The digitization of retail market in Asia is growing at a faster rate along with Korea, China and India over US and Europe while India is at the forefront. The digital penetration in India is much deeper when compared to any other countries worldwide which lead to the creation of an ecosystem that is comfortable for consumers and retailers as well. There have been dramatic changes in the retail system and it’s at a great boom in Asia. In terms of the retail growth Asia is in the leading position with an amazing growth rate that is twice the rate of the rest of the world. Many casino companies are also opening their slot machines there.
Online retailing is growing at about 3 times the rate. It has also been estimated that in Asia Pacific the online retail sales will double in the next 5 years and will grow from $1.3 trillion in the year 2018 to $2.5 trillion in the year 2023. CAGR which is nothing but the compound annual growth rate is 14.0% which is accounting for about 28% of the total retail sales. When we look at the online retail sales globally, Asia Pacific still remains to be the largest regions.
China was the first country to reach its online retail sales market to $1 trillion in the year 2018 and since then had continued to be the largest markets around the world with about 82% of the entire Asia Pacific retail online sales. By the end of 2023 it is also expected to reach around $2 trillion. India also continues to be one of the fastest growing countries in the world with about a compound annual growth rate of 25.8% and it is expected to reach around $85 billion by the year 2023. There have been 72% of online mobile retail sales in Asia Pacific and it’s mainly due to the usage of Smartphones particularly in India and China. By 2023 it is also expected to have 16.9% of CAGR and may reach $2 trillion which was $911 billion in the year 2018 and it may account for about 81% of online retail sales in the year 2023.
The online retail sales in 2018 accounted for $232 billion which was mainly through the online fashion that included footwear and apparel. Another online retail sector which is growing at a faster rate is Grocery. China again remains to have the largest marketplace for online grocery which is then followed by other countries like South Korea and Japan. The online grocery sales may grow at 26.5% CAGR and will reach about $260 billion by the year 2023.
A retail ecosystem would consist of various communities of retailers, consumers and the partners that always work on reshaping the retail landscape for a better experience for their consumers. The ecosystems are not just confined to China but even in India there are several companies which are leading it. Ecosystem delivers their consumers with a great combination of various services including online chat, e-commerce, gaming, streaming, payments in apps or single platforms etc.
By becoming the universally adopted payment and shopping platform the consumers will definitely enjoy their online shopping experience. The best part of ecosystem is that it provides retailers an access which is very hard to replicate the capabilities like data analytics, last mile fulfilment or the cloud services with their platform. These ecosystems show a significant influence over the overall retail sector both in brick and mortar retailers and online retailers as well.
The pace and extent of development of the ecosystem will not remain the same or uniform all around the geographic markets. According to the research report, there are actually 10 factors that explain why is it that the ecosystem in certain countries of Asia had developed so rapidly and also includes various other social factors like the age, urban density etc. in a country. The emerging retail ecosystem has been raising new set of choices and interests for retailers on how to go on with the new retail landscape. It’s definitely a great opportunity for the new bees want to play in the market while it has the ability to change the entire set of rules of the game and may be a loss of control as well. It’s important for retailers to make sure they have the capital, capabilities and customer franchise in order to complete in an ecosystem.
For those responsible retailers generally, there are 5 strategic options with which they can now respond to the changes and rise of ecosystem. They should always make sure to play and focus solo over building out competitive omni channel model and differentiate while making sure not to participate in the ecosystem. The retailers can participate in ecosystem and utilize the open ecosystem platform while they can leverage the capabilities of ecosystem partners. One can also build their proprietary ecosystem with the help of alliances, partnerships or JVs with the key external partners too.
The retailers can also become open ecosystem where in they can provide access while they can monetize their own capabilities, assets or the infrastructure as the open ecosystem platform. One can maximize their shareholder value by trying to get acquired by the potential ecosystem players. Based on the feasibility of the retailers they can choose any of the above-mentioned strategies that will help them to deal with the rise of ecosystem.
With the expanding digitization in retail sector in Asian and global markets, based on the requirements of consumers and retailers, the ecosystem continues to evolve. After analyzing the various aspects of each market and what happens there, the global companies can now decide and adopt these platform models so that they can prepare for the future retail. This also ensures to provide better performance of the retailers and there will be less chances of loss that may be incurred by them in the ecosystem. Stay ahead by taking right steps in the rapid changing world.