E-Commerce in Asia: Landscape, Challenges and Opportunities

The expert panel, moderated by Mr Matt Kovac, Executive Director, Food Industry Asia (FIA), speaks on e-commerce in Asia.

Due to technological advancement, evolving consumer trends and improved logistics, the growing e-commerce market in Asia faces both unique challenges and new opportunities, say an expert panel from The Institute of Grocery Distribution (IGD), Mondelēz International, RedMart and the Asian Trade Centre (ATC), at a recent Food Industry Asia (FIA) Lunch Series event.

The event, “E-commerce: Is it a disrupter or an enabler for the food industry?”, organised in collaboration with the American Chamber of Commerce in Singapore (AmCham) and IGD, took place at AmCham’s Stamford American Auditorium on 11 November. Participants discussed the current state of the e-commerce sector in different markets across Asia; reasons behind market growth; challenges such as a new breed of competitors, a highly diverse consumer base and regulatory obstacles; as well as opportunities driven by evolving consumer behaviour.

In an interview with FIA, Mr Ganesh Kashyap, General Manager and Director, E-commerce (Asia, Middle East and Africa) at Mondelēz International, touched on how consumer demands and trends have disrupted the traditional retail model and created many new opportunities for companies.

The biggest market and opportunity for online grocery at the moment is in China, said Mr Kashyap. He added that for Mondelēz, more than 10 per cent of their goods are sold online, with an average growth of 20 per cent year on year. Markets in the rest of Asia, such as India and Japan, are fertile, yet evolving in different ways. However, due to factors such as population size, growing smartphone penetration and the development of a culture of online shopping, opportunities for brands are significant.

Explaining the reasons for the growth of online grocery across Asia, Ms Shirley Zhu, Programme Director, IGD Services (Singapore), presented four main drivers: rise of the middle class, maturation of millennials, smartphone penetration and improvements in logistical infrastructure.

Ms Shirley Zhu, Programme Director, IGD Services (Singapore), presents the reasons for growth in the online grocery sector.

Mr Kashyap said that the traditional concept of “full basket purchases” continues to exist both offline and online. However, e-commerce has allowed for the new opportunity of “single item retailing”. This is when a consumer makes comparisons between multiple online retail environments for a particular brand, category or product. He or she decides, makes the purchase, leaves the online environment, and they may not return for a while. This behaviour, Mr Kashyap said, is not regular in the way traditional grocery shopping is.

The differences in consumer and shopping behaviour between the online and offline environments also poses many challenges for brands, said Ms Penny Cox, Vice President of Commercial and Marketing, RedMart. Multicultural Singapore, she said, has largely diverse customer base – this translates to a greater variety of needs, as well as an increase in efforts and capacities to meet these demands.

Other factors that contribute to difficulties faced in e-commerce include multiple time zones, time constraints, the delivery process, an evolving marketplace with an increasing variety of sellers, as well as the aesthetic quality of product packaging.

Ms Penny Cox, Vice President of Commercial and Marketing, RedMart, shares about RedMart's experience in Singapore's online grocery market.

Dr Deborah Elms, Executive Director, ATC, said that although the online commerce and trade environment has been somewhat benign so far, recent political changes, particularly in the UK and the USA, are making an impact on the sector.

E-commerce, she said, is viewed as a disruptor for many governments across Asia, which will pose serious regulatory challenges for brands with an online retail presence.

In order to have success in the online trade environment, Dr Elms added, companies need to set clear objectives and strategies, seek to educate government officials on the benefits of e-commerce and the importance of good regulation in this area, as well as partner with governments as part of efforts in improving food safety.