in this area given that Brazilian consumers frequently supply a CPF (roughly the equivalent of a social security number) when they purchase online or offline – the savviest retailers are leveraging this customer data to identify and target omnichannel shoppers.