Companies should turn to Asia to future-proof their business models: Economist report

In a white paper released today, in partnership with Dentsu Aegis Network, the Economist Corporate Network examines how the rise of mobile, social and ecommerce in Asia are aligning to put the region at the forefront of marketing innovation.

"The catalyst for this is the convergence of social, mobile and commerce with platforms like WeChat and Line taking the lead," said Arvind Sethumadhavan, chief innovation officer at Dentsu Aegis Network Asia-Pacific. "This is a significant step change compared to the West where commerce is still an independent activity which sits outside existing social platforms."

In Asian markets that are not as wealthy as their counterparts in Europe or North America, writes the report, that isn’t a factor holding the region back, and it is in fact encouraging innovation. “In many ways, Asia is becoming the place where consumer companies are figuring out how to future-proof their businesses,” writes Jason Wood, the author of the report. “Necessity, after all, is the mother of invention.”

An extract from the white paper reads: “It might be presumed that low levels of financial inclusion in Asia are holding back ecommerce. In Indonesia, for example, only 20 per cent of adults have a bank account (whereas nearly half have a Facebook account). However, innovation is overcoming such hurdles. For example, mobile phone companies are using their billing capabilities to offer payment services—by adding ecommerce purchases to monthly bills in the case of post-paid customers, or using phone credit to pay for goods and services in the case of pre-paid customers.”

By 2019, the region will have almost 4.3bn mobile subscriptions, says the report
 

Equally, the report adds, where customers do not yet have confidence to pay in advance for online purchases, e-retailers have rolled out cash-on-delivery services in markets like India and Indonesia. “Cash on delivery gets over the trust hump. If people are unhappy about shopping online, then cash on delivery takes away their fear and their risk. In a market like Vietnam, about 80 per cent of our sales are paid for with cash-on-delivery,” said Cooper McGuire, CFO and co-founder, Zalora in the report.

Although the explosion of mobile phone adoption in Asia is well documented, the report highlights the fact that many consumers in the region are leapfrogging earlier stages of digital technology and moving straight to mobile. It states that by 2019, the region will have almost 4.3 billion mobile subscriptions, or 117 for every 100 people.

Michelle Guthrie, a managing director in the Asia team at Google, emphasises the relevance of mobile in Asia: “Mobile, mobile, mobile! Internet users in Asia are predominantly connecting via mobile. Most of them aren’t migrating to mobile, that’s where they’re starting. In Japan and Korea, the watershed came in 2012 when more videos were watched on mobile than on desktop devices. That’s now true for the rest of the world too.”

“Asian markets are leading the adoption of mobile internet platforms and consequently we are witnessing a mobile-first approach in people’s behaviour and the solutions being developed,” said Sethumadhavan. “Companies need to view Asia as pilot markets to future proof their business models and a hotbed for innovation prototyping.”

To download the full report, click here: Asia’s Digital Disruption: How technology is driving consumer engagement in the world’s most exciting market