The world once shopped until it dropped. Today, it shops until it drops the lid of its laptop, or until it drops its smartphone back into its pocket. The internet has transformed the way we purchase our goods, and online shopping has become a way of life, part of our DNA. And if you are part of an online small and medium-sized enterprise (SME) with ambitions of going global, e-commerce will be your lifeblood.
Worldwide annual sales from online shopping tipped over the US$1 trillion mark back in 2012, and that figure is forecasted to double for 2016, according to digital market research company eMarketer.
But there is one region where the boom in online shopping has been particularly felt in recent years, and where the next few years should see significant further growth. “Asia Pacific has more internet users than any other part of the world and is also the fastest-growing digital region,” said Dr Karen Reddington, president, FedEx Express, Asia Pacific.
Online buying rates in the region are the highest in the world, says market research specialist Nielsen, and eMarketer forecasts that the area will break through the US$1 trillion annual sales barrier on its own in 2017.
This is backed up by research from the Economist Intelligence Unit (EIU), which foresees retail sales in Asia growing by 4.6% in volume to US$7.6 trillion this year, compared with growth of just 2.5% in North America and 0.8% in Europe.
According to the EIU, the growth in online shopping in Asia is being driven by women. Its survey of female shoppers across the region found that 63% browse the web at least once a day for products and services – nine out of ten are shopping for clothing and accessories.
Last year, for the first time ever, shoppers in Asia spent more money online than their counterparts in North America, said eMarketer. Asia hosts 42% of the planet’s internet users, according to the Oxford Internet Institute, and the increasing spread of online access and availability of smartphones means 40% of e-commerce sales will come from Asia Pacific next year. What’s more, six out of every ten dollars spent online in Asia come from China.
The expansion in online shopping in China alone has been remarkable. Its share of the Asia Pacific e-commerce sales market was 14% in 2010, but by next year, it will have reached 56%. Last year, 13.9 billion packages were delivered in China, and 60% of them were through online shopping.
According to Seizing the Cross-Border Opportunity, a worldwide study published by market researchers Forrester Consulting and commissioned by FedEx, the average Asian consumer spends US$347 a year on international purchases, buying from websites outside their own borders. This is well above the worldwide average of US$300 a year, and indicates a willingness on the part of Asia Pacific shoppers to go global in their pursuit of the perfect purchase.
The region’s e-commerce growth looks set to continue. In its recent e-Trade Readiness Index of G20 countries, which measures potential trade in the online sector, the Economist Intelligence Unit identified three Asia Pacific nations (Australia, South Korea and Japan) in its top five.
According to the Forrester research, there are distinct characteristics within Asia itself. In Singapore, just over three quarters of shoppers (76%) use digital payment platforms to pay for their online shopping, compared to 36% of people in the wider APAC region.
Buyers in Hong Kong are more likely to look abroad than their Asian counterparts; 86% of shoppers make at least one purchase per year from an overseas merchant compared to the APAC average of 72%.
The vast business shift towards e-commerce has been charted by the Organisation for Economic Co-operation and Development (OECD), which has measured how SMEs have migrated online in response to the expansion in internet shopping.
More than 75% of businesses in 34 OECD countries have a website, up from 70% in 2009, the organisation says, while it also pointed out that 95% of young people use the internet, and that the average 15-year-old spends three hours per day online.
This indicates that the customer base for e-commerce is only going to grow in the coming years, but there are a number of key steps that online SMEs can follow if they want to capture a piece of that market. The Forrester study makes several recommendations that SMEs should follow if they have ambitions of running a successful online business.
Getting your site right
Firstly, businesses should study their web traffic. Most customers will find them through online search and internet advertising, and identifying their needs – often specific to the country they are from – is critical to success.
Making sure that the user journey from search to transacting on a site is smooth is also hugely important. Research from internet performance specialists Dyn* found that 42% of online shoppers will wait no longer than four seconds for a site to load before switching to a competitor’s offering.
E-commerce sites today must be fast and mobile friendly if they are to gain the trust of online shoppers and turn a browser into a buyer.
There are great opportunities for businesses that get their cross-border proposition right. Word spreads pretty fast these days, and not just by word of mouth. Social media and consumer review sites are the sounding boards for the modern consumer. Online endorsements from customers can really help build trust in a business.
According to Nielsen, 43% of online shoppers connect with friends, family and strangers on social media before making a purchase decision.
Watch and learn
Smaller online businesses are also advised to learn from their peers. If one of their competitors has been successful in overseas markets, they should reach out to them in a bid to understand what they have done to ease their global expansion, examine their logistics set-up and see what lessons can be learned.
Logistics are a major factor in determining the success of an online business, and SMEs must decide whether to provide their own shipping or look to a major express carrier to help them distribute to other countries. To be a worldwide success, it is wise to work closely with at least one major logistics company, as their experience and expertise provides a global reach, speedy delivery and lower costs.
Before making that move to go global, e-tailers must first identify their key overseas markets. They can do this through web analytics on their own shopping site or the online multi brand platform they have partnered with. Look at what these new customers desire from your product and your website and do not hesitate to engage with them; ask them for feedback through an online survey or by talking to them face to face – there is no substitute for having researchers on the ground to see how your product and your business fits into an up-and-coming market.
The modern online shopper wants their products fast and they don’t always want to pay added costs for delivery and returns, so it is vital to consider these changing needs.
In a market where consumers are increasingly venturing overseas when making online purchases, it won’t be long before every success in e-commerce is a global one. But before they take on the world, SMEs have to be ready.
*Dyn, internet measuring company, has offices in US, Australia and UK, clients include Twitter and LinkedIn