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Land of the rising stars

Asia Pacific is to overtake Western Europe as the second biggest online market in 2013. Daniel Latev, Head of Retailing, Euromonitor International, takes a look at the online leaders in the region.

INTERNET RETAILING continues to hold the mantle of the fastest growing channel. Interestingly this is not only in percentage terms but also in actual growth generated. Internet retailing is expected to generate more actual sales over the next five years than big store-based channels such as supermarkets and hypermarkets, apparel or electronics specialists.

Even more intriguing is that internet retailing is no longer exclusive to the developed Western markets. Emerging markets – particularly within Asia are enjoying equally strong growth rates and high penetration of online retailing. China is probably the best example where B2C sales are expected to reach almost US$100bn in 2013, and is now indisputably the second largest online market globally after the US.

Combined online sales in Asia Pacific (including Australia and New Zealand) would reach US$194bn in 2013 – surpassing Western Europe and becoming the second largest online market after North America. Clearly the opportunity within Asia is large and growing quickly – so how can retailers take advantage of this?

Many British retailers took an early advantage from Western European markets – establishing foothold in countries where they didn’t have store presence and attracting customers to their platforms. Some retailers are already taking this approach further afield expanding into Asia and North America. ASOS is one of the best examples with a majority of its sales now generated from international customers. And while online sales can be a good way to expand into international markets without incurring the high set up costs of retail outlets, companies need to be keenly aware of the specifics of the markets they enter. One size fi ts all approach might not work well across this region and the strategies used in expanding in western markets might not work well in Asia.

Reviewing the top 10 retailers in the region shows the strong lead of local retailers. Within the top 10 online retailers only four are owned by American companies, yet of these four only Amazon and Apple generate most of their online sales through the same retail storefronts as in Western Europe and America, the rest have grown through acquisitions and heavy customisation to fit with local consumer demands.


Virtual shopping malls are the preferred shopping destination. Five of the top 6 online retailers in Asia are virtual shopping malls led by Tmall. These retailers have established such a strong reputation among consumers and retailers alike they are now the default destination for online shoppers.

Tmall , the leading Asian retailer, is part of Alibaba Group focusing on Business to Consumer sales with the aim of providing a one-stop shopping experience for online consumers. Tmall was born out of the popularity of – Alibaba’s consumer to consumer (C2C) marketplace. Taobao, and C2C commerce still dominate Chinese internet retailing overall, however Tmall has made it possible for small merchants to reach consumers across China. Despite its high market share Tmall has outperformed the market growth. Its continued success is driven by the strong cooperation with small and medium-sized sellers, assisted by enhanced microblogging marketing on social media platforms and shopping search engines.

Alibaba, is further aiming to increase its influence in the Chinese retail market. The company has announced plans for massive investment in infrastructure – fulfilment centres and distribution network. The company aims to invest US$16bn by 2020 in order to reach China’s vast interior where consumers still have very limited access to modern retail channels and brands with the ambition to generate sales of a half trillion US$ by 2016.


The majority of the top 10 in Asia are pure players. Suning and Lotte are the only multichannel retailers. Suning Appliance is the leading Electronics and Appliance specialist in China with more than 1,500 outlets in the country. is betting on its low price strategy for its online channel, including no annual service fee for suppliers of the online channel. Extensive product range, convenient online payment, an extensive distribution network supported by its existing outlets across the country, and good aftersales service enable Suning to record strong growth and compete with Tmall and

Lotte Group is the leading retail group in South Korea operating in both grocery and non-grocery retail. Its three online sites reflect its store based operations with Lotte imall offering marketplace services as well.


It is noteworthy that most of the top internet retailers are all specialising in more than one particular product type. These players provide their shoppers with a wide array of products, ranging from apparel and electronics to toys and media products, to name but a few. These platforms find favour among consumers as they offer the convenience of one-stop shopping on top of good deals. Payment preferences and logistics and distribution are still in their infancy – particularly in markets such as China, India, Malaysia and Thailand.

Payment by cash on delivery is still the preferred method for many consumers as penetration of digital payment tools is still relatively low. Alibaba’s initial success in China was partly due to the Alipay escrow payment system which guaranteed payment for merchants and protection for consumers. Delivery is another area where retailers need to partner with local companies to find a cost effective and reliable service. In many cases online retailers invest in developing their own delivery services to guarantee timeliness and quality of service.

Price is a key factor for most Asian consumers, particularly in China, where shoppers can be extremely price sensitive. Shoppers would spend extra time searching for the best deal both online and in stores to make sure they pay the lowest price. In this regard price promotions have been used as a key tool in capturing market share.

Overall shopping preferences in Asian markets can be very different to those in the West. Using “virtual” shopping malls can be highly beneficial for international brands however to get to consumers, retailers still need to be keenly aware of these specifics to meet local requirements. For store based retailers – online first strategy in complicated markets such as China or India can be a good way to learn about consumers and build initial brand recognition. It is not surprising that Argos and Macy’s are starting with online presence only in China.

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