cross-border e-commerce in asia pacific - consideration...
TRANSCRIPT
-0-
Cross-Border E-Commerce in Asia Pacific
- Consideration from Japan
July 2019
Corporate Directions, Inc.
Kenji Sekijima ([email protected])
-1-
Table of Contents
◼What is “Cross-Border E-Commerce”?
➢ Definition
➢ Typical transaction types
➢ Unique cross-border transaction practices in Southeast Asia
⚫ Case) Grabr
◼Market Circumstances
➢ Market volume of cross-border e-commerce
⚫ Worldwide
⚫ From China, largest market of cross-border e-commerce, to Japan
➢ Reasons behind growth of Japanese products at cross-border e-commerce sites
◼Marketing Activities
➢Product & Price
➢Promotion
➢Place
◼ At the conclusion
-2-
At the beginning…
This contributed presentation details the current business trends of cross-border e-commerce in Asia Pacific region.
The popularity of Japanese products in Asian Pacific region has been increasing with the recent strong growth of
tourists visiting Japan. In addition that tourists purchase the products in Japan, the number of tourists purchasing
Japanese products after returning home has been growing. Furthermore, based on word-of-mouth communications from
friends and acquaintances who have visited Japan, the number of customers purchasing Japanese products before visiting
Japan has been also increasing.
Needless to say, merchandise sales at cross-border e-commerce sites is an excellent sales means that enable
Japanese companies to expand their trading area while minimizing initial investment required for overseas expansion. On
the other hand, the reality is not all Japanese products are sold well at cross-border e-commerce sites. Japanese
companies need to recognize their lack of resources and capabilities, and the shortage area might be required to closely
cooperate with partners which deeply figure out the customer characteristics in Southeast Asian region.
Readership in this contributed presentation assumes…
◼ segments to expand sales of Japanese promising products in Asia Pacific region
➢ person in charge of sales operations at overseas subsidiaries of Japanese company
➢ person in charge of product procurement at retailer/ e-retailer/ distributor, etc.
◼ segments to support the overseas expansion for Japanese companies in Asia Pacific region
➢ person working at marketing agency
➢ person working at research companies
➢ person working at logistics companies operating in Asia Pacific region, etc.
-3-
◼ Cross-border e-commerce is generally defined as follows in Japan.
Ministry of Economy, Trade and Industry(METI)
➢Cross-border shopping is an electronic commerce between a consumer and a business with a nationality other than
the country where the consumer resides
The European Commission
➢ According to “Consumer survey on cross-border transactions” published by European Commission, cross-border
shopping is any purchase made by consumers from retailers or providers located in a country other than the
country in which a particular consumer is resident. A purchase can be made either in person or via distance
shopping.
What is “Cross-Border E-Commerce”?
Definition
-4-
What is “Cross-Border E-Commerce”?
Typical transaction types
◼ Cross-border e-commerce can be broadly divided into 3 types, but basically, purchasing activities through e-
commerce platformer is considered the mainstream.
Transaction Type
Direct Purchase
Domestic
EC Platform
Overseas
EC Platform
Overview
• Direct purchase from overseas
operators
• EC platformer is operated within
the borders, but merchandisers
registered in EC site are
overseas operators
• Both EC platformer and
merchandisers registered in EC
site are both overseas operators
Purchase Flow
Merchandiser
Order
Delivery
Merchandiser
Order
EC Platformer
MerchandiserEC Platformer
Order
Delivery
Delivery
Border
Customer
Customer
Customer
-5-
Reference 1) Unique cross-border transaction practice in Southeast Asia
◼ Personal sellers account for larger part of cross-border commerce, so consumers can ask friends or someone to
purchase products which are much cheaper and faster than current cross-border e-commerce.
