eCommerce solutions are rapidly evolving and so is the market opportunity. CEO’s and CIO’s of every online business are struggling to cherry-pick the most appropriate solution for their growing needs.One of the factors that make it even more difficult is the enormous scale predicted for the market growth. Then there is an increasing popularity of mobile commerce that further weighs into the decision process.
Market Size and Opportunity
The online retail market in Asia-Pacific region is one of the fastest growth trajectories never seen before. With millions of venture capital money being pumped in the regional eCommerce giants, there is increasing confidence from investors and retailers that the forecast predicted by analysts may indeed turn out to be true. The APAC region is expected to register a growth of 16.61% as reported by Forrester in their Online Retail Forecast report. Asia-Pacific will contribute most to new sales in the business-to-consumer (B2C) commerce segment in coming years, according to eMarketer’s forecast of digital sales of retail and travel products and services. This year the region is expected to clock $525.2 billion in B2C eCommerce sales as compared to $482.6 billion in North America. The gap will continue to get wider in the coming few years and hence establishing the APAC region as the biggest online retail market in the globe.
In 2014-15, user experience is seen as an investment area to drive future revenue. With higher mobile phone adoption and increasing sales through mobile, every $ invested in m-commerce and mobile user experience is expected to deliver a 10x return depending on the retail business. Online travel sites that drives most of the mobile commerce sales has already proven this. 2015 will witness a mobile commerce revolution with a more mobile than online eCommerce market.
If these analyst predictions are right then the e-retailers ought to be investing heavily in their mobile and also online sales channel. However, retailers should realize that one shoe does not fit all. Mobile offerings have to be tailored to suit the business needs and buying behavior of the consumer in that specific business segment.
New Business Models and Partnerships
Even as you read this, there are heads at work trying to devise new ways and ideas to maximize their sales online. This burning need has given rise to various business models like the multi-channel commerce, bricks-and-clicks and hybrid online-offline that maximizes the competitive advantage from the combination of both, the web and the physical channel.
With China leading the pack in Asia, Indonesia and India are the closest in terms of B2C eCommerce sales growth worldwide. As per eMarketer, China has seen a growth of 63.8%, Indonesia at 45.1% and India at 31.5%. While these % are expected to vary a lot considering the huge online population and increasing penetration in countries like India but Indonesia seems to have shown an interesting scenario emerging in this region and hence we would like offer a focussed review below.
Indonesia is poised to become a major player in eCommerce in the next few years, with estimated total market revenue ranging from US$3bn (baseline scenario) to US$10bn (upside scenario) by 2015, representing growth rates of 3X to 10X from the current level. Hence, the intent to bring a focus in this white paper. Indonesian eCommerce is to be watched closely in the coming months and years primarily for the following reasons –
- Economic growth – Indonesia is on a rapid economic growth path. The growth in the middle class population (GDP > $3000) is one of the key drivers of this growth.
- Internet penetration – With around 25% of Indonesian population, and growing, using internet for various purposes is also triggering the growth in eCommerce. Typical usage of users is in the area of bank transfers, net banking and online shopping. People are also getting used to using their mobile phones and tablets for transacting online. Of the 25% around 6% have conducted online transactions to tune of 10 trillion rupiahs.
With the launch of a local payment gateway IPAYMU and more on the anvil, the comfort factor of transacting online is rising.
Some of the well-known sites on which the Indonesian people transact are tokobagus.com, tokopedia.com, bhinneka.com, bekas.com, berrybenka.com . The list is long and growing.
Some of the challenges that exist and will hopefully get addressed over time are –
- Most people in Indonesia do not have a credit card; hence, the most popular method of e-payment is through either bank transfers or cash on delivery (COD). COD is a popular payment method in the Asian region for obvious reasons. But then that’s slowly changing with more and more adaptations of secured payment gateways and consumer protection laws getting strengthened.
- Backend logistics support needs a technology booster shot. With low technology and non-integrated (avoiding the usage of disintegrated) systems, it gets expensive to ship particularly bulk items to places in the east of Indonesia. There could be exceptions like JNE/Tiki that has a sizeable coverage all across Indonesia.
Indonesia though has crossed the early-stage days has huge potential to being an eCommerce leader among the Asian giants.
Enterprise eCommerce products that will dominate the eCommerce market include Oracle Web Commerce, SAP Hybris, IBM Websphere Commerce and Demandware. Gartner’s 2014 Magic Quadrant for E-Commerce has identified three of them as Leaders and one as a strong Challenger. Demandware does seem to be a serious threat to the leaders.
The three key aspects that help you measure the big guns in this area –
- Dependability and Scalability
- Higher degree of personalization
- Strong integration capabilities
This Magic Quadrant illustrates the key technical, organisational and go-to-market challenges that eCommerce practitioners will face in the coming years. Beyond these parameters the practitioners will have to go deep into the customer present and future needs and mapping them with product capabilities to identify the best fitting solution.
Customers tend to fall in the trap of their ‘Now’ needs and ride on the product that fits well into their ‘Now’ situation. It is imperative that the customer vision also is understood and the alignment with the product’s roadmap ensured.
We strongly believe that our company Adapty is well poised to address the eCommerce spurt in Asia particularly since we are sitting right in the middle of region – India. The Indian online business has a lot of similarities and synergy with the market in other countries in the Asian region and hence our India experience positions us as one of the market leaders in the eCommerce implementation.
Our rich experience with Asian clients like FutureBazaar have given us deep insights into the nuances that matter the most to internet consumers in this region.
We have vast experience with global retail clients like Walmart, global publication giants like DowJones and several global fashion and luxury retailers having presence worldwide.
Our recipe of deep eCommerce expertise, global client and deliver experience and knowledge of the Asian markets puts us in the sweet spot of being the preferred partner for any Asian online retailer.