Propensity for e-tailing in Asia is high due to exorbitant cost of physical brick and mortar retail space, high cost of transport and convenience in ordering goods online compared to shopping in highly congested , polluted city landscapes. Increased reliability of secure electronic payment options and enhanced fulfilment efficiency of logistic had also boosted customer confidence in e-tailing

Asia is a thriving growth market for e-Tailing.China holds the top-notch position in start-ups and unicorns for e-tailing in Asia and challenges the best in the world. South East Asia is the emerging hub for e Commerce in Asia. According to a study done by McKinsey, Chinese companies like Alibaba and its associate companies record the highest sales in terms of Gross Merchandise Volume (GMV). Alibaba had penetrated successfully in global markets by establishing strategic partnerships in Asia, USA, Europe, Latin America and Australia by leveraging its core platforms for trading, electronic payment and logistics. The transformation that is taking place in China towards a consumption led economy from an export and investment led economy will boost e-Tailing in China further. Budding entrepreneurs in Asia can learn a lot from Chinese e-Commerce giants and unicorns like Alibaba, JD.com, Meituan Dianping and elle.com.

Figure 1: e-Retailing growth in Major Asian Markets

The emergence of Technologies such as AI, Big Data, IoT, AR/VR, Blockchain and 4G/5G create an enabling environment for e-Tailing to register a multi fold growth in Asia (as shown in Figure 1). AI, Big Data, Cloud and Blockchain technologies, improve the agility and reliability of payment, supply chain and logistic. These technologies also facilitate personalization of transactions while empowering customers. (Examples: for real time tracking, traceability, customer validation, prevent counterfeit, secure payment, increase productivity of logistic operation). As illustrated in Figure 2, a multiplier or network effect is created in e-Tailing platforms in Asia by adding more customers and more merchants in a virtuous cycle. Enormous growth in valuation of e-Tailing companies like Alibaba (US$ 500 Billion), JD.com (US$ 200 Billion) can mainly be attributed to this spiralling growth due to network effect.

Figure 2: Virtuous Cycle and Network Effect of Core e-Tailing Platforms, integrated with Payment, Logistic and Analytic Platforms (for a company similar to Tao Bao, China) – Conceptualized and Developed by Mothilal De Silva

A compelling customer experience through personalization, lower cost and high fulfilment efficiency (in terms of on time delivery and quality of goods at the final destination) can attract more customers. Trust building measures such as ESCROW payment methods, unblocked chat line with the merchant, good authentication and verification processes to certify merchants, flexible return policies and efficient dispute resolution can increase customer confidence and create more demand. CAINIAO, the logistic platform of Alibaba assures on time delivery and only less than 2% of goods are damaged or dispatched late. This is a classic example for fulfilment efficiency.Having an Asset Light Strategy of outsourcing logistic network backed by an AI driven logistic platform can reduce cost substantially as it eliminate the need of investing in warehousing and maintaining a work force. Example: Alibaba has completely outsourced its logistic operation to 3rd parties (but connected to a single intelligent logistic platform, CAINIO developed by Alibaba) and its profit margin is as high as 45% compared to Amazon’s 3% and eBay’s 20%. (Source: Danker Capital 2016)

As illustrated in Figure 3, Internet Plus Asia will focus on four different types of e-tailing start-ups, unicorns and established companies in order to highlight the strategies that underpin their success.

Figure 3: Internet Plus Asia’s Scope in e-Tailing – developed by Mothilal De Silva

Internet Plus Asia will showcase companies under four different categories as follows

Table 1: Cross Border B2C e-Commerce market Forecast across regions, in US$ Billions (Source: Ali Research and Accenture)

• As Table 1, Global share of B2C e-Tailing cross border sales for Asia Pacific is closer to 50%.
• According to Mordor Intelligence, share of cross border transactions in Singapore is nearly 55% compared to domestic online sales of 45 %.( Source: Frost and Sullivan 2016). Fashion and Accessories dominate in terms of $ sales. Exporters use different channels such as social media (We Chat, Line) and multiple portals such as Koala, Rakuten, JD.com and T Mall to reach the targeted segments. Blockchain technology is adopted to reduce counterfeit and package losses, authenticate vendors, provide a digital identity`, facilitate cross border payment and to provide more transparency. (Example: Alibaba’s T-Mall and its logistic arm CAINIAO had adopted Blockchain technology in cross border selling).

Figure4: Examples for Cross Border e-Tailing Platforms

Figure 5: Transformation of Consumer behaviour; Single Channel to Omni Channel

Figure 6: Examples of O2O and Omni Channel or “New Retail”, according to Jack Ma

Figure 7: Discover Phase of the Social Shopping Process for a Chinese e-Tailing platform (similar to Pinduoduo) – developed by Mothilal De Silva

Figure 8: Discover, Interact and Buy Process of a Chinese Social Shopping customer using a platform similar to Pinduoduo – developed by Mothilal De Silva
 

 Figure 9: Examples for Specialized Niche Players in Asia for e-Tailing