IGD Unveils Size of Prize for Online Grocery in Asia as Singles' Day 2017 Gathers Pace

E-commerce in Asia is set to experience a growth explosion over the next few years, according to new figures released by IGD, the international grocery research organisation. With Singles’ Day, the world’s biggest online shopping event, which was underway across Asia and culminated on 11 November, IGD is forecasting the region’s largest online grocery retailers to grow, on average, 34.6 per cent a year between now and 2022.

Shirley Zhu, Programme Director at IGD Singapore, says: “Retailers and grocery manufacturers across Asia are embracing the online channel, driven by a number of reasons, such as demographic shifts, rising internet and mobile penetration and improved logistics. However, growth still varies significantly between different countries and retailers. The region’s top eight online retailers are all from China, Japan and Korea, countries with a high adoption of online shopping and more advanced supply chains.

“China is the world’s largest online grocery retail market and JD and Alibaba’s Tmall are the country’s leading online marketplaces. JD is Asia’s number-one online grocer, with Alibaba a close second. In terms of revenue from online grocery, Alibaba is four times the size of Japanese retailer Rakuten, Asia’s third largest player.

“JD and Alibaba are set to see by far the fastest growth in online grocery in Asia to 2022. Although grocery is a relatively small part of the overall business of these two marketplaces, due to their sheer size, they still lead in online grocery,” Zhu continues. “In the future, we expect JD and Alibaba to also increasingly see returns on their investment in Southeast Asia as the market gets more mature. For example, Alibaba Group has just unveiled a hub in Malaysia, on top of its acquisition of Lazada, while JD.com has set up a joint venture with the Thai conglomerate Central Group.”

There is a key focus on online shopping in Asia during the world’s largest online shopping event, Singles’ Day. On Singles’ Day 2016, Alibaba reported sales totalling US$17.8bn – $11bn more than Black Friday and Cyber Monday combined. This year, more than 15 million products are expected to be available from 140,000 brands, with JD.com also taking part in the festival, which has a more international flavour than previously.

“The opportunity is no longer just for domestic companies,” explains Zhu. “Last year, leading retailers such as Alibaba reported a big uptick in shoppers buying from international brands or merchants during Singles’ Day. And this year, Alibaba is targeting the 100 million Chinese people who live overseas by making brands available outside China, while JD has announced free shipping to customers in Macau, Hong Kong, and Taiwan.

“There will also be more offline activity. JD will roll out campaigns in its own physical stores as well as Walmart’s 400 bricks and mortar stores in China. Meanwhile, Alibaba is making more ‘new retail’ experiences accessible. Facial recognition payment will be made available in converted 'smart stores' across nearly 100,000 stores in 31 provinces and 334 cities in China. Pop-up stores for cosmetics, for example, will offer experiences through augmented reality for make-up and lipstick trials.

Zhu continues: “The Singles’ Day festival has essentially grown into a two-month opportunity for brand owners. This year many brands started their marketing campaigns weeks before the official kick-off of the event on 31 October. To fully take advantage of the festival, instead of simply offering coupons to shoppers, many brands have designed their product offering, promotions and social content specifically for Singles’ Day, giving them a better opportunity to stand out from the crowd and grab shoppers’ attention.”

However, Zhu advises brands to be “prepared for the after-effects” of such a big online shopping event. “This kind of event always puts ecommerce players’ operations – and those of their logistics suppliers – to the test,” she explains. “A high level of impulse purchase means returns are quite common, so that needs to be handled. Another challenge for online retailers and manufacturers following Singles’ Day is how to retain the interest of shoppers after the discounts have come to an end.

“However, whether it’s during the Singles’ Day festival or more generally, the size of the prize in online grocery in Asia is undoubtedly huge. To ensure they make the most of this opportunity, retailers and manufacturers must remain agile and flexible, develop their understanding of online shoppers, focus on improving their logistics and ensure they are taking a collaborative approach to this exciting channel.”

Find out more about IGD’s Asia-Pacific retail reports, research and training here.

• IGD is an education and training charity for the food and grocery industry that undertakes research for the benefit of the public. Our in-depth understanding of shoppers, retailing and supply chains is supported by our knowledge of broader topics affecting the industry – health, nutrition, sustainability and economics among them. This gives us unparalleled insight that can help identify opportunities to improve performance and tackle business challenges. Our reach is global, with experts based in the UK, Singapore and North America. We invest the net income we make from selling our expertise back into our charitable activities
• Asia’s top eight online grocers, in order of forecast growth to 2022, are: JD.com; Alibaba’s Tmall; Rakuten; Yihaodian; Shinsegae; AEON; Seven & I; and Auchan. The first four are pureplay ecommerce companies, while the next four are the online channels of physical retailers
• All data is derived from IGD Datacentre. Our field research is backed up by a comprehensive desk-based research programme. Insights are taken from a wide range of sources, including company reports; releases and filings; analyst briefings and research notes; regulatory bodies; and global news services