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How Southeast Asian E-Commerce Players Can Go Beyond Borders

UPS study shows Asia’s online consumers value free shipping with convenient and transparent return policies

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BY Ezra Ferraz - 11 Apr 2018

How Southeast Asian E-Commerce Players Can Go Beyond Borders

PHOTO CREDIT: Company Courtesy

Asia’s online shoppers demand free shipping, expedited deliveries, and consumer-centric return policies to be offered as standard, according to a study conducted by comScore and commissioned by American logistics company UPS.

The UPS Pulse of the Online Shopper Study, released today, notes that only 57% of shoppers in Asia are satisfied with the online shopping experience — the lowest satisfaction rate compared to other regions surveyed. Nearly two-thirds of respondents in Asia cited free shipping as an important factor in the check out process. E-commerce sites should also start thinking of a convenient and transparent return policy, with 67% of shoppers in Asia citing free shipping on returns as important when selecting online retailers.

The study surveyed 3,200 online shoppers in China, Hong Kong, and Japan who made at least two online purchases in a typical three-month period.

Succeeding in cross-border e-commerce

While the study focuses on consumers in Hong Kong, China, and Japan, these market profiles are important for entrepreneurs and founders in Southeast Asia who want to succeed in cross-border e-commerce.

All three of these countries have highly developed e-commerce, but consumer trends differ significantly between them. UPS found that 82% of online shoppers in Hong Kong bought a product from an international e-commerce site over the last year, followed closely by China at 61%. Japanese shoppers trailed far behind with only 21% making an overseas purchase, which places them squarely among the lowest in the Asia Pacific region.

Of these cross-border shoppers, a significant population bought from another market in Asia, including 67% of Hong Kong shoppers and 47% of Chinese shoppers. Japan only had 13% of its online shoppers buy from another market in Asia.

“This shows that international retailers, including those in Asia, have a great deal of work to do to woo Japanese shoppers, who primarily cite lack of product or brand availability domestically as their top reason for buying internationally, according to 45 percent of Japanese shoppers that make overseas purchases,” Sylvie Van den Kerkhof, Vice President of Marketing, UPS Asia Pacific, tells Inc. Southeast Asia.

She adds that ASEAN entrepreneurs should seek to understand their East Asian neighbors in order to gain from these lucrative opportunities.

Even though 98% of online shoppers have made a purchase from a marketplace like Taobao, Amazon, and Lazada, Van den Kerkhof says 90% of Asia’s online shoppers stated that they would like to shop at small retailers. Those surveyed in Japan, in particular, did so in search of unique products.

“Close to half of all Japanese shoppers surveyed, 47 percent, chose this as their primary reason for shopping at small retailers despite their overall low volume of international purchases. The numbers for this reason stood at 39% and 37% for China and Hong Kong respectively,” says Van den Kerkhof.

Ease of returns affects customer experience

The UPS study extended to the other side of the customer funnel: returns, which can be crucial to the customer experience. Of those surveyed, only 4 in 10 had returned an item over the past year, and 79% of this group returned 10% or less of their purchases.

It is helpful for Southeast Asian e-commerce players to note that the relative ease of returning an item actually plays into the buying decision. Half of Asia’s online shoppers reviewed returning policies before buying an item, while two-thirds declared free shipping as important when choosing between online merchants.

“From a consumer’s perspective, it appears that the peace of mind of being able to return something if they need to is enough reassurance to encourage them to complete the checkout process. Once purchased, comparatively few items are actually sent back to retailers,” says Van den Kerkhof who explained that shoppers actually bought more when they underwent the return process.

Sixty-nine percent of online shoppers made additional purchases when returning a product at a brick-and-mortar location, compared to 67% of those returning online. These figures suggest it makes business sense to have a fair, transparent, and hassle-free return policy.

Another actionable point for ASEAN entrepreneurs is logistics. More than half of Asia’s online shoppers are shipping their products to alternative delivery locations (ADLs), and 71% expressed interest in shipping to ADLs for reduced fees.

“Offering options such as in-store purchase pickup, alternate delivery locations and free and fast shipping can help meet consumers’ growing demand for increased flexibility and control, and ever more delivery options,” she says.

Though the UPS study covers a lot of ground, Van den Kerkhof believes that entrepreneurs in Southeast Asia should really invest into understanding cross-border shopping behavior.

“To really compete in e-commerce, entrepreneurs and retailers in Southeast Asia — or anywhere for that matter — need to understand the unique characteristics, shopping behaviors and preferences of consumers in each market that they enter. This is especially critical for those that are farther afield from one’s home base as culture, language, and habits can be quite different in various regions, and one-size definitely doesn’t fit all,” she says.