Challenges of E-Commerce in Asia

E-commerce is big in Asia and a growth industry. Local Asian retailers are increasing e-commerce activities as well as global players entering these new markets to expand globally. Rising wealth and a growing middle class provides revenue opportunities for organizations selling their products and services in Asia.

Independent research firm, Common Sense Advisory, published its recent report, The Top 10 Languages that Reign Online, 2015, which studied the top 10 most-used languages from an annual study of global websites. Simplified Chinese was ranked at number two and Japanese at number seven as languages with the fastest growing demand. Global brands must ensure they don’t miss out on these growth areas and potential new revenue streams.

With more drive and competition to reach the Asian consumer, this has meant more demand for Asian localization activities to meet rising expectations. Asian consumers don’t just want products shipped to them, they want products that meet their specific needs and brands have been culturally adapted for the wide variety of Asian countries. It is not simply a case of linguistically translating content into key Asian languages. Different purchasing habits will exist across all countries and cultures and this must be adapted throughout the whole e-commerce supply chain.

In a recent blog interview, Welocalize General Manager of Japan and VP of Asia Pacific, Mark Shriner, give expert insights on e-commerce in Asia and stated that “Asia e-commerce companies haven’t traditionally placed as much value on localization efforts. But, as we’ve seen in the last few years, this is changing as the desire to expand in overseas markets has increased.” Read the full blog interview with Mark Shriner here.

In February 2016, the leading event for e-commerce and multi-channel retail innovators, eTail Asia, in conjunction with Worldpay and WBR Digital, published a benchmarking report, “The Risk/Reward Paradigm,” which surveyed 100 leading retailers in Asia. The objective of the report was to discover how they are responding to the rapid expansion of the Asian e-commerce market. Here are four key findings that will impact overall globalization decisions and activities as detailed in the report:

Which regional markets do you intend to enter or increase your presence during the next 3–5 years?

In the report, “Nearly all respondents (99%) intend to enter or increase their presence in the Asia Pacific region in the next 3–5 years. A huge population with significant internet and smart phone penetration presents an attractive proposition for the overwhelming majority of retailers,” Maria Prados, VP Global Retail, Worldpay.

Which Asian Markets do you consider to be the most challenging to enter? The three most challenging countries were China (57%), India (49%) and Indonesia (42%).

“Asia has historically been a tough region to build into. Given the particularly protectionist government and high regulatory barriers of entry for India and China, it is unsurprising that those two markets are considered the hardest to enter. However, the sheer size of these markets — China is the second largest online commerce market globally, and India is expected to quadruple in size in the next four years — and their growing middle classes, means there is merit in exploring opportunities to enter,” Maria Prados, VP Global Retail, Worldpay.

Which online strategies do you think most effectively drive customer retention? The five top responses were customer service and support (93%), loyalty and reward programs (93%), personalization (73%), mobile campaigns (68%), and social media (63%).

These findings demonstrate the importance of strategic localization and globalization activities in Asia. E-commerce sites have to personalize websites and online digital marketing activities to resonate with target consumers. This also includes online search activity. Multilingual SEO activity is crucial for online success. This involves awareness of the top search engines in target countries and getting into the mind-set of the target consumer and knowing which terms and phrases will be used in online searches. For customer service programs, this means knowing how to approach customer service for the varying countries within Asia. For example, do consumers want live online chat or do they want to speak to someone in their native language? This is all part of the globalization process.

Fraud risk was a big topic in eTail Asia’s Benchmarking Report. The greatest fraud related challenge when entering new markets washow to understand the fraud risks across the different payment methods. Payment methods in Asia vary considerably when compared to the USA. Asia has a more fragmented online payment market, especially in South East Asia. Tackling and preventing fraud is a major consideration for retailers and local knowledge on popular payment tools and risks associated is key for an etailer looking to expand into new markets.

For big e-commerce markets, like China, there are a number of payment structures that have gained a good reputation for safe transactions. WeChat, the top social and messaging application in China has WeChat Pay, which enables a lot of Asian mobile e-commerce. The online Apple store recently announced it will accept payments through WeChat Pay which surely give reassurance and credibility to this mobile payment method. The dominance of Alipay (the leading Chinese online payment platform from Alibaba) makes a lot of transactions safe.

Entering and further penetrating Asian markets is a strategic discussion that will take place among many global online retailers. It’s a big revenue opportunity, providing you assess the risks and obtain local knowledge and information about individual countries and markets.

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