Political change, trade wars, monetary policy adjustments, and mounting evidence of an economic slowdown on the horizon – the news headlines are hardly designed to foster exuberance in the business community. Yet, there are sectors which should give cause for hope. In particular, the e-commerce sector is expected to maintain healthy and resilient growth. What’s more, the opportunities are there for business of all sizes.
Here are the three e-commerce bright spots businesses could focus on to help stay up-to-date with the dynamic retail environment and changing consumer preferences.
Access emerging consumer markets
E-commerce is increasingly multilateral. As consumer purchasing power expands and digital infrastructure becomes more sophisticated globally, businesses need to identify and access emerging markets with the right potential. Accessing these evolving consumer markets helps businesses diversify their revenue streams, which helps build greater resilience and stability when growth slows in other markets.
Key developments expected this year include the rise of regional trade clusters, which businesses can capitalize on to navigate the challenges within the current climate of uncertainty. Within Asia Pacific, negotiations on the Regional Comprehensive Economic Partnership (RCEP), the world’s largest trade pact involving 16 countries, are expected to conclude this year. The success of the partnership will fuel international trade with the member states of the Association of Southeast Asian Nations (ASEAN) and People’s Republic of China, South Korea, Japan, India as well as Australia and New Zealand.
Looking at individual markets, the scale of this opportunity becomes clear. According to 2018 research by PayPal, e-commerce in India is expected to grow by 42 per cent year-on-year, with m-commerce expected to increase by 57 per cent. In a country where only 34 per cent of consumers shop cross-border, businesses anywhere in the world could target the Indian consumer and capitalize on the growth potential. In Japan, where only 6 per cent of consumers purchase from non-local online retailers, there are tremendous opportunities for the cross-border e-commerce sector to expand. This optimism is supported by the projected 23 per cent year-on-year growth of e-commerce and 62 per cent year-on-year growth of m-commerce in the Japan market.
Be known for something other than low product prices
Changes to taxation and trade policies related to online goods could potentially affect price-sensitive shoppers, and impact online sales. However, the survey has shown that in Asia Pacific, price is not the only driver for online purchases. Almost half of consumers shop internationally as it allows them to purchase higher quality goods (49 per cent) and gain access to items not found in their own country (48 per cent).
Consumer buying behavior also informs their online attitudes. For unique or niche products, some consumers are willing to pay a premium. But for mass-market products that have been commoditized, they will search for the cheapest option available to them from anywhere in the online world. Businesses with the resources and capabilities to do so should investigate the potential for producing their own branded products in order to offer consumers greater value-add beyond just price. Online retail need not be a race to the cheapest item.
Enhance the overall consumer experience
Seamless retail and service experience holds the key to succeeding in today’s shopping environment. As a greater proportion of retail sales comes from online, businesses need to understand the changing consumer landscape and constantly improve the shoppers’ experience to cushion against price increases. With e-commerce as an endless aisle, the need to provide an excellent overall experience is more important than ever to retain customers.
The research identified the main barriers for cross-border e-commerce as shipping costs (29 per cent), a difficult returns process (24 per cent), concerns about not receiving an item (23 per cent) and a perceived lack of help (22 per cent). Businesses need to think beyond their narrow dimensions of their own product and ensure that they integrate seamless logistics solutions for the delivery and return of goods as well as uphold high standards of customer service to capture market share.
Ensuring that payments can be made securely and providing the option to pay in the consumer’s local currency are some of the top drivers encouraging cross-border purchasing.
With an inflow of investments and the rise of e-commerce players of all sizes, cross-border e-commerce opportunities are considerable. Despite the increasing political and commercial uncertainties expected this year, the fundamentals underpinning e-commerce remain strong. With the right strategies, businesses have much to gain from e-commerce’s potential to weather the storms and emerge stronger than ever.