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E-commerce grew to $835 billion in Asia in 2015, the kind of expansion that beckons web retailers around the world. But moving into cross-border e-commerce means mastering the different market conditions from country to country, according to Internet Retailer’s new 2016 Asia 500.
The lure of Asia, and particularly China, for international merchants is strong and growing stronger: Chinese consumers alone purchased $589.61 billion worth of goods online in 2015, an increase of 33.3% over the same period a year earlier, according to the National Bureau of Statistics in China. By comparison, online retail sales in the U.S. grew by 15.5% per year from 2011 to 2014 and were up by nearly 15% in the first three quarters of 2015, according to the U.S. Commerce Department.
The largest domestic e-commerce players are driving the bulk of the sales and growth in China. The 266 China-based merchants ranked in the new Internet Retailer 2016 Asia 500—the largest online retailers in Asia as measured by their annual online sales—grew 65.7% in 2015 to $173.69 billion from $104.82 billion, representing 79% of total Asia 500 sales of $220.00 billion and 89% of the growth. By comparison, the 30 United States-based retailers ranked in the Asia 500 grew online sales 24.2% to $21.91 billion last year—the bulk of that for most of them coming from Chinese customers.
Indicative of e-commerce growth in Asia overall, total 2016 Asia 500 online sales were up 54.5% in 2015 to $220.00 billion from $142.42 billion in 2014.
When factoring in the roughly $411 billion transacted through the seven largest online marketplaces, including those owned by Rakuten Inc. and Alibaba Inc., Internet Retailer estimates the Asia-Pacific e-commerce market is worth $834.71 billion, up 32.1% from $631.81 billion in 2014.
E-retail growth in Asia and China remains far ahead of that in the U.S., one reason many U.S. brands and retailers are looking to expand into these markets. For the first nine months of 2015, adjusted U.S. e-commerce sales totaled $251.98 billion or 7.2% of total retail sales (excluding foodservice) of $3.51 trillion, according to U.S. Commerce Department data.
Such heady online growth isn’t lost on merchants based outside Asia, particularly those targeting Chinese consumers that crave foreign goods. As added incentive for buyers and sellers, the Chinese government in recent years has made it easier for consumers to buy overseas goods via the web. That includes setting up free trade zones in 10 cities where China’s customs service provides fast clearance of small orders from Chinese consumers. Foreign companies can ship the orders from abroad or store goods in these areas without them clearing customs, and then, as orders are received, send them through the streamlined customs process.
One way U.S. retailers are reaching shoppers in Asia is through marketplaces. For example, when BCBG Max Azria Group LLC wanted to step up its presence online in China, the U.S. women’s apparel manufacturer and retailer decided the best place to start was Tmall Global, Alibaba’s marketplace for imported goods. BCBG previously shipped online orders to China, letting international e-commerce fulfillment specialist Borderfree handle orders. But growing sales justified a bigger investment in China, says Michelle Magallon, senior vice president of digital commerce and omnichannel.
In November 2015 BCBG signed a deal with VoyageOne to manage its website on Tmall Global, including marketing and fulfillment, Magallon says. BCBG is in the early stages of putting together a multichannel distribution strategy in China, which includes two stores in Singapore. The company also has five stores in Taiwan.
BCBG isn’t alone among merchants in the U.S. and other countries looking to sell to the growing number of Asian online shoppers, notably the 375 million Chinese consumers who buy online. But those retailers aiming to enter or expand their online sales in Asian countries all face similar challenges, regardless of home country. To succeed online in Asia, retailers in the U.S. and other nations first are assessing the challenges of marketing, logistics, culture and regulations—and associated costs—for conducting e-commerce in each country.
For companies like BCBG, which is not yet ranked in the Asia 500 but is No. 424 in the Internet Retailer 2015 Top 500 Guide with online sales of $37.9 million in 2014, the key to connecting with online shoppers in Asian countries is understanding what shoppers want and then evaluating the local vendors who can provide the services needed in each market, Magallon says.
“My recommendation is to ensure you understand the dynamic of the economy and the culture,” she says. “Everything needs to be local, including payments, customer service, etc.”
The Internet Retailer 2016 Asia 500 is available as a database and a separate Executive Report in PDF format. The content includes:
- 2015 e-commerce sales figures (database)
- 69,500 customizable facts (database)
- 139 data elements (database)
- Company contact info on 903 e-commerce execs (database)
- Feature articles highlighting e-commerce trends in China, India & Indonesia (PDF)
- Charts breaking down top 3 retailers per Asian country (PDF)
- Features & functions of each Asia 500 e-retailer site (database)
- Market facts on 10 Asia-Pacific countries (PDF)
- Profiles of the 7 top online marketplaces in Asia (PDF)