Many elements come into play when considering the e-commerce growth market aside from Asia’s vast population. McKinsey and Company, a multinational management-consulting firm, identified three powerful trends fueling Asia’s rise in the market – rapid economic growth, urbanization and the adoption of Internet penetration and mobile technologies. Together these factors are transforming the region, its people and its economies.
For the love of Western Brands
Who doesn’t like designer threads or the latest technology? Asia’s continuous desire for luxury Western brands such as Dior, Burberry and Chanel soars, with Japan now the second biggest luxury market in the world. For example, last year alone, Burberry sold made $870 million USD in Asia last year, an 18 per cent growth from the previous year, making up nearly 39 per cent of its global revenue. The runner up at 37 per cent is Dior with nearly 30.9 billion Euros in revenue.
Another popular brand we all know, Apple, has also seen particular growth across Asia in the past year. Apple’s latest iPhone 6 and iPhone 6 Plus handsets have made significant gains in Japan, China and South Korea, enjoying a 33 per cent market share in Asia, becoming the second most popular phone manufacturer behind Samsung. In Japan, Apple enjoys an overwhelming 51 per cent of the smartphone market, while China’s iPhone sales have soared to $16.8 billion USD.
The Cultural Conundrum
The main obstacle merchants face when looking to break into any foreign market is culture. In Asia, cultures differ significantly from country to country, and in some cases, differ from region to region within a specific country. Each country possesses its own language, each region its own dialect, making navigation of this great melting pot a particular challenge. Malaysia for example, is comprised of many different ethnic groups including Malays, Chinese and Indians, with many other ethnic groups represented in smaller numbers, each with its own languages.
Each country in the region also celebrates different traditional holidays at different times in the year, resulting in different sales peaks and troughs. For example, many of the countries in East Asia celebrate Lunar New Year in late January or February, while others fall at different times.
The lack of widespread e-commerce platforms and payment methods can also pose a problem. Due to this, merchants must pay close attention to the buying behavior of consumers in each of the disparate markets, and should take all of this into consideration in order to make the most positive impact when entering Asian markets.
Cash, credit, or e-wallet?
Though credit cards are still the number one payment method for online purchases in Asia at 37 per cent, e-wallets are becoming increasingly popular, accounting for almost 25 percent of online purchases. To give you a better scope of e-wallet usage internationally, usage only makes up 13 per cent in Europe, and 5 per cent in Africa and the Middle East. The only exceptions to this rule are Bangladesh at 0.8 per cent of usage, India at 1.5 per cent, and Taiwan at 1.8 per cent.
Determining popular payment methods in each region is challenging as alternative payment methods very popular. In the Philippines, mobile payments reign due to the popularity of mobile network operators Smart Communications and Globe Telecommunications, alongside other alternative payment providers such as Dragonpay and PayPal. These methods of payment now account for 7.5 per cent of online purchases in the Philippines. But, in comparison, mobile payments account for only 0.1 per cent of online purchases in Indonesia, and just 0.3 per cent in Malaysia and Japan, proving yet again, what’s successful in one country, certainly may not be in another.
In any market, it is imperative to not only understand your potential customers, but also their preferred methods of payment. Retail offerings tailored to your clients wants and needs is critical to gaining ground in the complex e-commerce market in Asia. Knowing where to begin and finding the best approach can be an arduous undertaking. For this reason, seeking the expertise of electronic payment specialists with international expertise can help you circumvent the challenges of unlocking the potential of Asia by building ongoing relationships and a rapidly growing customer base.