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Online Shopping Scenario in the APAC Region

Monday, February 21st, 2011

Technology drives almost all facets of our lives. Apparently, there is not one aspect of our lives that technology has not redefined with its Midas touch.

From education, medical care, diagnostic equipment to, of course, electronic gadgets and telecommunications, technology con- tinues to make paradigm shifts almost on a daily basis. Technology has changed the very concept of shopping, and software ser- vice providers and application developers have continuously offered innovative and exciting opportunities for those tuned into the online services format to migrate to online shopping.

Features of online shopping

Online shopping is essentially done at two levels. Mobile online shopping is at the mirco level. The most common and fast adapting online shopping applications are developed for mobile-driven shopping. Smartphone technology and other mid- sectoral electronic media like the tablets, PDAs and others are driving better views and access to millions of online stores and web shops that stock, sell or resell billions of items a shopper would never have been able to see during a routine traditional shopping spree.

Online shopping at the macro level is usually done on Wi-Fi mode. Wi-Fi is a very important factor that has made online shopping so compulsive. The pervasive con- nectivity that Wi-FI offers in malls, univer- sity campuses or on transit buses is creating new instances for shopping online. This is fast converting consumers who would nor- mally dither before making a purchase to take the plunge and shop online. Web ana- lytics reveal that the Asia Pacific region is setting the global trends for shopping on- line.

Why is online shopping gaining high popularity amongst the APAC regions?

There are unlimited advantages to online shopping, but when viewed in the context of the region, the easy and quick acceptance of the online format is not truly surprising. As a matter of fact, there are more High Net Worth consumers within China than the whole of Europe put together. The rea- sons for this surprising consumerism are at- tributed to several socio-economic reasons including high disposable incomes and greater focus on status and reflection of the private label of all consumer goods.

The traditional mindset of the region to- wards shopping can be divided into two sec- tors. The first set of shoppers are those who shop for the essentials. This is the innate cultural ethos of the region and there is a large focus on savings for the future. This is fundamentally half of the population of these regions. The second set of shoppers is the upwardly mobile middle–income consumers who aspire to and follow all the trends and values of the high-income class. This is the most vulnerable and at the same time the highest subscriber group of online shopping.

Most online shoppers are people who shop by brand worthiness. Since most on- line deals have something to offer, such as a discount or that exclusivity that such shop- pers seek, online shopping goes beyond be- ing a high glamour quotient - it becomes a convenience. The reasons for this transition are largely attributed to the reach of technol- ogy in introducing faster, more secure and highly adaptable business processes that deliver better services. Therefore, availabil- ity of packaged groceries at hypermarkets has drawn the lower middle-income group to shop online. Today, a schoolteacher from suburban areas of Bangkok or Shanghai can now shop or place an order while on her way to school or work area with the latest Smartphone or from the train that is Wi-Fi enabled. The core of online shopping is the constant customization.

This is essentially offered through the software applications that are so engineered that the online purchaser has seamless ser- vices, from secure and safe websites, for bet- ter shopping experiences in virtual contexts. Customization is essential for there are mil- lions of goods and services available online and the sellers need to be top ranked when- ever a consumer ‘Googles’ for a product or a service. This is again possible because of the technology and social media networking posts that will trend a product and advertise on the availability at an online shop. Japan leads the global mobile shopping sector due to the existing infrastructure for fast and in- novative delivery of technology customized for personal consumption.

Factors that influence the online shopping format in the region

Today shopping has moved beyond plastic card swiping to something more innovative and sophisticated. You can now shop any- time, anywhere. All you need is a secured internet connection when you want to shop and a PCI compliant web-shop to max out your card. Online shoppers need to be aware that there is an international body of pay- ment card issuers like MasterCard, Visa etc., who have grouped together to prevent pay- ment cards from being compromised at the merchants’ end. Any merchant who stores payment card details has to comply with the security standards set by the card industry. When any merchant is non-compliant, then in the event of any fraud, the individual merchant bears the responsibilty to com- pensate the aggrieved party.

There is decadal change in shopping for- mats thanks to the spurt in the growth of hypermarkets predominantly in urban areas. In China, one-third of packaged grocery sales are attributed to the ro- bust modern trading channel. The sta- tistics are self-revealing. Beijing sees nearly half, its population (45 percent) buying from hypermarkets, and about three quarters of Shanghai consumers are already shopping online. The Korean fig- ures are similar too with the modern trade avenue close to 31 percent of all trade.

However, there is one negative develop- ment amongst the so many advantages of online shopping. The small ‘mom and pop’ stores in the region are slowly going out of business and there is no immediate solu- tion to rehabilitate them.

Trends in global online shopping versus trends in APAC region

Though the rest of the world showed con- sumers cutting back on spending, some of the countries of the APAC region, such as India and Vietnam, showed a surprising rise in sales values to the tune of 15 percent in comparison to the rest of the world. Perhaps only China reflected the signs of the global recession by showing a stagnated growth rate of 3 percent in the previous quarter. Additionally, there appears to be sectoral growth of close to 11 percent in this year.

In the global markets, the move is towards online portals, while in the Asia- Pacific regions there is an equal mix of tra- ditional or wet markets for fresh produce, followed by the online format for lifestyle products, clothing and electronic goods.

There is another feature that is fast es- tablishing a foothold in the industry. The change is in the spurt of shopping spaces that are essentially larger than the mom and pop stores, but are much smaller than the massive football-sized malls with their multiple food courts and cuisine. This for- mat became popular with the increase in the Family Mart and Circle K convenience stores. These are proving to be very conve- nient and unique in Indonesia. Several lo- cal chains are spearheading the transition to the online format. In fact, the number of sales in this sector is close to twenty percent of this mode of shopping.

In the global market, one other trend- ing online feature is the concept of private label. There has been a tremendous expan- sion in this niche and consumers are look- ing to following the same trend in the post recession period too, for greater profitabili- ty. However, Asia and the surrounding areas are far from appreciating such goods with private labels. Perhaps only in Hong Kong is the concept of goods with private labels sales trending at about five percent of total sales.

The concept is in direct competition to the established brands. Retailers have been making substantial investments to transit into the sales of private labels. However, this is still in the gestational phase. This is essentially because the local labels need to establish themselves in terms of quality, cost and per- formance.

Future scenario of online shopping in the Asia-Pacific region

A few trends that are purely specific to the region are the increasing role of the male as a shopper. Traditionally, shopping has been a predominantly female pastime. This is changing and statistics now speak of more than 22 percent of men be- ing involved in buying groceries for their homes. In Korea, this figure changes, with 11 percent of men being in charge of household shopping. Vietnam is yet to make a start as the cultural preference is for the more es- tablished traditional shopping options such as wet markets.

No discussion on online shopping is complete without the Korean penchant for shopping over the internet though it is largely limited to lifestyle products, person- al grooming products, and groceries. Korea is establishing the footprints for the global markets to duplicate at a later stage. Anoth- er interesting feature of the Korean online shopping scenario is that nearly thirty per- cent of the shopping happens via television.

Shopping online is here to stay

The Asia-Pacific regions in the nascent stages of economic resurgence are accept- ing the online format of shopping for the ease and the swiftness with which the on- line business works.


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