May 3, 2019

By Tristan Chiappini, Head of Account Management at PPRO

E-commerce is one of the greatest business success stories of the last decade. It has created jobs, injected new dynamism into our economies, created countless'unicorns'and given people, who wouldn’t otherwise have had it, access to goods and services that improve their lives.

This is most apparent within Asia. It is the largest and most populous continent on the planet with a combined population of approximately 4.4 billion, meaning roughly 3 out of 5 people on Earth call this region their home. It’s fair to say that e-commerce is already booming within the region — 993 million people currently shop online, with this figure set to grow by an additional 454 million new users by 2021.

Driven by an emerging middle class, movements toward deregulation of cross-border trade and improvements in technology such as more affordable mobile internet access, the Asia market represents a huge opportunity for businesses who want to be a part of the e-commerce success story. But before choosing which country within Asia to target first, there are a few aspects to consider as part of an e-commerce route to market.

Breaking out of China

China has traditionally been seen as the natural starting point for many online retailers looking to break into the Asian market. However, this trend is starting to change. The Chinese Dragon once monopolized and dominated the Asian e-commerce market, but Asia now has an array of lucrative markets to offer. One particular incentive for online merchants to look beyond China is due to the current trade negotiations with the U.S. that has put the future of the country’s trade at stake. On September 17th, 2018, the United States announced tariffs of 10% on Chinese imports worth $200 billion a year. Unless China and the U.S. reach an agreement, these tariffs were set to rise to 25% by the end of the year along with another round of protectionist tit-for-tat. This uncertainty presents an opportunity for the rest of the Asian markets to flex their e-commerce muscle.

Rapid growth 

Over the next five years, 88% of the growth in the global middle class will come from Asia. Every month, millions of people in Asia climb out of poverty into the middle class, giving people a greater opportunity to be a part of the e-commerce success story.

With the political uncertainty, in China, manufacturers have begun to look for new destinations across Asia for investment and to base factories. This has benefited countries in Asia. The Tiger Club economies collectively refer to the economies of what we would traditionally call the developing countries of South East Asia (Indonesia, Malaysia, the Philippines, Thailand and Vietnam). But this is changing, this'club'all have maturing e-commerce markets that are profiting from this uncertainty as their appetite for cross-border trade grows.

A good example is Vietnam which has risen from being classified as poor to now a middle-income country. With cheap labor, an educated workforce and a business-friendly environment, Vietnam has managed to attract some major companies such as Intel, LG and Samsung and many others. As a result, the country now has an export sector worth an estimated $19 billion a year, enriching the local workforce which in turn is creating the demand for goods and services beyond their borders.

In rapidly industrializing and developing markets, e-commerce is growing at more than 50% a year. Another example from the 'Club' points to the Philippines, where the country is now the 10th fastest-growing economy in the world with a growth rate of seven percent in 2017. Underlying the impressive growth rate is a $180 billion infrastructure program known as “Build Build Build” — which was introduced as an initiative to accelerate infrastructure spending and develop industries that yielded robust growth. This created a variety of new jobs, improved the lives of Filipinos and encouraged growth in e-commerce spending, with the Philippine economy growing by 6.7% year-on-year.

Elsewhere in the Club, Thailand, the second largest economy of Southeast Asia, has approximately 57 million internet users that are well-versed in the use of digital technologies, mobile and e-commerce. Thailand is an ideal growth environment for e-commerce businesses and is another example of how a country has transformed to embrace e-commerce transactions, to ultimately become a prosperous market for investors and savvy cross-border e-commerce focused merchants.

Attracting local consumers

When focusing on which alternative market in Asia is right for your business, there are many important factors to consider such as existing customer sales, pre-sales and post-sales customer service, logistics and delivery, customer targeting, just to name a few. Another important aspect to consider is the mix of payment methods available at the checkout. It is useless to invest in creating and implementing an APAC e-commerce strategy only to fail at the last hurdle.

Payment cultures vary from country to country, and the same goes for online payments throughout the world. But what is especially true of Asia is that the differences from country to country within the region could not be greater.For example, in Singapore, 74% of the population’s favorite payment is card-based payment, whereas, in China, e-wallets are strongly preferred, with 49% of online purchases made using this payment method. No other country in the world uses this online payment option as much.  This diversity of preferred payment methods emphasizes how crucial it is to understand local preferences when it comes to an online merchant developing their shopping strategy. If consumers can’t pay with their preferred method, they will simply choose to shop elsewhere.

E-commerce markets and payment methods develop at a fast pace. It’s therefore important to consider these aspects and partner with the right organizations when looking to reap the rewards of a region at the inflection point of their e-commerce spending power.

Cover photo: iStock

Topics: Mobile Payments, Region: APAC, Trends / Statistics

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May 3, 2019

Shake Shack Inc. is planning additional investments and will test new digital channel opportunities amid a solid quarterly financial performance.

In a May 2 conference call, CEO Randall Garutti said the company is seeing strong results from recent digital initiatives and will focus on making that a more important part of its business.

"The expansion of our business in new digital channels presents a real opportunity for us to expand that concept of community and to engage with our guests and fans in a much broader and personalized basis," he said during the call.

He said the company also plans to test more pickup shells over the next few months "where we’ve had a higher proportion of digital sales and the new Shacks are being designed with an omnichannel experience top of mind," Garutti said.

He said corporate leaders are pleased with the positive impact digital has had across all channels, with all channels delivering growth as a percentage of sales and delivering a higher average check.

Company officials noted operating expenses increased by 90 basis points to 12.1% in part due to digital growth leading to more delivery commissions as well as higher overall marketing spend.

Shake Shack reported that total year-over-year revenues increased 33.8% to $132.6 million during the first quarter ending March 27, prompting the company to increase its revenue and same-store sales expectations for the year.

"Our performance was supported by the strength from new openings, the holiday shift and warm weather conditions across a number of key markets early in the quarter and the continued growth of our digital channels, where we see significant ongoing opportunities," Garutti said during the call.

Shake Shack raised its year-end revenue expectations from $570–$576 million to $576–$582 million, and it now expects same-store sales to increase from 1%–2%, as opposed to a previous forecast of flat sales.

Highlights included:

"We also plan to open 16 to 18 net new licensed Shacks, with our international growth focused on Asia and our new markets of mainland China, Singapore, the Philippines and Mexico," Garutti said.

Topics: Mobile Apps, Mobile Payments, Restaurants

Companies: Shake Shack

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May 3, 2019

Mastercard Inc. has entered into an agreement to buy Transactis, a digital bill payment platform, according to a press release.

The platform makes it easy for companies of all sizes, even property owners and schools, that typically don’t collect bills online, to accept online and mobile payments.

"We see Transactis as strengthening our support in the bill payment space," said Colleen Taylor, executive vice president of new payment platforms at Mastercard, in the release. "Transactis' technical and commercial know-how, combined with our reach and comprehensive payment options will greatly simplify the entire process."

The acquisition follows the debut last fall of Mastercard Bill Pay Exchange, a platform that lets consumers set up bill payments for mortgages, utilities, rent, credit cards and other bills. The exchange is slated to launch later this year. 

The exchange uses a series of API’s offered to banks and credit unions to allow consumers to set up bill payment through their own digital banking apps.

Terms of the deal, which is expected to close in the second quarter, were not disclosed. 

Topics: Bill Payment, Card Brands, Mobile Payments

Companies: MasterCard

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