APAC is an e-commerce market that’s bursting with opportunity for international brands. According to data from an eMarketer report, retail e-commerce sales in APAC grew over 30% in 2017 and China boasts the world’s largest e-commerce market. APAC is also a region with an increasingly outward-facing agenda, with 63% of Asia-Pacific CEOs reporting they expect their global footprint to expand in the next three years, according to a survey carried out by PwC.
It is also a complex region, and although many international brands want a slice of the action, many make mistakes on entry that cost them their best shot at seizing the region's e-commerce opportunities. Here are five common mistakes, which brands can avoid if they take the right precautions before entry.
Thinking about APAC as one region
APAC may be a useful geographic umbrella term but it has little use beyond that. Depending on the definition, the region can encompass anywhere from 28 to 60 nations, each with its own culture and differing needs from international brands.
That brings with it practical problems: different languages, time zones and cultural outlooks. In addition, there are legal problems for region-wide business practices; multi-channel communication, for example, is complicated because approved marketing activities alter depending on where you are in the region.
Brands also need to appreciate the distances involved. In the time it takes to fly from one side of Europe to the other, you might only have flown between individual states in APAC. That also has knock-on implications for supply chains and shipping. Things don’t move as fast and because of the greater distances, costs are much higher.
Believing every market has the same tech maturity
As well as logistical differences, technological advances vary across markets. On paper, mobile commerce is huge in APAC but in reality, China drives the vast majority of mobile transactions and multichannel digital marketing strategy lags behind. In markets like Indonesia, because of mobile immaturity, the point of sale is often offline and alternative options like cash-on-delivery can be offered by over 50% of merchants.
Performance also doesn't necessarily indicate how advanced an economy is: Vietnam had the top conversion rate in South East Asia (30% above average) but is not an advanced market from a digital marketing perspective.
Traditionally Australia has seen a lack of investment in search and in affiliate – advertisers have typically operated private programmes open to select publishers, rather than the broader open programmes that are common in the UK and US.
Before entry, brands need to think about how their approach will differ based on the markets they are most interested in and what channels or tools will be open to them depending on tech maturity.
Expecting linear decision making
Decision-making is led by culture and varies widely across Asia Pacific. A particular characteristic is that it tends to be “circular” rather than “linear”. In some markets like Australia that will mean less urgency – in others, it means allowing more time for decisions to be taken as all the factors are taken into account.
What that means for international brands entering APAC is that they should not plan on decisions happening as rapidly as elsewhere in the world and instead, more time needs building into plans than less.
This may also be connected to the amount of data available to an executive. A SAP and CFO Research survey of Singapore, China, Australia, Hong Kong, India and Japan found that only 17% of finance execs believe they have business insights at their disposal to make informed decisions.
Not partnering locally
With reference to the importance of local culture and differences between markets, having a local partner on the ground is a no-brainer. Without it, international brands face navigating a minefield of languages, cultures, logistics, processes and decision making without any insight. APAC is incredibly fragmented and a network of contacts in key locations is critical to pulling off entry in the region.
Local partners also have the added benefit of immediate trust with local customers and the infrastructure to enable rapid expansion. Brands can throw bodies at APAC but without local expertise, they’re unlikely to succeed on their own.
Lacking international recognition
Having spoken about the importance of local expertise, international reputation matters a huge deal too. New brands enter APAC all the time but the ones that gain traction and drive proper awareness like fashion retailer Zara have an international brand recognition behind them. If you look at brands that have entered the region successfully in recent years, the most successful have had an international brand behind them that is established and known across the key target markets.
In conclusion, APAC is a region bursting with e-commerce opportunities for international brands but success depends on getting entry right the first time.