If you are an online merchant and want to take advantage of the eCommerce revolution currently taking place in Asia, this article is for you. We will go through some of the risks and opportunities regarding the Asian and South-East Asian (SEA) region in 2021, explaining the direction the region is taking going forward.
The eCommerce potential is undeniable as Asia is already the world’s largest eCommerce marketplace and continues to grow rapidly. Because of the global pandemic, many consumers in SEA turned to online purchases and many merchants turned to online sales. In 2020, eCommerce became a lifeline for people’s daily essentials as well as a survival business strategy pivot for vendors when offline operations were affected by COVID-19 safety measures.
Here are some of the main opportunities in 2021:
Rising penetration of the internet and smartphones
Mobile ownership is very high in SEA at almost 90% and internet penetration is rising very quickly in most SEA countries. In China, mobile payment penetration is triple that of the US, accounting for 24% of total retail sales in 2019, compared with 11% in the US, and 9% in Germany. There is still room for growth in the region, especially for companies that manage to build an optimized omni-channel user experience.
The eCommerce space will become more inclusive
As eCommerce develops in the region, a lot of people will continue to benefit from the ongoing change. From e-banking for the unbanked to small and medium businesses joining supply chains, to people starting to sell new products online, eCommerce offers an evolving marketplace that can transform Asian economies and make them more inclusive. eCommerce is also offering the traditionally disadvantaged segments of the population with ways to profit from new opportunities, linking rural and urban areas for example. Women are also expected to play a bigger role, both as online sellers and consumers. According to one report, SEA’s eCommerce market could grow by more than US$280 billion between 2025 and 2030 by increasing the number of women selling on online platforms. While this study focuses on eCommerce sellers, emerging evidence shows that targeting women customers will also be key to growth.
Expansion of cross-border eCommerce
It comes with no surprise that the online share of total retail sales has grown significantly across markets worldwide since the pandemic. However, it is a bit more surprising to see that online shoppers are purchasing more from online retailers outside of their home countries. One study even shows that cross-border online sales worldwide have increased by 21% at the beginning of 2020. The global pandemic has removed some psychological barriers and individuals are less afraid to purchase goods on the internet that come from a foreign website.
Multiple payment modes are getting more and more important
Offering multiple forms of payment, especially for mobile shoppers, will be key in 2021 in SEA. Smartphones play a role in most online purchases, and the payment methods that online merchants display can make or break a sale. It is therefore important to partner with a competitive payment provider in order to offer the most relevant payment methods locally. Of course, expanding your online business into Asia in 2021 does not come without risks. Here are the main risks we have listed in the region for 2021:
Online frauds and cybersecurity issues
The main risk for online merchants in 2021 will be the rise in online frauds and cybersecurity issues. In 2020, businesses have been heavily targeted with ransomware and phishing attacks, a trend that will likely continue in 2021. In the same fashion, fraud is an ever-growing curse for online merchants as it increased by 33% last year globally, and does not show any sign of slowing. The global COVID-19 pandemic has opened up new opportunities for fraudsters trying to deceive unsuspecting customers; as more people are ordering, shopping and paying online than ever before. This digital migration brought a vast array of business opportunities to online merchants, increasing their pool of potential customers; but it also brought some threats, with credit card fraud significantly increasing during that same period. At Softline Ecommerce, we use a next generation AI-based fraud minimization technology that allowed our clients to keep very low fraud rates of around 1.2% on average in 2020. Local laws and legislation affecting cross-border eCommerce Legislations, laws and regulations change in line with the economic and political landscapes, which are constantly evolving. Businesses usually have little time to catch up with the new rules and regulatory systems for eCommerce in order to regulate cross-border transactions in different countries. At Softline Ecommerce, we have local insight and expertise when it comes to regulations, so you can successfully sell across regions.
Rising competition
Asia is the world’s largest eCommerce region, accounting for nearly 60% of the world’s online retail sales. China is leading the region, accounting for around 45% of global retail eCommerce transaction value in 2018. In 2019, the online market in China was worth $1.5 trillion, while the USA was $600 billion. However, this massive market is attracting a lot of new players, bringing a rising possibility of fierce internet competition in the coming years. The level of competition is still relatively low for foreign products and there are still a lot of niches and space for eCommerce companies to thrive in the region. The technological stage of online merchants and their level of agility will drive winners to capture the biggest market share. At Softline Ecommerce, we empower our clients to sell their digital products in emerging markets and improve their local sales with our state-of-the-art technology and expertise.
If you want to conquer Asian markets successfully, Softline Ecommerce’s all-in-one solution might be a good choice for you. We will take care of everything: payment processing in local currencies, invoicing, tax management, compliance with regulations, securing transactions and AI-based fraud minimization. So, if you want to see what we can do together, don’t hesitate to contact us on our website, via Linkedin or email (ecommerce@softline.com).