According to our latest report “Top E-commerce Cities in Asia”, ongoing economic growth, young generation, as well as expanding international investments have laid a solid foundation for the region to become a leader in the online retail market. Total e-commerce revenues across all product categories in the region is USD 832 billion in 2018, expected to surpass USD 1 trillion by 2020. Around 1,7 billion people are currently shopping online in the region and this number is expected to reach around 60% of Asia’s population for e-commerce by 2022. Our latest report, with the title “Top E-commerce Cities in Asia”, recorded that the e-commerce industry has continued to witness exponential growth around the world, with an astonishing USD 2.86 trillion in 2018 and are estimated to grow further to USD 6 trillion in 2022.
Some factors contributing to this occurrence are: 48.1% internet penetration; more than 7,000 startups in the region; 1.7 billion e-commerce users or 49% penetration rate; as well as 1.46 billion smartphone users. Number of e-commerce users in Asia is predicted to exceed those in Europe and North America due to their rapid growth of internet penetration, smartphone adaptation, and increasing payment solutions. Adding to that, the burgeoning middle class, the rise of international investments and advancing economic growth have become the foundation for digital business proliferation in the region.
The report aims to shed light upon the significance of e-commerce landscape in Asia and how it has quickly adapted to global trends. As an “e-commerce city” here is referred to an urban city with interconnected infrastructure which makes up an e-commerce ecosystem that helps it thrive. The report analyzed 40 metropolitan cities based on 16 key indicators and identified top 12 “E-commerce cities” in Asia, namely Bangkok, Beijing, Ho Chi Minh City, Hong Kong, Jakarta, Kuala Lumpur, Mumbai, Osaka, Seoul, Shanghai, Singapore and Tokyo.
While economic size and growth rate are worth to consider, the report highlights that other factors including the city’s readiness to accept digital disruption, network infrastructure, ecosystem and competitiveness, customer behavior and future growth opportunities, also help to determine the attractiveness of city’s e-commerce landscape. The paper zooms into each top e-commerce city, highlighting its prowess that is worth noting and learning from for other global cities. Opportunities and barriers in every city are also elaborated, as to further explain what made it possible to put them in this Top E-commerce Cities list.
The report found that Tokyo, Osaka, Seoul, Beijing, Shanghai and Jakarta have the most attractive retail market size. The six cities also have relatively high internet penetration as a main driver for the market to engage with e-commerce. As for Singapore and Hong Kong, the two cities boast the strongest consumer purchasing power. The markets tend to use larger portion of their monthly expenses for e-commerce transactions. This factor is a direct enabler that makes up an e-commerce city.
On the other hand, Bangkok and Ho Chi Minh City are lagged behind compared to their counterparts when it comes to human resource and knowledge creation based on the report’s score board. Ho Chi Minh City specifically, has a strong technical talent pool and growing base of students educated both at local universities and abroad, but there are still gaps to be filled at the managerial level until today’s young population further gain experience.
For government’s contribution in developing regulation is more aggressive in developed cities such as Beijing, Osaka, Shanghai, and Singapore. They even provide a digital roadmap, tax incentive, clear regulation and funding in a few cases. While the highest level of user satisfaction for e-commerce is possessed by Beijing, Shanghai and Jakarta. Customer-centric platforms, coupled with the customer’s openness to adapt to new features being offered, are the main drivers behind this high user satisfaction, making any consumer’s pain points easier to be addressed.
The study shows that most of the cities are considered to have a high level of funding availability as a result of investor presence in boosting the investment in the respective cities. Furthermore, the competition level among the top 12 cities is quite challenging, especially in Beijing and Shanghai where Asia’s e-commerce such as Alibaba and JD have significant influence across the region.
What can other global cities learn?
This paper recommends a framework deemed pivotal for a sustainable e-commerce ecosystem - a building block for future e-commerce cities : stable and predictable regulatory environments, adequate talent, market readiness and robust infrastructure, funding to scale up the business, and global culture to empower innovative ideas.
The paper also suggests big companies to build synergy through investment or partnership in e-commerce, bringing a mixture of corporate know-how and long-term experience with innovative and fast-paced minds of e-commerce entrepreneurs. The synergy built with e-commerce and tech-companies will directly boost the growth of e-commerce in the city and even the country in the current digital age.
Download the full report on Top E-Commerce in Asia