Merchandiser
Merchandiser
Merchandiser
1. Request 2. Visit Japan
3. Purchase products4. Delivery
Southeast
Asia
Japan
Personal Sellers
5. Payment
-6-
Reference 2) Unique cross-border transaction practice in Southeast Asia: Grabr
◼ “Grabr” has started to adopt the unique practices of Southeast Asia’s cross-border transaction as a new business.
Source: Grabr website
-7-
Market Circumstances
-8-
Market Circumstances
Market volume from FY2014-FY2020
◼ Cross-border e-commerce market in Asia Pacific region has a higher growth potential and would be expected to
jump into the largest market from FY15 upward.
➢China is said to be the leading force in Asia Pacific cross-border e-commerce market.
Source: Accenture「Global Cross Border E-Commerce Market 2020(2015/06)」
71 99 144218
299381
476
7392
112
131
156
184
217
6782
98
115
133
153
177
0
300
600
900
1,200
(USD billion)
(FY)1816
677
14
235
15 17 19 20
North America
Western Europe
Asia Pacific
Others
308
531
401
827
994
CAGR (14-20)
37.1%
Actual Forecast
-9-
Market Circumstances
Market volume from China, the largest cross-border e-commerce market, to Japan
◼ As Japan accounts for larger presence in China, the largest cross-border e-commerce market, purchase amounts
from Japan have continued to grow in response to the whole market growth in China.
12.0
15.1
18.5
22.3
26.3
0
10
20
30
40
50
(FY)20
(US$ bn)
17 1918 21
CAGR (17-21)
+22%
Actual
* IUSD: 108.5JPY(as of 2019/06/17)
Cross-border EC transaction volume from China to Japan Top countries: where to purchase in China
Forecast
13%
13%
9%
4%
4%
3%
3%
2%
0 5 10 15 20 (%)
Japan
Thailand
UK
South Korea
France
U.S.A
Australia
Singapore
Source: Ministry of Economy, Trade and Industry 「Market Research on E-commerce (2017/04)」、PayPal and Ipsos「PayPal Cross-Border Consumer Research 2016」
-10-
Market Circumstances
Reasons behind growth of Japanese products at cross-border e-commerce sites
◼ Cross-border EC market has been rapidly expanding in Japan since there are benefits for both consumers and
merchandisers’ side.
Consumers’ perspective Merchandisers’ perspective
Higher internet
penetration
• With the spread of smartphones (Internet),
many people in Asian region have access to
information around the world. They can
easily access to cross-border EC sites, and
buy high-quality and genuine products while
comparing them with products sold in their
county.
Lower entry
barrier
• The overseas expansion through cross-
border EC would not have to establish a
physical sales company or develop store
network in Asia.
• In addition, the merchandisers can sell the
almost same products through cross-
border EC sites.
Repeat
purchase of
tourists visiting
Japan
• There are many cases in which foreigners
visiting Japan purchase home appliances,
hygiene products, food products, clothes,
etc. in Japan and love to use them after
returning home and purchase repeatedly
using cross border EC site.
• In addition, word-of-mouth from foreigners
visiting Japan has great.
Expansion of
trade area
• Future consumption in Japan has been
expected to decline for reasons of
population decline, etc. Cross-border EC
makes it easy for whole ranges of the
Japanese companies to expand the trade
area.
-11-
Reference (1): Spread of smartphones in Asian region
◼ The higher penetration rate of smartphones in major Asian cities has accelerated the environment to purchase
products through cross-border EC sites.
Source: Hakuhodo, Inc.「Market Research in 2016 (N=10,700)」
81.0%
41.6%
64.8%
53.5%
85.4%
49.1%
71.2%
27.1%22.8% 22.0% 23.3%
99.5% 99.4% 99.0% 98.9% 98.8% 97.9% 97.8%95.1%
88.9%
74.9%71.5%
0
20
40
60
80
100
JakartaSingaporeGuangzhou
(%)
ShanghaiHong Kong Taipei Beijing Seoul
26.6%
77.9%
Kuala
Lumpur
Metropolitan
Manila
Bangkok Ho Chi
Minh City
2012
2016
-12-
Reference (2): Repeat purchase of foreigners visiting Japan
◼ The increasing number of tourists visiting Japan enjoy a shopping spree and then clearly has a positive impacts
on the purchase phase of “after visits” and “before visits”.
