Ecommerce has come a long way and online purchase intention rates have surged. Yet there’s still ample room for high-growth categories to grow digitally. Despite the lack of developed infrastructure in many Asian countries, start-up entrepreneurs and multinational corporations alike cannot afford to risk the potential loss in revenue from business derived from ecommerce payments, where the surge of customer-related transactions is most likely to be found.
Globally, online purchase intention doubled between 2011 and 2014 for high-demand categories such as event tickets, electronic books, sporting, toys, videos/DVDs/games, music, pet supplies, flowers, cars/accessories and alcoholic drinks. According to Nielsen’s own global ecommerce report from August of 2014, online purchase intention rates have tripled for computer software and nearly tripled for baby supplies.
Asia’s massive population is driving an impressive increase to the number of consumers that are coming online. Combined with Asian’s increasing confidence using credit cards, growth of digital payments will continue to drive large scale transformation in the payments ecosystem through mobile and e-wallet transactions.
The advancement of solutions that facilitate the use of cards in a virtual environment by creating secure payment channel alternatives are providing further enticement to online shopping. In Singapore, for example, ecommerce grew at an annual growth rate of 38 per cent in 2014 and the forecast from Paypal Digital Future of Travel Report, 2014 pegs the value at US$4.92 billion in 2018. This growth is also driven by a 48 per cent growth in Singapore’s online shopper population. M-commerce on the other hand, has grown at 65 per cent in 2014 and is forecast to be worth US$2.03 billion in 2018, with the number of online shoppers subscribing to mobile payments increasing from 48 per cent in 2011 to 65 per cent in 2014.
The travel industry is one sector which has benefited from the recent surge in demand for online products and services. The travel category enjoys the highest average online spend at US$500 per online shopper and travel is attracting a significant proportion of m-commerce users too, thanks to greater value on mobile offers and the ease of booking given the rise in spontaneous travel.
Despite the surge in online travel bookings and purchases, however, the degree to which travel businesses are leveraging online platforms remains relatively low, with travel agents citing lack of time or resources, insufficient customers using mobiles for access and lack of a good mobile solution to support their businesses as reasons for the lag in up-take.
With both ecommerce and m-commerce set to continue growing in Asia in the years ahead, the role of branding will become increasingly important for banks and payment providers alike. Customers remain wary of making online purchases and there is a general lack of awareness of how payment providers and banks can guarantee security. To continue growing this high-opportunity segment, banks and payment providers need to focus on educating the market and building solid brand awareness and trust.
Sagar Tamang is managing director, financial services, Southeast Asia, North Asia and Pacific at Nielsen