3.5 B2C: Asia

Mobile phones are immensely popular in Russia (numbering 43% more than the population) but most are still second generation, limiting immediate ecommerce prospects. {1} A detailed account of ecommerce in Russia is provided by East-West Digital News. {6} The highlights are that: Russia has overtaken Germany, Europe's largest Internet market. Online retail accounted for US$ 10 bn in 2011, up 25% annually but only 1.5% of retail overall. Top categories by turnover were electrical appliances, computers, clothing, childrens' goods and groceries. Expected market size in 2020 was US$ 40 to 60 bn, the former being 5% of the retail market. Growth would be driven by new Internet and ecommerce users. Social networking was important, with sales figures currently low but growing fast. ePayment is in its infancy, and there serious skills shortages in marketing and IT. {31}

An academic study {2} found Malaysian SMEs poorly prepared for ecommerce, though research by Frost and Sullivan {3} showed that some 60% of B2B transactions were already conducted over the Internet. Singapore merchants were better informed but, in half of those surveyed, {4} ecommerce accounted for less than 10% of revenues.

In contrast, the Chinese ecommerce industry advanced by leaps and bounds in the first half of 2010. {5} Domestic ecommerce companies completed 23 financing transactions, amounting to US$331 million. Many companies are considering self-built ecommerce logistics systems, some of them wholly integrated, including B2C business platforms with B2B ones. The mobile ecommerce has become the hot new market, and ecommerce legislation has gradually improved. The key findings of a recent Forbes article were that: {6}

1. The number of Internet users in the world's most populous country jumped 28.9% in 2009 to 384 million, a figure exceeding the US population.

2. China's online shopping sales rose to $36.6 billion last year, helped by retailers persuading consumers to feel more comfortable shopping online.

3. Alipay has grown to become China's biggest online payment company by processing more than 1 billion yuan ($146 million) in transactions every day. Alipay recently announced that it expects to surpass PayPal's transaction volume within two years.

4. Much of China's ecommerce growth is being driven by younger buyers. China Market Research Group said that users in China between the ages of 13 and 28 spend 20 hours a week online on average, compared with 12 hours a week in the US.

A similar picture is painted by a ReadWrite Web article. {7} In 2009, China's ecommerce market totaled 263 billion RMB (approximately $38.5 billion) with growth equivalent to about 105% increase year-on-year. C2C is currently the largest segment of China's ecommerce market, but B2B is growing in importance due to two trends. Traditional retailers are developing ecommerce platforms as additional channels to get consumers to buy their products. Secondly, small, one-person operations are now expanding to become formal B2C enterprises.

Equally bullish was a Forrester Research estimate that Chinese ecommerce sales were set to grow 20.41% annually to reach $356.1 billion in 2016. {26} Projections for the Asia-Pacific region ecommerce sales were (2012 / 2016 in US$ bn): China $169.4 / $356.1, Japan $63.9 / $97.6, Australia: $23.2 / $35.4, and India $1. 6 / $8.8. Currently only 40% of Chinese shop on the web today, compared to 69% in Japan and 58% in Australia.

2012 predictions for the Chinese economy included greater use of mobiles and tablets, a growth in gaming and subscription sites, ecoupons and new Chinese search engines. The last are currently worth some US$ 1.65 billion, and show a year-on-year growth rate of 57.7%. Internet retailing is set to increase in value by 42%, rising to RMB 458 billion by 2015. M-commerce was reported to be worth RMB 117 billion in 2011. {25}

Statista also gave glowing prospects for China: {27} an annual growth rate of 34.5% to 2015, reaching 2,703 bn yuan from 363 mn shoppers in 2015, a B2B market share of 48.9%, and 2006-15 growth in epayment use of 59.3%. Surveys in late 2012 {33-36} reinforced this picture. Though many problems remain unsolved, including tax, licenses and fake products, 2013 would see a marked expansion and consolidation of the ecommerce market. China Daily reported that China's online business-to-customer retail sector could hit 785 billion yuan ($126 billion) in 2013, nearly double that of 2012. By the end of 2012 total ecommerce in China, including C2C and B2C e-sales, reached ?162.8bn, up 65% to 2011. The share of B2C e-commerce excluding services, was 29,8% or ?48.5br, up 112% compared to 2011. With respect to total B2C e-sales, China ranked fourth after the USA, the UK and Japan, but is expected to take second place after the USA by the end of 2013. The share of B2C e-commerce in China (1.9% compared to 1% in 2011) is still relatively low compared to the UK and the USA. {42}

