Online shopping boom in Asia

TAIPEI - One consumer ordered a year's supply of sanitary napkins. Another, who was not happy with a newly purchased notebook computer, returned it after more than a week.

And if that mail-order dress does not fit, the courier who delivered it will take it back to the store, free of charge.

This is the world of online shopping for millions of increasingly wired but also increasingly time-starved consumers in Asia's biggest and most developed economies. It is instant gratification at the click of a button, with after-sales service as a bonus.

Last year, online merchants rang up sales totalling $344.6 billion in China, Japan, South Korea, Taiwan and Hong Kong. All five economies saw significant growth compared to the year before, ranging from 8 per cent in the relatively mature market of Japan, to 67.8 per cent in China, which has the lowest Internet penetration rate of just 40 per cent.

In Singapore, consumers spent $1.4 billion, or 33 per cent more than in 2010, according to online payment firm PayPal and research company Nielsen.

A case in point: China's largest online shopping portal Taobao reported record one-day sales of 19 billion yuan (S$3.7 billion) on Nov11, when the country marked "Singles' Day".

Bank executive Guan Xin was one of the more than 200 million Chinese - attached or otherwise - who marked that day with some virtual retail therapy. She spent about 3,000 yuan in total on a pair of running shoes, an MP4 player, a mobile phone charger, and even a mop and pail, whose prices were heavily marked down.

"It's faster to buy online. I already knew what I wanted," said Ms Guan, 27.

So did one of her friends, who bought a year's supply of sanitary napkins.

Ms Guan is archetypal of the region's online shopper, according to analysts: Aged between late teens and 30s, willing and able to spend, as well as tech-savvy enough to search for the best bargains with just a few clicks.

And the types of products they buy are expanding beyond long-time favourites clothes and accessories, electronic gadgets and air tickets, to daily necessities and food.

The Japanese now make 20 per cent of their daily purchases at online stores, according to a recent survey by Nikkei business daily.

In Taiwan, top online retailer PChome sold a million packs of toilet paper rolls last year.

The item was ranked the second most popular - after consumer electronics - among NT$12.3 billion (S$516 million) worth of goods the company sold.

The trend presumably owes itself to good service.

Free delivery, sometimes with no minimum spending required, has become de rigueur and is a big plus for grocery purchases.

Many retailers also offer free returns and refunds - no questions asked - for faulty items or goods still in saleable condition.

Web services engineer Lee Yi-chiun, 37, once returned a notebook computer with a faulty screen to the online retailing arm of Yahoo Taiwan after using it for over a week.

"I got a full refund promptly, no problem," said Mr Lee, who is one of the company's "platinum" members, having racked up more than NT$1 million worth of purchases, including a washing machine and a refrigerator.

"I don't think a bricks-and- mortar shop would have been as generous," he said.

In China, shoppers at clothing retailer Vancl do not need to pay a cent until after the item is delivered to their door and they are happy with the size and fit. Those who are not satisfied with the garment - or are stricken with buyer's remorse - can send it back.

And lest shopping from the comfort of one's desk is not convenient enough, the prevalence of smartphones these days promises to bring the mall to consumers, wherever they may be.

In South Korea - home of Samsung - 10 million out of 37 million online shoppers last year made purchases on their mobile devices, according to the Korea Chamber of Commerce and Industry.

In Japan, purchases using smartphones make up 30 per cent of all online sales, while Hong Kong saw 13 per cent of online purchases carried out on mobile phones and 11 per cent on tablets, according to the findings of a Visa survey of 8,000 Internet users from Hong Kong, South Korea, Japan, Singapore, Vietnam, Russia, the Philippines and South Africa this year.

Still, the online retail industry lags far behind its bricks-and-mortar counterparts.

Online retail sales in Japan, for instance, reached 8.5 trillion yen (S$125 billion) last year, but the figure accounted for just 2.8 per cent of total personal consumption in Japan.

The potential for the industry is thus immense, even though growth is showing signs of slowing years in the mature economies of Japan, South Korea, Taiwan and Hong Kong.

But a MasterCard survey of online shopping attitudes in 25 economies early this year found a bigger increase in the number of consumers in the emerging markets of Thailand, Malaysia, the Philippines and Indonesia who access the Internet to do their shopping or have bought something online in the past three months, compared to the developed economies.

seokhwai@sph.com.sg

With reporting by Ho Ai Li, Kwan Weng Kin, Karen Ha, and Hwang Youmee


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