Asia-Pacfic online retail sales to hit $7bn this year

Online retail sales will grow at least 150% this year in the Asia-Pacific region to reach $US7 billion, according to a report released last week by market analyst Boston Consulting Group

          Online retail sales will grow at least 150% this year in the Asia-Pacific region to reach $US7 billion, according to a report released last week by market analyst Boston Consulting Group (BCG).

          The market in 1999 was worth $2.8 billion, three times as much as in 1998, BCG estimated.

          With more than 10 million consumers having already bought online, and Internet use surging, the market is reaching critical mass.

          However, as critical mass is reached, regional companies wanting to succeed in this new market must act soon or risk losing the inevitable battle with large global online players, BCG said.

          The survey covers the online retail markets of Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, New Zealand, Singapore, Philippines, Taiwan and Thailand.

          Key trends identified in the BCG report include:

          -- rapid broadening of the potential online consumer market

          -- accelerating use of wireless access to the Internet, which will translate into new customers wanting new services

          -- growing importance of integrated "clicks and mortar" business models

          -- growth of "killer categories", which have large offline revenues and strong online potential, such as online brokerage, travel services, automotive sales and real estate

          -- emergence of e-commerce enablers, such as distribution and Web design companies, supporting online retail businesses.

          Despite the region's tremendous diversity, the online retail market in Asia-Pacific is still highly concentrated, with the leading 25 players in most countries accounting for more than 60% of overall revenue, BCG said in the report.

          Although some markets and categories, such as computer hardware and software, financial services and travel are already starting to get crowded, many other areas remain virtually unexplored.

          Three countries account for 94% of the total Asia-Pacific market -- Japan at $1.5 billion, Korea at $720 million and Australia at $380 million. Most other countries in the region have revenue of less than $30 million.

          Computer hardware and software and financial brokerage lead the categories, with revenue of $770 million and $700 million, BCG said.

          Online brokerage is the fastest-growing e-commerce market in Asia-Pacific, driven primarily by phenomenal growth in South Korea, where the category's revenue reached $520 million in 1999, according to BCG.

          A "clicks and mortar" approach will be even more important in Asia-Pacific than it is in the US, according to BCG. Multichannel players -- not pure-play Internet start-ups -- already dominate the e-commerce landscape in the region. The security of well-known brand names, plus consumer demand for physical as well as online outlets, will be advantages to established players who are aggressive in developing online strategies, BCG said in the report.

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