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E-commerce set to explode in Asia

Grocery retailers and suppliers embrace online trade, with China the epicentre

E-commerce set to explode in Asia

Alibaba's Singles Day activity last year

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E-commerce in Asia is set for a “growth explosion” over the next five years, according to IGD.

The international grocery research organisation is forecasting Asia’s largest online grocery retailers to grow on average 34.6 per cent a year between now and 2022.

“Retailers and grocery manufacturers across Asia are embracing the online channel, driven by a number of reasons, such as demographic shifts, rising internet and mobile penetration and improved logistics,” explained Shirley Zhu, programme director at IGD Singapore.

When looking at e-commerce’s reach across Asia as a whole, Zhu said growth still varies significantly between different countries and retailers. 

The region’s top eight online retailers are all from China, Japan and Korea, countries with a high adoption of online shopping and more advanced supply chains.

Growth rates also vary within this upper echelon. Chinese based pair and Alibaba's Tmall are Asia’s two largest online grocers by a considerable margin. By way of comparison, second ranked Alibaba’s revenue from grocery sales is four times that of Japanese retailer Rakuten, Asia’s third largest online grocer.          

“JD and Alibaba are set to see by far the fastest growth in online grocery in Asia to 2022,” Zhu adds. “Although grocery is a relatively small part of the overall business of these two marketplaces, due to their sheer size, they still lead in online grocery.”

While their origins are in China, Zhu said and Alibaba have scope to grow their businesses in neighboring markets.

“In the future, we expect JD and Alibaba to also increasingly see returns on their investment in Southeast Asia as the market gets more mature,” she said. “For example, Alibaba Group has just unveiled a hub in Malaysia, on top of its acquisition of Lazada, while has set up a joint venture with the Thai conglomerate Central Group.”

Zhu’s comments come before the world’s largest online shopping event, Singles’ Day, reaches its climax this weekend (11 November). More than 15m products are expected to be available from 140,000 brands, with also taking part in the festival, which has a more international flavour than ever before.

“The opportunity is no longer just for domestic companies,” explains Zhu. “Last year, leading retailers such as Alibaba reported a big uptick in shoppers buying from international brands or merchants during Singles’ Day. 

“And this year, Alibaba is targeting the 100m Chinese people who live overseas by making brands available outside China, while JD has announced free shipping to customers in Macau, Hong Kong, and Taiwan.”

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