20
5
10
35
0
15
30
25
Taiwan
(Million Visitors)
10
24.2
11 12 13 14 15
Others
16 (FY)17
China
6.2
South Korea
Thailand
16.3
18
26.2
6.34.6
Hong Kong
7.9
10.5
20.0
CAGR(10-18)
+19%
Good cycle of purchasing Japanese products Increase of tourists in Asian region visiting Japan
Source: Japan National Tourism Organization「Statistical information」
Visiting Japan
Before Visits After Visits
Inflow promising consumers
Memorable
purchasing
experience
In Japan
Word-of-mouth communication
Travels to
Japan
-13-
Reference (3): Repeat purchase of foreigners visiting Japan
◼ The past purchase experience in Japan, or word-of-mouth communication from relatives and acquaintances who
have visited Japan have a positive influence on the purchase at the cross-border EC site.
Source: Ministry of Land, Infrastructure, Transport and Tourism 「White Paper on Tourism (2017)」
30.0%
35.1%
34.2%
38.9%
39.2%
13.8%
21.3%
14.8%
12.7%
20.1%
19.2%
20.2%
21.8%
23.9%
26.3%
37.0%
23.4%
29.2%
24.5%
14.4%
0% 25% 50% 75% 100%
United States
South Korea
Taiwan
Hong Kong
China
Past satisfied purchase experiences in Japan
Recommendation from acquaintances who visited Japan
Recommendation from information media about sightseeing in Japan
Other reasons
-14-
Marketing Activities
-15-
Marketing Activities
Conditions to consider in expanding cross-border e-commerce business in Asia Pacific region
◼ Japanese merchandisers would be required to design strategic marketing process to capture the strong cross-
border purchasing demand of consumers in Asia Pacific region.
Product & Price
Promotion
Place
Marketing Process Overview
• Product categories already sold well to tourists visiting Japan and with higher level of satisfaction
would be 1st candidate to expand through cross-border e-commerce sites.
✓ Of course, there are differences in suitable products by countries, so sellers would be
required to consider product categories tailored to characteristics of the countries
• In addition, sellers need to care about price elasticity because cross-border e-commerce specific
expenses such as overseas transportation costs and customs* would weaken the price
competitiveness compared with local similar products.
• Sellers with lower awareness would be required to widen the upstream part of the marketing funnel
compared to products that are already sold well for tourists in Japan
✓ There is a huge difference in the promotion method between products that are already
popular among tourists visiting Japan and products that are not.
• Cross-border e-commerce is an excellent channel for capturing customers “before visit” and “after
visit”. On the other hand ideally, in order to maximize the business, sellers would be required to
develop strong sales channel combined with inbound market due to creating seamless flow
between inbound and outbound.
*Customs duties vary depending on the country and products, so it would be required for the companies which consider overseas expansion to investigate before actual product sales.
-16-
Marketing Activities
Product & Price: Product category
◼ Product categories with higher purchase rates and higher satisfaction levels should be considered first when
expanding through cross-border e-commerce sites.
➢Among products meet the above conditions, products already expanded and sold well at local stores would
not be suitable for cross-border e-commerce.
Source: Japan Tourism Agency 「Consumers Trend of Foreigners Visiting Japan (2017)」
0
5
10
15
20
0 20 40 60 80
Electric appliances
Japanese-style clothing/Folkcraft articlesConfectionery
Most satisfied items(%)
Purchase rate in Japan(%)
Other foods/Beverage/Alcohol/Cigarette
Cosmetics/Perfume
Camera/Video camera/Exclusive watch
Medical goods/Toiletry products/Healthy goods
Clothes/Shoes/Bags
Manga/Animated character’s related items
Books/CD/DVD/Postcards
Promising Segments
-17-
Marketing Activities
Product & Price: Price Elasticity
◼ As cross-border EC specific expenses such as overseas transportation costs and customs weaken the price
competitiveness, sellers would be required to care about the price elasticity before actually listing the products.
