APAC online sales to hit trillion dollar mark
Asia Pacific continues to be the largest region for online retail sales, containing both the largest market (China) and the fastest-growing market (India), according to the latest data from Forrester.
Approximately one-fifth of total retail sales will take place online by 2021 in Asia Pacific, with 78 per cent of that coming from mobile.
Online retail via mobile is expected to grow at CAGR (compound annual growth rate) of 15.6 per cent to reach $1 trillion in 2020, up from $539 billion in 2016.
Speaking to Inside Retail, Forrester data analyst, Satish Meena, said there are multiple opportunities for local retailers, with Chinese online buyers increasingly travelling globally and buying both offline and online products including luxury, clothing, watches, imported food items (including dairy) and beauty products.
“Companies can explore the opportunities in these categories either by starting operations or through Tmall,” he said.
“On the other hand Alibaba opened an office in Melbourne to tap the Australian and New Zealand markets of buyers and businesses. With China trying to move towards a consumption-led economy, some of the retailers and business in the above categories can explore opportunities.”
With $681 billion in online retail sales in 2016, China is the largest online retail market globally, followed by the US. China accounts for nearly 80 per cent of Asia Pacific online retail sales and Forrester expects it to become the first market to reach $1 trillion in online retail sales in 2020.
“Globally retailers are trying to find ways in order to cope with the increasing online retail sales in some of the categories like fashion (including clothing and footwear) and electronics,” said Meena.
“We have seen a large number of clothing and footwear stores focused towards millennials shutting down in the US in the last two years. The penetration of organised retail in China was very low as compared to markets like US and Europe so customers are increasing buying more categories online which provides them a large number of options at a reasonable price.
“We are expecting retailers in the mature online retail markets like US, EU-7, Japan, South Korea and Australia to face difficult times in 2017.
India remains the fastest-growing market in the world, expected to reach $64 billion by 2021, growing at a five-year CAGR of 31.2 per cent. However, government actions, a slowdown in venture capital funding, logistics challenges, and slow growth in the number of online buyers are holding back India’s online retail market.
Apparel is the largest category for online retail, followed by consumer electronics and computer hardware. However, grocery, beauty and cosmetics, and homeware and furniture are the fastest-growing categories, showing the increasing maturity of online shopping in Asia Pacific.
“Grocery and beauty & cosmetics are the fastest growing categories in Asia Pacific due to the maturing of markets like China, South Korea, Australia and Japan. Customers are expected to spend more frequently in buying these categories in next five years,” said Meena.