Online merchants can scale far easier than bricks-and-mortar retailers. And as they expand into new regions, like Asia Pacific (APAC), it can be tempting to repeat what’s worked for them elsewhere.
Tempting, but wrong.
The region is awash with opportunity but also steeped in complexity. Different markets must be unpicked to understand how to serve their unique features – everything from consumer habits to payments and banking regulations matters. Yet, most merchants don’t have the time or resources to carry out such forensic analysis.
This article explains seven areas where merchants should focus their efforts as they seek to create online shopping experiences and systems that can both scale regionally and resonate locally.
Merchants that have found success in the US or Europe may be surprised at how APAC consumers go about their business. Assumptions can be dangerous. For example, Hong Kong is generally considered a hub of technological innovation; yet our research finds 14% of residents say they never shop online. Meanwhile, in Singapore, sometimes viewed by outsiders as a comparable market to Hong Kong, only 3% of people never shop online.
Merchants plotting a mcommerce route into APAC may be equally frustrated by the disparity of the region. They may find success in Indonesia, where almost 4 in 5 people shop using their mobile. Yet in Japan – a country with 100 million smartphone users – less than 1 in 3 say they use their devices to shop.
Indeed, a look at mcommerce penetration across APAC finds it is higher in countries with relatively low GDP. In contrast, Australia, New Zealand and Singapore sit alongside Japan at the other end of the scale.
A look at where consumers in APAC do their online shopping will also thwart merchants who hoped to treat APAC as one market. In Singapore, mainland China and Indonesia, most online purchases are made via a third-party marketplace on a mobile app. Yet shoppers in Australia and New Zealand are much more likely to reach for their laptop and log in to a retailer’s site. Merchants will need to understand how this picture changes based on their products and the trade-off they are willing to make between access to more consumers and control over the whole shopping experience.
Forward-thinking merchants will also want to note the rising popularity to shop directly within a social media platform. Around 25% of consumers in Indonesia and Thailand buy this way. And any plan to engage consumers in the region should not ignore the rise of the super-app. Though some super-apps are closed shops, others such as WeChat, Alipay, Baidu, Meituan and Tmail allow third parties to integrate their services and products.
Another thought for merchants is not just where to place their products but also what shoppers see when faced with them. Making a purchase is a hugely psychological experience – details matter, including language. And it matters to some more than others. For example, 76% of Japanese consumers say they would not buy from a website that was not entirely in Japanese throughout the shopping and paying experience. The challenge is made harder in countries like Singapore and Malaysia, which both have three official languages.
Letting people pay how they want to is a pretty safe strategy. But in APAC, where there is so much choice, this is easier said than done. In mainland China, Australia and Thailand, digital wallets are now the most popular way to pay. Aside from the might of Alipay and WeChat Pay, popular digital wallet providers include Rakuten, LINE, Samsung Pay and Kakao, Grabpay and GO-PAY. Apple Pay and Google Pay are also coming to the party in a big way. However, as we have seen with other complexities, digital wallet preference is subject to local influences.
That said, merchants shouldn’t go all-in on digital wallets. APAC is the world’s largest market for card transactions, and the major card networks such as Visa, Mastercard, JCB and UnionPay still dominate. This preference for cards is particularly stark in Japan, where 78% of shoppers prefer them vs. just 7% for digital wallets. Consumers in New Zealand and Singapore have similar preferences.
Merchants that are serious about delivering shopping experiences that resonate locally will not ignore currency sensitivity. A shopper should expect to pay in their local currency and can’t be blamed for abandoning their purchase if it's not offered. However, this creates a tricky balancing act. The more currencies offered, the more currency conversion is required.
The answer is not to restrict the currencies made available but to control the cost of settlement. But without a unified banking infrastructure in APAC, moving money across borders – even within APAC – can be costly. And the more currencies used, the more that managing fluctuating currency values becomes a full-time job.
Navigating a single nation’s rules can be complex. Navigating many simultaneously can paralyze a business. Unlike large markets such as the US and Europe, there is little regulatory harmony across APAC. Some countries will require merchants to set up a legal entity there, whereas others will have rules about how much revenue they can send overseas. The level to which merchants must secure shoppers’ data, anti-fraud obligations, and tax implications can also stop a business in its tracks.
Localization is key to businesses expanding into APAC. But, localization is fine in theory but much harder to achieve in practice.
Few businesses have the resources or capacity to put boots on the ground in every market across the region, so they need to work with partners to provide that coverage. That means finding a partner with access to payment methods, insights into consumer behaviors, knowledge of regulations, competitive FX capabilities, and data analysis that can pinpoint opportunities and risks at a granular level — ideally all within a unified platform.
With a suitable payments partner, merchants can scale across the region and unlock new markets at speed yet maintain localized experiences that ensure their competitive advantage.