Source: Mizuho Information&Research Institute, Inc.「Survey on repurchase intent of Japanese products for foreigners visiting Japan (August, 2016)」
4.63
4.43
4.39
4.04
4.01
3.88
0 1 2 3 4 5 6
Unknown order method
No SKUs
Higher shipping cost
(Reasons)
Quality concern (genuine or not?)
(Score)
Higher price
Longer waiting time for delivery
【Purchasing obstructive factors at cross-border EC sites; N=600】
* On a scale of one (=Not at all true) to six (=very true)
-18-
Marketing Activities
Promotion
◼ Companies which sell products in Japan but not popular for tourists need to plan and implement basic marketing
activities steadily in overseas market to newly create “good cycle” of purchasing activities.
Popular products among tourists visiting Japan Lower-awareness products among tourists visiting Japan
AwarenessS
Inflow promising consumers
Awareness
Consideration
Prospect
AwarenessS
Promote Repeat
Purchase
Nurture
Loyal
Purchase
Nurture
Loyal
Promote Repeat
Awareness
Consideration
Prospect
• Mass Advertisement
• SNS Advertisement
• Product Sampling
• Listing Advertisement
• Pure Advertisement
• Dynamic Advertisement
✓ Products with lower awareness
among tourists visiting Japan
would be required to conduct
additional activities to expand
upstream of marketing funnel.
Marketing Activities (e.g.)
-19-
Marketing Activities
Place
◼ Not only Japanese but also Asian players would be required to develop the strong channel structure in
cooperation to entice consumers in whole phases since they could complement each other’s area of expertise.
“Good cycle” of purchasing Japanese products
Visiting Japan
Before Visits After Visits
Memorable
purchasing
experience
In Japan
Word-of-mouth communication
Traveling to
Japan
• Japanese players proactively capture inbound market
at physical stores in Japan.
• Asian players proactively capture outbound market
through cross-border EC.
(+) Ideally, collaboration between Japanese and Asian
players would be required to achieve seamless flow in the
phase of “before visits”, “visiting Japan” and “after visits”.
-20-
At the conclusion…
◼ Many Japanese merchandisers are looking forward to strengthening cross-border e-commerce business in Southeast
Asia because further strong market growth would be expected.
➢Southeast Asian market is considered promising as “China +1 Market” among overseas business managers of
Japanese companies.
◼ The key factor for success in cross-border e-commerce business is an appropriate choice of reliable partners. Due to the
nature of cross-border e-commerce, many Japanese companies which consider overseas expansion through cross-
border e-commerce will be SMEs (Most of large-sized Japanese companies have already operated business in overseas
markets with their own marketing units). They tend to have a shortage of key resource and capabilities in overseas
market, so have difficulty running smoothly without a reliable partners that complement scarce areas of Japanese
merchandisers.
➢On the other hand, there might be more cases where large-sized Japanese companies utilize cross-border e-
commerce sites as tests prior to the actual product development in Asia Pacific region.
◼ Ideally in the near future, both Japanese and Asian players should aim for achieving the seamless purchasing experience
for customers due to developing common customer base to share necessary information in the inbound/ outbound
markets in Japan and Asia Pacific region.
-21-
Corporate Directions, Inc.
23rd Floor, Tennoz First Tower
2-2-4 Higashi Shinagawa,
Shinagawa-ku, Tokyo 140-0002 JAPAN
Tel : +81-3-5783-4640
URL : http://www.cdi-japan.co.jpAll rights reserved. Copy and reproduction forbidden.