CONNECTIONS: Comment - Unresolved issues crimp Asia's online shopping growth

In January, 58 per cent of Korean households had an internet connection via a home PC, the highest percentage globally. This was followed by Singapore and Sweden, at 57 per cent, and Hong Kong's 56 per cent. The US now lags these four countries with respect to home internet connections, with a penetration of 54 per cent.

The above figures contrast strongly with those that relate to online purchase. In Hong Kong, for example, only four per cent of internet users 16+ had made an online purchase within the past six months, and 12 per cent in Korea. This compares with the US, with over 85 per cent of adults having made an online purchase at some time or another.

Despite a growth in shopping site browsing activity in Hong Kong, the percentage of people who actually purchased online remained constant at four per cent of internet users. Singapore, South Korea and Taiwan performed better. While some online retailers around the region may be patting themselves on the back as a result of growth in online purchasing, it should be remembered that the majority of this growth has derived from the increase in the number of people coming online.

The implication here should be clear. While it is positive that both the increase in the rate of browsing has exceeded growth in actual online connections and that more people are using shopping sites for comparison purposes, both largely have been driven by the increase in online connections.

As the rate of new internet users begins to slow, the challenge for ecommerce sites will be to convert greater numbers of visitors to their sites into purchasers.

In both, Hong Kong and Singapore, part of the problem lies with a vibrant shopping culture where few of the population are more than a couple of minutes from a variety of brick and mortar retail outlets. However, the key failure on the part of ecommerce sites appears to be their lack of initiative in addressing some of the basic issues that are holding back the development of ecommerce in Asia, namely: consumer concerns regarding online security, the general lack of user-friendliness of sites, the advantages of shopping online and the nature of the product offering. In addition, consumers remain concerned about unclear return policies and few firms seem willing to spend up on branding and advertising. Further, in Hong Kong and Taiwan in particular, there seems to have been no clear government strategy to encourage the growth of ecommerce.

Despite these setbacks, there are some positive signs. But unless those in the industry are prepared to address the core shortcomings we are bound to remain treading water for some time to come.