By Vaibhav Dabhade, CEO of Anchanto
Whether you’re a brand, distributor, retailer, third-party logistics (3PL) company — or any entity that’s part of the eCommerce ecosystem — Asia is the place for you to conduct business right now. Southeast Asia’s retail and the digital revolution is converging and growing — opening countless opportunities that were previously dormant.
Point in case: Alibaba’s major acquisition of Lazada and Amazon’s growing footprints in the region are classic harbingers of the eCommerce opportunity, that waits to be consumed. Even the numbers do point to the same: Google and Temasek reported that Southeast Asia is the fourth-largest eCommerce market in the world with 260 million active internet users. Making this data even more significant is the fact that 70 percent of this population is under the age of 40.
With research reports pointing towards imminent growth of Asia’s eCommerce market at an annual average of around 20 percent over the next three years, sourced through eMarketer, it’s hardly surprising that the eCommerce market is expected to reach $88 billion by 2025.
So, what’s fuelling this eCommerce explosion? While research reports point to a number of varying factors, I keep stumbling upon the real reasons in my regular deliberations with eCommerce heads and retail brand managers.
APAC’s soaring internet connectivity
APAC contributes over 40 percent of global active internet users. Consequently, the Chinese and South Korean markets are already witnessing a retail growth rate that overtakes brick and mortar shops.
With the increase in number of buyers, the average value of the purchases has also increased. This has helped retailers to bolster their top and bottom lines.
Logistics players jumping on the eCommerce bandwagon
Evolving logistics continues to be at the core of eCommerce growth across ASEAN and APAC. As I always say, we live in a customer-centric world and there should be no confusion regarding who wears the trousers in today’s supply chain world. If you don’t provide what the customer wants, the customer will leave you and go elsewhere.
And it seems like logistics players have started realizing this, given that the region has experienced a sudden rise in timely and reliable delivery mechanisms.
Post-purchase experience, an initial hiccup for eCommerce growth, is now been recognized by retailers and is being worked upon through partnerships with logistics players, government bodies and logistic associations.
This has led to the rise in the number of eCommerce logistics start-ups. Subsequently, this has pushed traditional 3PLs to adopt technology and digitize, modernize and optimize their eCommerce fulfillment operations.
Transforming supply chain actors
Logistics and supply giants in the region such as DHL, FedEx, and UPS have shifted focus, and reformed their processes of handling and transporting goods. They have prioritized delivery of small parcel volumes over their traditional process of handling and transporting larger goods, giving an opportunity to the eCommerce industry.
Southeast Asian governments have been extending unprecedented support to local eCommerce bodies in order to boost regional and national economies. Policies such as the Digital Free Trade Zone (DFTZ) and eUsahawan in Malaysia have encouraged SMEs to kick-start eCommerce operations without worrying too much about taxes and other complexities.
Power of Millennials
Millennials now represent more than 45 percent of APAC’s population and almost 60 percent of world’s population is expected to live in Asia by 2020. According to a research by Accenture, millennials in Asia will have an estimated disposable income of almost $6 trillion by 2020. This will heavily influence online purchasing patterns and augment eCommerce revenue in the region.
Start-ups: providers and adopters
Many eCommerce providers and logistics start-ups have become adopters of emerging technologies and platforms themselves, helping to further open the eCommerce ecosystem. Being agile, on both technology and business fronts, these start-ups have led a major disruption across every facet of eCommerce supply chain. Right from innovation in payment and one-click ordering, to cash-on-delivery and free turns, start-ups have pioneered in improving the customer experience.
Conclusion: The key to align with opportunities
The APAC region has its own distinctive set of challenges and barriers. The biggest ones include socio-political and language differences, as well as complex and fragmented tax laws.
eCommerce organizations have used a tech-powered strategy that has helped them surge ahead and make the most of this growth opportunity. While incorporating localization, innovative marketing strategies and customer-centric strategies are vital in winning the market, technology has proved to be the most crucial and defining element. The most successful players in the region today were the early adopters, who recognized and adopted technology and aligned themselves with eCommerce well-in-time.
Product Information Management (PIM), Master Data Management (MDM), Order Management System (OMS) or Multi Channel Management (MCM) — call it through any acronym. Ultimately, digitization has been the keystone in riding this wave of change, for all eCommerce operations, whether multichannel selling, logistics, payment or warehousing.