West meets East

February 26, 2013 09:04 AM

Asia is now the world’s biggest and fastest-growing e-commerce market—a market that grew more than twice as fast than the U.S. market in 2012, an analysis of data in Internet Retailer’s newly published Asia 500 shows.

Consider these facts:

  • Asia direct-to-consumer e-commerce sales reached $377.98 billion in 2012 up 25.9% from $300.19 billion in 2011.
  • Sales of the Asia 500 retailers, the region’s largest merchants by online sales in Asia-Pacific, grew year over year 59.2% to $248.69 billion from $156.22 billion.
  • The combined sales of the region’s 10 largest web retailers—Alibaba Group (based in China), Rakuten Inc. (Japan), (China), (U.S.), Suning Commerce (China), (China), eBay Inc. (U.S.), (China), HappiGo Ltd. (China) and Vancl (China)—accounted for 85.9% of all Asia 500 sales in 2012.
  • The regional sales of the biggest U.S. retailer in the Asia 500——grew 20.2% year over year to $8.80 billion from $7.32 billion.
  • The fastest-growing Asia 500 retailer—Suning Commerce Group Co. Ltd. (China, No. 5)—grew sales 403.7% to $4.76 billion from $945.1 million. The retailer recently changed its name from Suning Appliance Co. Ltd. to reflect its broader merchandise offerings. The Asia 500 retailer showing the lowest growth rate was (China, No. 393) with web sales that fell 37% to $10.1 million from $16.0 million.

Asia is coming of age as a robust e-commerce market. But for all of its potential opportunity, Asia, including China, is also the world’s most complex e-commerce market, a region that requires U.S. retailers and technology suppliers to pick the countries they want to prioritize and learn those markets well.

Asia is a series of diverse national retail markets, each with its own distinct audience of local web shoppers and its own stage of e-commerce evolution. Unlike the more mature U.S. e-commerce market, Asia has no common currency, universal language or uniform commercial code. Those factors, plus its rapid growth, set Asia apart from the world’s second- and third-largest regions for e-commerce: Europe, where the Centre for Retail Research estimates online retail sales grew year over 16%to $315.9 billion from $272.3 billion, and the United States, where the Department of Commerce says e-commerce sales grew year over 15.8% to $225.5 billion last year from $194.7 billion in 2011.

To help U.S. retailers and e-commerce technology companies better understand Asia’s complicated e-commerce landscape, Internet Retailer spent more than a year researching and then ranking the 500 largest web merchants across Asia and the Pacific. “Despite its relatively late start, e-commerce in Asia is already bigger than e-retailing in the United States, and it’s growing twice as fast,” says Jack Love, publisher of Internet Retailer. “That alone makes this research guide—now the 10th in our library—the most important one we have introduced since we published the first Top 500 Guide nine years ago, because no e-commerce market is going to impact American retailers, manufacturers and vendors more than Asia.”

Driven by the huge presence of Alibaba Group, No. 1 in the Asia 500, which operates marketplaces such as Taobao and Tmall and generated web sales of $170 billion in 2012, China is Asia’s biggest e-commerce market and one that could overtake the U.S. as the single largest national online retail market as soon as this year. In 2012, online retail sales in China totaled $179.00 billion, up 42.2% from $125.90 billion in the previous year, says the China Ministry of Commerce. But the Ministry of Commerce made its projection in May. By other estimates China’s e-commerce sales in 2012 were much higher, including a projection of $219.1 billion from Forrester Inc. By that estimate, web sales in China grew even faster year over year by 74.2%.

In Asia, it’s marketplace companies such as Alibaba in China and Rakuten Inc. (No. 2) in Japan that dominate online retailing. In China, Alibaba and its Taobao marketplaces accounted for 82.2% of all Asia 500 China sales of $206.77 billion. In Japan, Rakuten’s Ichiba shopping mall accounted for 48.9%— $9.76 billion—of all 2012 Asia 500 Japanese retail web sales of $19.95 billion. Marketplace companies, including Trade Me Group Ltd. (No. 73) in New Zealand and eBay Inc. (No. 4) with its Gmarket in South Korea, have a long history of developing an early lead in online retailing and an array of services that keep customers coming back.

But statistics and analysis published in the Asia 500 show that U.S. companies are beginning to seriously target Asia for growth. Collectively, the web sales of the 39 U.S. merchants ranked in the Asia 500 grew 18.8% to $15.81 billion in 2012 from $13.31 billion in 2011, and accounted for 6.4% of all Asia 500 sales.

To grow in such a diverse and complex e-commerce arena, such U.S. mer­chants as Wal-Mart Stores Inc. (No. 244), Macy’s Inc. (No. 249) and Vistaprint NV (No. 142) are making acquisitions or forming joint ventures with Asia-Pacific compa­nies well established online. Other U.S. merchants, such as Inc. (No. 4) and Zazzle Inc. (No. 301), are creating highly customized e-commerce sites that target shoppers in a particular coun­try such as Japan based on lots of market due diligence and planning. For U.S. retail chains such as Gap Inc. (No. 199), the path to a successful entry into Asia-Pacific e-commerce is to build upon their existing store bases and recognized brands.

The Asia 500 provides detail on how each of those retailers is faring in the Asia-Pacific region. “In the new Asia 500 Guide, American e-retailers will be able to assess the tantalizing opportunities the Asia market offers them, whether they enter it through the many online marketplaces or portals that dominate Asian e-commerce or develop their own Asia web sites to compete with fast-growing local web sites, which typically lack the technical sophistication of the Americans who have invented and perfected e-commerce,” says Internet Retailer publisher Jack Love. “Either way, they will find e-commerce financial, operational and contact information of their potential Asian partners and competitors.”

The Asia 500 also offers consumer brand manufacturers a research tool to help identify new and accessible outlets for their goods and services, and for e-commerce technology vendors to discover potential new buyers of their products and services. “We spent more than a year researching the Asian market to extract the rich data in the Asia 500 Guide,” explains Love. “Our researchers travelled there and made dozens of expert contacts, and they emerged from this study with one common impression: Asian e-retailers are desperately looking to upgrade their fast-growing web sites, which remain several versions behind those in the U.S. Their search for tools to catch up with the West is bound to take them to Western e-commerce vendors.”

For the first time, the Asia 500 is available in three formats: print, digital and as part of the all-new and completely updated Information on how to order the brand-new 2013 Asia 500 Guide is available here.





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