A recent report by Euromonitor International found that the region accounted for 41% of global spending in digital commerce in 2018. The segment is expected to grow in line with the growth of Internet users in the region.
The report, titled “Digitalisation in Asia: How One Region is Shaping Worldwide Trends”, notes that Asia Pacific posted the fastest growth rate over the 2013-2018 time period.
Investments in digital infrastructure and a favourable regulatory environment have helped boost Internet penetration. As of 2018, 51% of Internet users globally reside in Asia Pacific. This is expected to rise to 53% by 2030.
“The expansion of connectivity has transformed life for Asia Pacific consumers, with these users embracing the ubiquity of the mobile device more than those in any other region. The transformative mobile landscape enabled Asia Pacific to advance other regions in many facets of life.
“Asian consumers are fully embracing mobile platforms and turning to phones for commerce activities, such as buying products and services. Nearly 60% of Asian connected consumers have used a mobile phone to buy a good or service at least monthly,” it says.
An expanding population and a growing economy will also continue to propel this region forward.
Asia Pacific is the most populous region and will add an additional 400 million people to the global total by 2030, with key contributors being India, China and Pakistan. Additionally, this region is expected to add an additional US$12 trillion in disposable income by 2030, which will account for 39% of the global increment.
Notably, China is touted as the first true mobile-centric nation with Chinese consumers accounting for 1.4 billion mobile Internet subscriptions as of 2018. Interestingly, this is more than three times those in the US, the next largest market.
“The ‘mobile-first’ mindset is being replicated by China’s Asian neighbours,” says the report.
Consumers in the region are increasingly using handheld devices to interact on social networks, access a wide array of services and make payments.
According to Euromonitor, Asia Pacific is shaping the digital consumer space globally in three areas, namely, social commerce, super apps and digital wallets.
“Consumers are slowly transitioning to social channels to interact with brands and execute purchases. Using social networks as a commerce channel is highest among emerging market consumers and those under the age of 30.
“The Asian Gen-Z cohort tops their global counterparts when it comes to buying via a social media platform and sharing a product,” it says.
Additionally, consumers’ preference for a seamless and integrated experience has led to the emergence of all-in-one apps – the super apps.
“Asia Pacific gave rise to the super app revolution. A super app is a multifunctional mobile app combining several features such as communication, lifestyle, social, financial and retail, into a single platform. These apps enable companies to leverage their existing infrastructure to generate new revenue streams and increase consumer engagement,” it adds.
These apps are largely driven by unicorn firms such as Tencent’s WeChat, Grab and Go-Jek.
The growth of digital commerce in the region is also buoyed by development in the digital payment space. Euromonitor notes that digital wallets are another key area that Asia Pacific is leading in.
“Overrun with these alternative payment platforms, digital wallets are evolving differently depending upon market dynamics. In China alone, more than half a billion people use mobile payment services such as Alipay and WeChat Pay to transact online or in brick-and-mortar stores.
“In Singapore, the industry is extremely fragmented with 27 different digital wallets. Even in cash-dominated societies such as India, mobile wallets like Paytm are driving the growth of digital payments,” it says,
Asia Pacific is notably the global leader in mobile payments. As of 2018, Asian consumers transacted US$1.6 trillion on a mobile device. That is 61% of the total mobile payment value being transacted globally.
No doubt, the global economic balance is gradually shifting to Asia and this shift will gain momentum over the next few years. Rising incomes in emerging Asia and growth in discretionary consumer expenditure will boost online purchases.
While China will remain the largest digital commerce market in Asia, countries such as Indonesia and India are emerging as new growth centres.
According to the report, retailing will remain the largest industry, with goods purchased online accounting for 44% of digital commerce in the region. A key growth area is the apparel and footwear industry.
Online foodservice order and delivery will also be a key growth driver in the space.
As the digital space continues to grow, regulators are increasingly looking to balance innovation with protection in the digital era.
New competitive realities and consumer behaviours are not the only forces influencing development, says Euromonitor.
“Governments use regulations to hold corporations accountable for the power they possess and the potential negative impact their behaviours could have on society or the environment.
“Governments across Asia Pacific are deploying various regulations that will shape the future of commerce.Some governments, including Japan, focused on policies and regulations to reduce cash transactions. In September 2018, the Singapore government introduced a standardised QR code for digital payments.
“In December 2018, India introduced a new regulation that will ban e-commerce companies such as Amazon.com and Walmart-owned Flipkart from selling products from companies in which they have an equity interest. The new regulations follow complaints from Indian retailers and traders who say the giant e-commerce companies are using their control over inventory from their affiliates, and through exclusive sales agreements, to create an unfair marketplace that allows them to sell some products at very low prices,” it says.
As consumers in Asia Pacific are becoming more connected, Euromonitor urges companies competing in this region to consider how connectivity has reshaped lifestyles and how devices are rewriting commerce in order to remain at the top of their game.
Source: The Star