By Lara Climaco | FilAm Star Correspondent
Online shopping is growing so fast in Asia-Pacific that it will become the world’s leading e-commerce region within just two years, according to research done by consulting firm Frost & Sullivan.
“With explosive growth in countries such as India, China, Japan, and South Korea, Asia-Pacific (APAC) is set to become the leading region in e-commerce in the world. By 2018, APAC is expected to generate sales of $1,892 billion at the regional level and $3,015 billion globally. The retail e-commerce segment accounted for 10.2 percent of the total retail sales in APAC in 2015, which is projected to grow to 20.3 percent by 2019. Among the APAC countries, China leads with a projected 19.6 percent of total e-commerce sales, followed by South Korea with an estimated 14.7 percent, by 2019,” Frost & Sullivan reported in its paper issued July 4.
The Philippines is among the fastest growing in Southeast Asia, with e-commerce revenue growth projected at 20.67 percent through 2020, next only to Malaysia’s 24.3 percent. About 40 percent of e-commerce transactions in Southeast Asia are cross-border, mostly involving airline tickets, tours and hotel reservations, electronics and clothes, the study noted.
However, in terms of market size, the Philippines trails its peers within the Association of Southeast Asian Nations (ASEAN), where the number of online retailers already exceeds one million. According to Frost & Sullivan, the combined e-commerce market among the ASEAN 6 – which includes Singapore, Thailand, Malaysia, Indonesia and Vietnam – is expected to grow at a compound annual growth rate of 16 percent, to $21.6 billion by 2020 from $10.2 billion last year.
By 2020, the Philippine e-commerce market is projected to be worth $2.97 billion, slightly higher than the forecast for Singapore at $2.96 billion. In terms of average revenue per user, though, the Philippines at $45 pales in comparison to Singapore’s $1,390. Additionally, its market size is smaller than the $4.59 billion projected for Indonesia, $3.91 billion for Malaysia, $3.7 billion for Vietnam and $3.42 billion for Thailand.
The proliferation of smartphones and tablets drives e-commerce growth in APAC, along with an expanding middle-class population getting accustomed to an “always-on shopping experience”, the study noted. Therefore, speed is the name of the game.
“With factors such as growing internet penetration, faster internet services, home/commercial wifi networks, availability of hotspots and mobile 4G, customers will value convenience and the ability to make faster purchase over the discounts and deals offered by e-commerce players,” Ajay Sunder, vice- president for ICT at Frost & Sullivan Asia Pacific, was quoted in a press release.
The paper, titled “e-Commerce Retailers – the Next Billion $ Opportunity – Are We Ready?”, quantified the opportunity loss of delays. When a web page takes three seconds to load, for instance, it deters 40 percent of visitors. A one-second delay could accumulate revenue losses to about $2.5 million annually for an enterprise making daily sales of $100,000, it added.
Oxford Economics, in a separate study on the impact of mobile internet on the economies of Southeast Asia, noted that the mobile internet market in the Philippines has remained relatively immature by regional standards. This is expected to persist.
“We believe that the market has considerable capacity to develop over the next five years. Our baseline forecast is for penetration to nearly treble in the next half-decade to over 75 percent by 2020, although we expect this would still be relatively low by regional standards. As in other lower middle-income economies in the region, the wider availability of sub-smartphone models (priced within the US $50–US $100 range) will be vital to stimulating mass adoption,” according to its study.
Oxford Economics estimated the opportunity gain from mobile internet penetration would translate to a $58.1 billion boost in economic output across Southeast Asia. “And the potential impact is even greater: if countries in the region each improved their penetration rates by a further 10 percentage points – harnessing the potential through favorable investment and regulatory policies – the total economic prize would rise to $73.4 billion in GDP in 2020,” it said in the study.