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Australia offers a market notable for its growing youth population and an overall base of consumers that are willing to adopt a variety of emerging e-commerce techniques – from shopping via social media to paying in instalments with new businesses. E-commerce merchants must make sure they can provide simple, fast, seamless shopping to meet the needs of this sophisticated audience. To help our clients locate, attract and keep their customers, we have tracked and assessed e-commerce developments in 34 mature and emerging markets around the globe.
The Australian economy grew close to potential in 2018, buoyed by strong export growth and an acceleration in household spending, helping support Australian e-commerce. However, these two influences are expected to weaken, with a moderation in real gross domestic product growth expected as a result. The expected softening in household spending owes to a confluence of factors including weak wages growth, high levels of household debt and an already low saving rate. These factors look set to persist and act as a headwind to household spending and the e-commerce sector. Looking further forward, any slowdown in the Chinese economy, Australia’s largest trading partner, would impact domestic growth. Meanwhile, falling housing prices could also impact spending in the short-to-medium term.
Although New Zealand’s e-commerce market is relatively small, strong growth and a high per capita spend are creating exciting opportunities for online merchants, as demand in rural areas catches up with urban centers.
China’s e-commerce market is worth a trillion dollars, and offers ongoing e-commerce growth potential via the large section of its population that is yet to embrace online shopping. That said, those in China who already use e-commerce are highly sophisticated shoppers. Merchants who can provide the online retail experience these Chinese consumers now expect, which includes excellent, world-leading apps and seamless digital wallet payment options, could find e-commerce growth opportunities to make their mark.
Hong Kong is a highly banked, wealthy region that enjoys excellent digital and physical infrastructure, both of which will support future e-commerce growth. However, a historical legacy of bricks-and-mortar commerce ensures that this growth will be less than stellar.
The Hong Kong business to consumer e-commerce market is worth $3.7 billion, representing one of the smaller e-commerce markets, by value, included in our report series. Nevertheless, Hong Kong is notable for its advanced e-commerce infrastructure and good e-commerce growth potential: its online shopping market is projected to expand at a compound annual growth rate of 10.2 percent to 2021.
The potential of Hong Kong’s e-commerce market is reinforced by the fact that the majority of the population is yet to even use e-commerce, but this suggests both a challenge and an opportunity for merchants. Only a quarter of Hong Kong’s citizens currently shop online, and e-commerce accounts for just 11 percent of Hong Kong's total retail spend. In contrast, in mainland China, e-commerce takes a 23.1 percent share of the overall retail market. Hong Kong’s compact metropolis lacks the rural population that typically looks to access the wide-ranging retail choice e-commerce offers. As with fellow city-state Singapore, high population density and a largely urban geography acts as a hurdle to e-commerce growth, as most of the populace enjoys easy access to physical stores.
Rapid growth is on the horizon for India’s e-commerce market. There is considerable room for development – from basic access to the internet to innovation in its online payment methods but both the state and e-commerce players are ramping up investment in the industry’s underlying infrastructure.
Indonesia’s business to consumer e-commerce market is worth $13.6 billion. While accounting for just 0.6 percent of its overall retail market, Indonesia’s online shopping sector has expanded at a prodigious rate, growing by over a third in both 2016 and 2017. And with this growth set to continue, the world’s largest archipelago also has the highest e-commerce growth prediction out of all the countries surveyed in our report series.
Indonesia’s online shopping industry is forecast to expand at an impressive compound annual growth rate of 34.6 percent to 2021, driven by increasing internet penetration, which currently sits at a lowly 32.3 percent, and an ongoing trend of steady gross domestic product growth. The scale of this development is clearly also a result of the industry’s immaturity. At present, annual per capita spend is low, standing at $344 a year.
The e-commerce market in Japan presents an opportunity for international merchants to court an audience with money to spend and an appetite for consumer electronics and fashion. However, those entering Japan’s e-commerce market must master the challenges of a single-language culture and ongoing cash use.
Japan’s business to consumer e-commerce market is worth $150.1 billion having increased at a single-digit rate since 2015. The e-commerce market is expected to follow a similar growth trajectory to 2021, expanding at a compound annual growth rate of 6.2 percent.
Malaysia’s e-commerce market has grown rapidly in recent years, fuelled by rising smartphone penetration and a willingness by shoppers to buy from overseas. Merchants new to the country can take advantage of growing regulatory and physical infrastructure designed to ease e-commerce in this exciting market.
Driven by a relatively high internet penetration rate, the e-commerce market in Malaysia is going from strength to strength and is forecast to grow at a compound annual growth rate of 24 percent a year. Overall, economic growth in the country is broadly positive, but the combination of slowing external demand and easing fixed investment could weigh on domestic sentiment. How sentiment evolves will also be an important determinant of whether the tax refunds, worth 2.2% of gross domestic product, will be saved or spent.
The Philippines is probably one of the most underestimated ecommerce markets in Southeast Asia. As the second most populous country after Indonesia, its ecommerce market can expect an annual growth rate of 101.4% until 2018. This is driven mainly by high mobile penetration. Filipinos are among the most prolific mobile users in the world, and smartphone penetration is now 30% of the population.
A local entity is not required and cards can be processed cross-border without international fees. We recommend that international merchants keep cards cross-border and enable local payment methods as well. Authorization rates tend to be lower in the Philippines than other markets, mainly due to the young generation being less willing to pay for digital content. We see lower conversion rates especially for content like games and music downloads.
Singapore’s ultra-fast internet and young, tech-savvy population make this a market to watch. However, being a city-state, e-commerce has strong competition from the convenience of physical stores. To help our clients locate, attract and keep their customers, we have tracked and assessed e-commerce developments in 34 mature and emerging markets around the globe.
The fortunes of Singapore’s e-commerce market in 2019 hinge in large part on external forces. The country’s wider economic growth trajectory could be threatened by global capital expenditure and supply-chain disruptions from U.S.-China trade tensions. Gross domestic product growth is expected to slow to 2.4 percent year-on-year in 2019, largely on the impact of a softer export outlook. While domestic demand so far has been resilient in the face of these global headwinds, higher domestic interest rates alongside a slowing property market could take the shine off household balance sheets, implying some deceleration in private consumption in 2020 and leading shoppers to temper their spending habits.
South Korea is the third-largest retail ecommerce market in Asia Pacific after China and Japan. It has the highest credit card penetration in the world, and the average South Korean shopper has five credit cards, compared to two in the US. 80% of the population owns a smartphone and 44% uses it for shopping.
Most local cards are co-branded with Visa and Mastercard. Until April 2016, they required a market-specific authentication process, which only worked in Internet Explorer. While this is no longer the case, it can take longer than expected to migrate off ActiveX authentication services.
At 0.8 percent of total retail sales, e-commerce still takes only a tiny proportion of overall retail spend in Thailand. As the nation’s digital infrastructure continues to improve, this means there is a huge amount of untapped potential in this nation of mobile-first internet users.
The expected 3.3 percent year-on-year gross domestic product growth in Thailand in 2019, projects a step up in fiscal transfers, subsidies and tax rebates that will offset an expected slowing in export growth. To this end, incoming data suggest government spending ratcheted up sharply towards the end of 2018. The rise in fiscal stimulus should continue to bolster household spending, supporting domestic demand through 2019. E-commerce spending per capita is high in Thailand at $1,746.20 per person per year, and increases in private consumption could boost growth further.