Staff Writer
Apr 25, 2016

5 Asia-Pacific m-commerce lessons from Mintel

In little more than five years, mobile online retail in China has gone from virtually zero to one of the most important m-commerce markets in the world. That “staggering” pace of growth has turned the country into “a hot bed test market” that gives valuable pointers to the rest of the region’s future, a new white paper from Mintel argues.

Matthew Crabbe, director of research, Asia-Pacific, Mintel
Matthew Crabbe, director of research, Asia-Pacific, Mintel

Last year, an estimated 340 million people in China shopped online using their mobile phones—more than the population of the United States. Ecommerce is already well established in the country and Mintel predicts it to account for as much as a quarter of all retail sales by the end of the decade, with at least a fifth of those transactions processed via mobile phone.

Mintel’s white paper, Pocket Power: the disruptive potential of m-commerce, draws on a series of extensive studies the global market intelligence agency has conducted throughout the Asia-Pacific region and in international markets, and paints a dramatic picture of the profound impact the rise of m-commerce is having on the entire retail industry. 

“Sheer size is not the most important thing about m-commerce. More significant is the disruptive potential of m-commerce to completely change the relationship between consumer, retailer and brand,” the report author, Mintel's director of research, Asia-Pacific, Matthew Crabbe, writes.

Download the Mintel white paper, Pocket Power: the disruptive potential of m-commerce, for more information and bespoke consumer research on the Asia-Pacific m-commerce market. 

“M-commerce offers access to shoppers in regions where few stores yet exist, across international borders, at any time 24-hours a day, seven days a week. It allows shoppers to have integrated access to and influence on ‘store’ inventories, and allows retailers to learn who buys what, where, when, how and why. And it brings the prospect of marketing to shoppers’ individual needs, in a way that has not really been possible before.”

In most markets, large-scale m-commerce remains a fairly distant future prospect, but the report highlights that for many Chinese consumers that day is already here. And where China leads, the rest of Asia is sure to follow: “M-commerce has the potential to enter every aspect of Chinese people’s lives, and of people across Asia-Pacific. This is going to have profound repercussions for companies in the region.”

Here are Campaign’s top-five takes from Mintel’s Pocket Power white paper:

1. Everyone everywhere will have a smartphone, not just the trendy and young

“Smartphone penetration rates in urban China are very high,” the paper states, adding that some 40 per cent of the country’s 1.3 billion mobile subscribers are “active smartphone users”, with their numbers predicted to reach 700 million by 2018. Of the 461 million new phones sold in China last year, 94.4 per cent were smartphones. 

However, Mintel says that while smartphone use is driven by demand in the country’s more developed urban centres, the periphery is catching up quickly. “These figures indicate that retailers and service providers have the potential to reach much deeper, and more quickly, into lower tier cities and even rural areas via mobile online shopping, than by opening stores,” Crabbe states. “Online shopping is likely to lead geographical market expansion in the future, rather than follow it.” 


2. Shops still have a role, but it’s changing fast

Mintel cites international groceries retailers Sainsbury’s, Tesco, Walmart and Cosco as examples of m-commerce giving access to Chinese consumers without the need to set up physical stores in the country. Cosco in particular managed to sell over US$3.5 million worth of products in 24 hours on the November 11 ‘Singles’ Day’ shopping festival in 2014. 

“This constitutes a massive, fundamental shift in the established retail industry model in China. All of a sudden, there is the concept of selling groceries to people in China without even having any physical stores there,” Crabbe goes on to say, while noting this could be a two-edged sword. “For international chains such as Walmart, it could also be that the consumers they are selling to in China might also be looking at their online shopping sites in the US, to see what (and whether) they can buy directly from there.”


3. Phones could make wallets obsolete

Mintel points to Alibaba’s Jack Ma unveiling his “latest new toy”, a pay-with-your-face app, last March as evidence of the pace of development and adoption of mobile payments in China. The paper notes that reticence remains both among consumers concerned about security and retailers wary of installation costs. However, citing 67 per cent of survey respondents being convinced of the convenience of using the technology, Mintel sees a sector with ample scope for growth.


“If people, and institutions, already trust mobile phones for making significant monetary transactions, how long will it be before people can not only present their airline boarding pass from their smartphone, but also be able to present their travel ID from it?” 



4. Buckle up, Asia, Alibaba is coming 

China’s tech giants, with Alibaba at their head, are pushing the envelope in developing the spread of both ecommerce and m-commerce, not just inside China but elsewhere in Asia, the paper argues, adding that “only the short-sighted would fail to see the phenomenon of m-commerce spreading rapidly across Asia-Pacific”. 

Mintel goes on to argue that “the spread of m-commerce cannot be forecast based simply on historical growth trends; nor can the spread of integration with the rest of Asia; nor can the depth of its penetration into communities; nor into individual lives”. The market intelligence agency says that current forecasts are “likely to underestimate the real growth potential”.

“M-commerce’s significance is likely to be much larger, and much sooner, than current predictions can foretell,” Crabbe says. “The implications are huge. What appears as a trending idea in China can quickly spread across the region, creating new business opportunities in other countries. This flow of ideas and opportunities feeds from other countries into China, as well.


5. Apps for everything, but quality beats speed

The disruptive power of digital upstarts such as Uber has been well documented internationally, but Mintel details the extent and diversity of China’s domestic O2O landscape. This encompasses mobile apps offering services ranging from travel accommodation to food delivery and home-cooked meals to order, and manicures to financial services—with uptake rates that are having a major impact on traditional industries. Online laundry services, for example, have grown from less than 1 per cent of the market in 2012 to 30.3 per cent last year, worth Rmb 64 billion. 

However, Mintel notes that these consumers are highly demanding: “Chinese consumers, for example, are rapidly coming to expect that the Uber app on their smartphone should be able to work just as well in India, Malaysia or Singapore, as it does back in China. They will expect to be able to sort out payments with their WeChat account, without having to reach for a credit card or cash.

The paper continues: “Assuring service quality, rather than simply being the first to the post, will become an increasingly important competitive strategy for service market companies in coming years, as competition increases and consumers become more discerning.”

Download the full Mintel whitepaper here.


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