Home Asia News E-commerce in Asia: The region’s next growth sector 

E-commerce in Asia: The region’s next growth sector 

E-commerce warehouse in Asia
eCommerce manufacturing warehouse, Jiangyin, China (Source: Air Elegant/Shutterstock.com)

Asian consumers are relying on online stores more than ever. This is as governments across the region plan on continued lockdowns for controlling the pandemic. As online shopping gains more traction, businesses are adapting and using advanced technologies. E-commerce in Asia is rising, with a growth rate projected at 6.95% annually between 2020 to 2025.  

Asia’s e-commerce sector expects an increase in user penetration from 53.3% in 2021 to 68.2% by 2025. This momentum will enable the e-commerce market volume to grow from the predicted $1.26 tn in 2021 to $2.12 tn by 2025.

Asia has surpassed the Americas and Europe, as the region is expected to project an e-commerce growth rate of 8.2% between 2020 and 2025. Meanwhile, America and Europe are expected to grow by 5.1% and 5.2%, respectively. 

Online sales in China, the world’s largest e-commerce market comprise 52.1% of the total e-commerce sales globally in 2021. This is predicted to increase by 21% year-on-year. Meanwhile, the US e-commerce market is only projected at $843.15 bn for the year.  

While big-name retailers had set up online channels even before the pandemic hit, the decline of foot traffic and closures due to lockdowns have prompted them to make online selling their primary business model. And also big shopping malls follow the trend, including Marina Square in Singapore, the Siam Center in Thailand, and the Pakuwon Group Malls in Indonesia.

E-commerce trends in Asia 

The use of augmented reality (AR) technology and the emergence of 5G networks accelerated the growth of e-commerce in Asia. AR has enabled customers to test out items virtually before purchasing them. For instance, Sony’s Envision TV AR app allows customers to visualize how a Sony TV fits into their space or looks on their wall or stand. To make this happen, customers must allow the app to their smartphone’s camera. The same system works for Sephora SEA’s AR mirror. Through simulating make-up products, the app enables buyers to try them on their faces in real-time. 

The Asia-Pacific region is positioned to become the largest adopter of 5G globally. The region is expected to have 1.14 billion subscribers or 65% of global 5G subscriptions by 2024. With the speed of 5G and greater internet accessibility, e-commerce sites can improve customers’ shopping experience, add more AI capabilities, expand network capacity, and strengthen security. 

E-commerce platforms have integrated live streaming into their systems to amplify their sales strategy. Between February and June 2020, the number of live streaming hours on e-commerce sites in Malaysia and Singapore has increased by almost 200%. In the Philippines, live selling is done by 65% of businesses on e-commerce platforms to gain new customers. 

Q1 2021 performance of Asia e-commerce giants 

Chinese video sharing website Bilibili posted a 68% year-on-year increase in total net revenues to $595.4 mn during the first quarter. The company’s e-commerce platform recorded revenues of $79.2 mn, representing a whopping 230% increase from the same quarter in 2020. 

Bilibili reported that its website’s average monthly active users (MAUs) went up by 30% to 223.3 million. On the other hand, its mobile platform’s MAUs increased by 33% to 208.5 million. In addition, the company’s average monthly paying users (MPUs) had a 53% surge year-on-year, reaching 20.5 million. 

Rakuten Group’s Q1 Fiscal Year 2021 financial results showed an 18.1% increase year-on-year in the company’s revenue to reach $3.57 bn. Besides this, the Japanese e-commerce firm’s gross merchandise sales (GMS) went up by 33.9% year on year. This was on the back of continued transaction volume growth to its online stores, such as Rakuten Ichiba, Rakuten 24, and Rakuten Seiyu Netsuper.  

Regulator’s warning to tech firms 

Alibaba Group, one of the world’s biggest retailers and e-commerce companies, reported a first-quarter loss of $1.170 bn. The news came after it paid a $2.8 billion antitrust fine to China’s State Administration for Market Regulation (SAMR). This was due to its business practices that, according to regulators, limit competition and undermine merchants’ rights. Still, Alibaba’s sales were up by 64% to $28.6 bn for the quarter ended March. 

Alibaba’s full-year revenue also increased by 41% to $109.48 bn. Alibaba chairman and chief executive officer Daniel Zhang Yong said that the company plans to use its incremental profits in 2021 in “core strategic areas such as technology innovation, support for merchants to lower their operating costs, user acquisition and experience enhancement.” 

Thirty-four other Chinese tech companies have received warnings from the SAMR. These include Tencent, TikTok owner ByteDance, e-commerce platform JD.com, TikTok rival Kuaishou, and Alibaba rival Pinduoduo. 

In mid-April, the antitrust watchdog published statements from 12 of these companies expressing their intention of complying with SAMR. Post this, the companies have vowed not to engage in anticompetitive behavior. In addition to that, they also are identifing areas of improvement in promoting a fair and competitive market. 

Most recently, food delivery giant Meituan pledged to cooperate with the regulator. At the end of April, Meituan came under the SAMR’s scrutiny on suspicion of monopolistic practices.