Rising e-commerce in Asia-Pacific region
According to latest eMarketer data, Chinese e-commerce sales will be close to $2tn in 2019, with the market growing 27% in the past year. The table below shows the top-10 e-commerce markets worldwide, with China the clear leader, followed by the US, the UK, Japan and South Korea. Notably, India is the fastest-growing e-commerce market, with 32% growth forecast for 2019.
China and South Korea are leaders in e-commerce in the region. Kantar Worldpanel predicts that 30% of FMCG retail in South Korea will be online by 2025, with e-commerce having a 25% share of retail in China by 2025. This is a higher share than forecast for any Western country.
There are 830 million internet users in China and 560 million internet users in India, according Statista. Other Asian countries with a high level of internet users include Indonesia (143 million), Japan (119 million), Bangladesh (92 million) and the Philippines (67 million). Overall, the Asia-Pacific region accounts for 53% of global internet users, but there is still just 48% internet penetration in the region, which means these numbers will continue to rapidly rise.
This e-commerce growth in the Asia-Pacific region represents a clear opportunity for e-retailers: as GDP per capita, internet penetration and e-commerce sales continue to rise in the emerging Asian markets, it’s clear that e-retailers in Europe, North America and worldwide should look at cross-border e-commerce exports to these countries.
Challenges in e-commerce exports to Asia-Pacific
There are several challenges in exporting e-commerce to this region. There are several challenges in exporting e-commerce to this region. This section highlights three issues to overcome when selling to China.
Consumer attitudes towards cross-border e-commerce
As shown in the graph below – taken from the UPS Pulse of the Online Shopper 2019 – 77% of Chinese shoppers have previously cancelled a cross-border e-commerce purchase due to the retailer being based overseas. In contrast, shoppers in Hong Kong are the least likely to abandon a cart when they find out the merchant is located outside their market. One of the reasons for this could be Hong Kong’s status as a free trade zone.
Therefore, Chinese consumers need high-quality product visibility (parcel tracking) and fast cross-border delivery speeds to ensure that the cross-border delivery experience is as close as possible to the domestic delivery experience.
Customs and legislation
Selling to Asia-Pacific markets can be complex from a legal perspective, with customs rules changing on a regular basis. At the beginning of 2019, Chinese authorities announced changes to customs legislation to make cross-border e-commerce into China easier. VAT on imports was reduced, and the tax-free threshold for Chinese consumers importing into China was raised.
The below table is an overview of Chinese customs legislation provided by Azoya. In this table, cross-border e-commerce is divided into two channels: direct shipping from overseas merchants to customers (light red), and bonded importing in which inventory is stocked in warehouses in free trade zones to enable faster fulfilment (dark red).
Postal shipping corresponds to personal customs clearance, and products do not have to have import permits or local China registration filings. While most packages go through customs without a hitch, customs officials may inspect a small percentage of packages, which may be levied a postal tax of 13%, 20%, or 50%. Postal taxes under 50 RMB are exempt altogether and the customer does not have to pay the tax. For postal shipments, there should not be more than six items, and altogether the value of the items should not be more than 1,000 RMB. However, if the shipment consists of just one item, then there is no limit on the value of that one item.
Selling the right product in the right way
According to the IPC cross-border e-commerce survey, consumers in China and South Korea were especially likely to purchase Health & Beauty products cross-border, with demand for this product category increasing year-on-year. Other common purchase categories for cross-border exports to the region are Clothing & footwear, Consumer electronics and Jewelry & watches.
When looking at marketplaces to sell your product on, it should be noted that Amazon and eBay are not as influential in Asia as they are in Europe, North America and Australasia. The key online marketplace in China is Alibaba, while other countries in the region have a wide range of e-commerce website and marketplaces. According to the IPC survey, Lazada is a notably important player for cross-border e-commerce into the Philippines, Malaysia and China. Other key cross-border e-commerce players include Rakuten (Japan) and JD.com (China).
If you chose to sell to the region via your own website rather than a marketplace, then it should be noted that 70-80% of online purchases are made via a Smartphone, with only a minority of online consumers having a personal computer. Therefore, your website should not just be ‘mobile-friendly’, it should be ‘mobile-focused’.
According to UPS research, the online consumer experience differs significantly by market in Asia. South Koreans are most likely to conduct their pre-purchase online research via a price comparison website (mentioned by 64% of survey respondents) or via a search engine (59%). Chinese consumers are less likely to use these tools and instead are more likely to conduct their research directly on the marketplace, which reflects the importance of Alibaba and JD.com in China.
Finally, it is of course very difficult to have your product recognised in these markets. After all, why should Asian consumers buy your product, and not another one? An important sales strategy in China is ‘influencer selling’. In China, if a celebrity or influencer wears or endorses a product, it has a particularly high impact in increasing sales – much more so than in Europe. As outlined in the Mary Meeker Internet Trends report – and shown in the images below – live-stream shopping by online influencers has been very successful in China.
How the Post can help
The International Post Corporation supports postal competitiveness and performance on cross-border letter and parcel delivery markets. We provide solutions to improve postal cross-border performance in terms of parcel tracking, delivery location choice, parcel returns, delivery speed, and many other aspects. This way, you can send items to Asia in a low-cost, high-quality manner via the postal network.
We have 25 member posts, all of whom carry out innovations to constantly improve parcel innovations. Here below we outline some of member innovations to help e-retailers in their country sell to Asia.