Online Retail In Asia Pacific Will Add US$1 Trillion By 2025
While the Asia Pacific region experienced the slowest YoY growth in online retail sales globally in 2020, it still added US$230 billion, with China accounting for one-third of additional global sales. As the largest market in the region, China accounts for 82% of the total e-commerce market and grew by 15% in 2020. Overall, e-commerce grew by 16% in APAC, with the grocery category growing the fastest in 2020 at 46%.
According to a new forecast by Forrester, online retail in APAC will reach $2.8 trillion by 2025, up from $1.7 trillion in 2020. Grocery alone will maintain 2020’s growth momentum to reach $473 billion by 2025, overtaking the consumer electronics category for the first time in 2024.
Key highlights from this new report:
- The region saw an additional 154 million online buyers in 2020, the highest number of new users ever in a single year. Of all the new buyers added globally in 2020, 69% came from Asia Pacific and 53% specifically from China.
- India saw the slowest growth in the region, while Australia grew the fastest.
- In addition, Forrester predicts that online retail in APAC is set to reach about one-third of total retail sales by 2025. Here are some trends emerging in the market:
- Incumbents enter the grocery segment, while new vertical players emerge. While pure-play grocery retailers attracted investment, dominant marketplaces also entered the category. Before the pandemic, Flipkart in India had a limited presence in grocery; it then added a 90-minute delivery service to make the most of the fastest-growing category in India. Tata Group acquired BigBasket, the largest online grocery player in India, to make inroads into the Indian e-commerce market. Reliance Retail also launched JioMart grocery to serve grocery demand in more than 200 cities in India.
- Retailers are leveraging offline stores to improve reach. The strategy of leveraging stores and final distribution centers to reach underserved tier-three and tier-four cities saw a push in 2020. Alibaba took a controlling stake in Sun Art Retail, China’s largest supermarket chain, which has 76% of its stores outside urban areas, allowing Alibaba to break into the underserved nonurban customer market.
- Brands are engaging consumers via livestreaming. Livestreaming has been popular in China for a while now and saw strong brand engagement in 2020. LVMH moved away from its traditional store-focused strategy to launch an extensive catalog on JD.com and debut on livestreaming platform Little Red Book. Farmers used livestreaming sessions on Douyin — Tiktok in China — to sell fresh produce, with some earning more than $1 million per month.
- Social commerce gains momentum outside China and adds grocery. Meesho, a pure-play social commerce retailer in India, reports seeing monthly users grow from just 0.5 million to 5.5 million and monthly orders jump by 500% from 2019 to 2020. In China, community buyers (i.e., buyers congregating on WeChat) purchase grocery in bulk and pick it up from a nearby drop location. Retailers save on the last-mile shipping cost, and buyers get groceries at a discounted price.
Contact firstname.lastname@example.org for a copy of the full report. Forrester analysts are also available for a media interview.