Think of e-commerce in Asia, and China probably comes to mind. With an average of 10 GPD growth per year that created a large middle class with a taste for consumption, it represent an enormous e-commerce market. But China’s economy is slowing down, with October logging the lowest level of growth since 2009. Shopping, however, has kept up the pace, with increases in retail sales and a 36% increase in e-commerce sales during Q3 2015 compared to 2014.
But there are concerns that retail and e-commerce aren’t enough to offset China’s evolving economy, and some contend that China’s e-commerce market is already too saturated for new entrants. Plus much of China’s e-commerce market has been built domestically – think Alibaba and WeChat – because government controls have meant it’s been difficult or impossible for foreign entities to gain entry to the market, although it’s perhaps easier than maintaining a physical retail presence. Further development of domestic technology and e-commerce is being encouraged in the hopes that it will compensate for the weaker segments of the economy.
Where will the next big e-commerce markets be in 2016? Think Association of Southeast Asian Nations (ASEAN) countries, where until recently laws and logistics made e-commerce operations challenging.
According to a recent Euromonitor report, ASEAN member countries are primed for robust e-commerce growth: “The region has a young population, expanding middle class, increasing Internet connectivity, rising smartphone penetration, and greater payment options, all of which are favourable for the growth of e-commerce.”
A commonality of ASEAN markets is the low level of e-commerce activity, but the high use of mobile phones for shopping.
There are indications that Indonesia will be open to foreign investment and ownership in 2016, including in the area of e-commerce. There are currently restrictions on foreign economic activity in the country, due to various factors, but President Joko Widodo reportedly wants to open the country up in order to stimulate its sluggish economy. Indonesia is ASEAN’s sixth-largest economy, and has a high percentage of Internet and social media users.
Widodo paid a visit to Silicon Valley last October with the aim of interesting private investors in Indonesia’s e-commerce and the country’s own startups.
Thailand has a young, affluent, tech-savvy generation with a taste for luxury spending. International and domestic retailers are beginning to enter into Thailand e-commerce, hoping to be the ones to jump start the sector with mobile e-commerce and platforms to make shopping on mobile easy.
With a predicted 35% increase in e-commerce activity in 2016, Thailand could be one of the busiest markets in the ASEAN region.
Singapore is another ASEAN member with a high level of Internet users but little e-commerce activity. But that could be changing. Japanese e-commerce company Rakuten opened an office there last summer. Called the Rakuten Institute of Technology (there are others in Boston, New York, Tokyo, and Paris), it’s where Rakuten does its research and development. The branch in Singapore will research consumer behavior.
In an interesting multi-channel concept, Singapore Post is developing a shopping mall that will combine brick and mortar retail with e-commerce. Shoppers will be able to buy in-store but have their purchases shipped. Whether the level of convenience and novelty this model creates will be enough to encourage digital buying in the country remains to be seen.
The Internet, mobile technology, and the Internet of Things are linking people, places, organisations, and objects like never before. Learn how to leverage this changing business landscape in the Economist Intelligence Unit report The Hyperconnected Economy.