The Indian scene looks less rosy. Turnover in the Indian retail industry stands at $390 billion, but the online percentage is only 0.47%, though that is poised to grow at 30% for the next five years. Currently, more than 75-80% of this market is constituted by travel portals like Makemytrip.com and Yatra, with matrimonial and job portals making up another 12%. {8} Internet advertising was increasing fast, but the weak PC penetration, low broadband usage, reluctant credit card users and high cost of acquisition remained major areas of difficulty. {9} Similar problems were noted by Plugged-In: product delivery delays, payment gateways costs, and the vendor reluctance to adopt systems integration, with limited broadband penetration and computer access in tier-2 and tier-3 cities. {10} Indeed, the Indian Venture Capital Association thought the inflection point of ecommerce in India was a good ten years away. Broadband access was not extensively implemented, and though travel represented 60% of ecommerce revenues, almost 98% of Indians couldn't get their travel tickets delivered online at the first attempt. {11} Optimism and faith in ecommerce had grown somewhat a year later, both in India {12} and more particularly in China. {13} {14} {15} Both are led by increased mobile phone penetration {13} and improved B2B services. {18} Indeed the Chinese merchant service Alibaba is extending its service to India, {17} and Chinese companies are increasing their (non-Internet) investment in south America, {19} Africa {20} and the US. {21} Reflecting greater US interest in India, Facebook purchased Parse, a company providing mobile development services, for $85 million in 2013. {38}

Nonetheless, ecommerce in India is still seen as in its inception stage, {22} but group-buying sites, discounted fashion brand retailers and specialized online stores dominated recent startups. {23} Looking further ahead, Outlook India {28} has suggested that ecommerce may reach US$ 260 bn on the subcontinent by 2025. Though less 10 million internet users currently buy online in India, there are some 150 million internet users that are `ready' for e-commerce. Inhibiting factors are a lack of innovation, short-term approaches, absence of regulatory support and weak IT systems. {29} Looking much further ahead, the ecommerce market has been put at $260 bn in 2025. {37}

Nikkei reported that Japan's ecommerce sales had increased 16.9% during the fiscal year 2010, bringing online shopping sales to 1.59 trillion yen ( $20 billion) in total. The surge was apparently led by smartphones (of which there were almost 10 million) and indeed by January 2011 some 57.5% of mobile users had used their mobiles for purchases. {24} Rakuten has acquired Buy.com and the e-book creator Kobo, and may be rewriting the rules of ecommerce in Japan. {39} Yahoo! Japan remains a significant player, {40} and YStats' report on the B2C ecommerce market suggested that B2C ecommerce would grow annually by a low double-digit percentage figure between 2012 and 2016. {41}

Some 12% of Australian companies were using ecommerce in 2011. Only 39% of Australian businesses had a web-site, in fact, and only 32% of them used it to sell products or services. {26} Estimates of the Indonesian ecommerce market vary widely, from US$ 50 mn to $3 bn. {30} The November 2012 Australian Bureau of Statistics ecommerce figures for small business show that though online shopping contributed some 3% of Australia's total retail sales in 2011, the number of SMEs receiving orders online fell. For small businesses, the annual decrease 2009 to 2010 was 3%, and in medium-sized businesses it was 1.8%. {32}

Worldwide B2C ecommerce sales grew annually 21.1% to top $1 trillion in 2012, according to new global estimates by eMarketer. Their estimate for 2103 is 18.3% growth to $1.298 trillion, with Asia-Pacific area figures now surpassing those of north America. {43}

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