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Three Things We Can Learn From The Rise Of Ecommerce In Asia

in Blog, Retail and Ecommerce

It’s hard to overstate Asia’s significance to the global economy. Home to almost half the world’s population, this continent contains the planet’s two most populous nations in China and India. It encompasses developed economies like Japan and South Korea, developing nations such as Cambodia and Indonesia, and former British colonies including Hong Kong and Singapore. And while some countries are struggling to roll out dependable internet infrastructure, others are seeing their digital economies grow even more rapidly than those of Western nations.

As a consequence, ecommerce in Asia is booming and the total value of ecommerce across all product categories is expected to surpass $1 trillion in two years’ time. That makes Asia an irresistible market for British and American manufacturers looking to promote their products to new markets.

Yet ecommerce in Asia shares relatively little in common with our own markets. From preferred payment methods to the influence of colour, it’s crucial to appreciate the specifics of each local market before attempting to promote their goods and services. Nor can Asia be lazily dismissed as a singular entity, any more than Europe can. There, as here, a spectrum of languages and cultural variations require a nation-by-nation approach to ecommerce. Indeed, in larger nations like India, product marketing may need to be adjusted from one region to the next.

These are three insights into ecommerce in Asia, which any business ought to be aware of before looking to the east…

1) Low Taxes And Low Incomes Mean High Expenditure On Low-value Items

Government interference in ecommerce has been surprisingly limited across the continent, with low levels of taxation encouraging healthy domestic and international markets. Levels of VAT in Thailand stand at seven per cent, while Singapore’s rival Goods and Services Tax is equally low. Both nations support voluntary registration by overseas companies, actively encouraging international traders to target their audiences. Indeed, Singapore dominates regional tables of cross-border transaction volumes.

It’s worth bearing in mind that despite favourably low tax rates, many Asian nations remain poor when compared to first world countries. China might have a burgeoning middle class, but the per capita disposable income of residents is still a modest £4,000 per year. Throughout most Asian nations, low-price goods are far more likely to attract large audiences compared to premium products, which will only be attainable by a relatively small percentage of the population.

2) Multiple Payment Options Are Crucial

In the UK, we’re used to completing online transactions using credit or debit cards. Yet in India, cash on delivery remains the default method of ecommerce payment. Digital payment wallets are also more popular in Asian nations than in the west, with China’s ubiquitous Alipay boasting 900 million users. That’s made Alipay a bigger concern than PayPal for ecommerce in Asia, though its Californian rival is also well established across most Asian markets.

A Statista report suggests credit cards are the preferred payment method in Asia, with debit cards less popular than payment wallets, direct debits or even cash on delivery. Attempting to impose Western payment models on foreign audiences simply won’t work, though it will drive customers into the welcoming arms of more culturally-aware competitor websites. If your business model revolves around immediate payment and delayed dispatch of orders, Asia may represent a major challenge.

3) Fashion Is – And Will Remain – The Dominant Market

While western nations fret over the environmental impact of cotton production and the microplastics generated from washing polyester, Asian countries are less concerned about the ecological footprint of their clothing. Consumers here demand fast fashion – the latest trends, available on demand and delivered rapidly. This has made clothing the most popular product type bought online. By 2021, it’s estimated the Asian ecommerce fashion market will be worth $357 billion, far outstripping high-ticket categories like electronics.

Western brands have a certain prestige in many Asian nations, but it’s crucial for companies to acknowledge and respect the cultural customs of individual target markets. Purple is associated with nobility and wealth in Japan, whereas in Thailand, it’s the colour of mourning. A company selling purple dress shirts will have to adjust its marketing from one nation to the next, in accordance with the expectations of potential purchasers.

To find out more about how to build a winning ecommerce proposition in, read our full report, Decoding Asia’s Brave New World of Ecommerce, at THG Ingenuity.

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