E-commerce sales in Asia-Pacific are growing like nowhere else. According to eMarketer Retail, e-commerce sales grew 31.1% in 2017 to $1.349 trillion. Increasing income and easy access to the internet via mobile devices, has resulted in higher online spending. As shopping turns digital, a huge potential arises for affiliate marketing in South East Asia. Affiliate marketing generates between 5-20% of a brand’s online revenue, thereby emphasizing the growing opportunities for affiliates.
However, the South East Asian affiliate marketing industry is still in the early stages of the adoption curve. Practices that are common in the USA and Europe do not have a guarantee of being adopted and working in Asian markets. Succeeding in South East Asia, means mastering the complexity of cultural differences, relationship building, regional fragmentation and looking beyond the powerful American technology companies. Therefore, locally experienced affiliates become valuable assets for international brands, when entering South East Asian markets.
1. Preparing for cultural differences
South East Asian cultures are known for being high context cultures, relying on nonverbal cues and implicit communication, it is important to understand and be aware of the value Asian cultures place on communication. In some countries presenting gifts can be seen as a bribe, however, in many Asian countries not giving a gift is regarded as rude or impolite. It is also important to note that the customs and traditions vary from country to country and it should not be assumed that traditions and ways of doing business are unanimous across all South East Asian regions. Hiring and working with local market managers can help to mitigate the cultural differences international companies are faced with.
2. Relationship building is a MUST
As part of being a high context culture, South East Asian cultures place great value on interpersonal relationships. Meeting with partners outside of a professional setting and investing the time and effort to understand the goals and needs of the partner not only strengthens the relationship but also shows the added value you can bring. In many western cultures, trust is automatically given until an action is taken to break that trust. However, in Asian cultures, it is the opposite. People have to earn trust in order to do business and meeting on a personal level can allow this trust to be built. As a result, not only discussing, but also taking the time to show you are competent and knowledgeable outside a professional work environment, is extremely valuable when building up a relationship with South East Asian partners.
3. Coping with regional fragmentation
South East Asia is a very fragmented market in terms of language, geography and e-commerce. Entering the affiliate market requires meeting the different rules and regulations of each country and understanding country-specific culture and language. Working together with local affiliate networks can be extremely helpful in such circumstances since they understand and are aware of the way local markets operate.
Bain and Company have reported that the market fragmentation is evidenced by over 20% of consumers that do not have a preferred retail platform, resulting in no dominant market player controlling the market share. Therefore, consumers have the option of choosing from multiple platforms to meet their needs. Most of the South East Asian countries are at different stages of economic development, resulting in different stages of use and acceptance of e-commerce. E-commerce in Singapore and Malaysia, for instance, is far more widespread and accepted than in Vietnam.
4. Looking beyond GAFA
In western online marketing, there is close to no way around Google, Amazon, Facebook and Apple (GAFA), the powerful American technology leaders. However, Asia has different dominant players that need to be taken into consideration when entering the affiliate marketing industry. Baidu, Alibaba, Tencent and Xiaomi (BATX) are the leading industry giants in the majority of Asian markets.
Through the banning and restrictions placed on many of the GAFA websites, BATX platforms have become market leaders and dominant within their respective market segments. Since Google-Temasek e-Conomy SEA reported that South East Asia is the fastest growing internet region in the world, it is vital for advertisers to understand that the big tech players (BATX), will greatly affect their businesses and the way in which their customers consume their products and/or services.
With the continuous growth of online commerce, affiliate marketing has the opportunity to expand and grow into a large player in South East Asian markets. Through the use and implementation of local teams, understanding the cultural differences, and the way business is conducted in South East Asian cultures, entering and taking advantage of the opportunities that lie within this growing market will become much easier.