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Ecommerce In Asia Exploding

Bangkok, Thu Dec 01 2016
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Asia is the largest e-commerce region in the world and home to many giants such as Alibaba,, Flipkart and Rakuten. Despite the fast moving nature of the food and grocery industry, it has been slower than some other retail sectors such as fashion or books when it comes to moving online. However, this is now changing across Asia, including within Thailand.

Three of the top 10 online grocery markets in the world are in Asia, with China at the top, Japan third, and South Korea sixth, demonstrating the strength of the Asian market. In Thailand, we can expect the grocery e-commerce market to boom in the near future, as we see an increase in mobile penetration and the expected arrival of the “Any ID” e-payment system in 2017. Four major factors are driving the growth of online grocery sales in Asia, namely, demographic shifts, including urbanisation, the rise of the middle class in China, India and Indonesia and the growing influence of millennial consumers; mobile and internet penetration; improving logistics infrastructure; and simply more players joining the online grocery arena.

As the region rapidly approaches a tipping point, we've detected four models that will help online grocery retailing emerge;

1. Bricks & clicks retailers - Conventional retailers are rapidly building their online presence. Eventually, every retailer will have a digital shopfront. These retailers have a huge store network that can be used for order pickup or delivery, giving them an advantage in “the last mile”. They also have strong sourcing and category management capability, and have accumulated a large shopper base and data. For example, Central Food Retail offers delivery throughout Thailand, and Tesco Lotus plans to double its online shopping business every year for the next 3-5 years. It has also introduced a new delivery service at lockers located in 48 condominiums in Bangkok. However, these retailers are new to the online world and often lack insights into online shoppers and experience in digital marketing, and need to improve on fulfilling orders. This presents an opportunity for manufacturers to collaborate with them. Brands can also create digital content to support retailers' online activities. A good example is a special Unilever Indonesia website that provided Ramadan inspiration to complement retailers' online promotions.

2. Pure play online grocers - These retailers often have a tech background and are great at online marketing and targeting. They build authority in certain categories to fulfil unique consumer needs, which drives loyalty and helps avoid price competition with big box retailers. As they don't carry as many items, they are usually faster at picking and delivering. On the other hand, online grocery is the most capital intensive field in e-commerce and that puts pressure on retailers. Some pure play retailers do not have strong existing relationships with suppliers, and their product ranges are sometimes limited. Manufacturers can design exclusive products for retailers to help them build their category authority. For example, APB's Archipelago Brewery supplies a craft beer exclusively to RedMart in Singapore, which was featured in RedMart's mailing to its shoppers.

3. Marketplaces - Online marketplaces are more important in Asia than anywhere else, which means both manufacturers and retailers are keen to form partnerships with them. Marketplaces such as Alibaba and attract lots of traffic, have huge shopper bases, established payment and delivery systems and strong capability for analysing big data. Despite the high fees for suppliers to operate stores on these marketplaces, they are a must have channel in Asia. Fast moving consumer goods manufacturers can help enhance the offerings in marketplaces and increase basket size on a more frequent basis. A good example of collaboration with manufacturers in marketplaces is Oreo Colorfilled, which was exclusively developed for customers of Tmall. Shoppers can pick a template, fill in colours, adopt an Oreo theme and add a personalised message on the cookie packaging. Customised products help brands stand out in these massive marketplaces.

4. Third-party service providers - Delivery and concierge shopping services are flourishing to help time pressed shoppers. Low labour costs and high population density make this model economically feasible. Some retailers are working with service providers instead of building their own delivery systems from scratch. The concierge shopping service provider HappyFresh helps people shop from various supermarkets such as Gourmet Market, Big C and Tesco Lotus, and delivers groceries to shoppers' doorsteps.

For food and grocery manufacturers who want to tap into the Asian e-commerce opportunity and haven't done so, the time is now. Choosing the right partners and supplying them with the right products is one step closer to winning.

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