In 2006, B2C e-commerce sales
for the five major markets in the Asia-Pacific region totaled only
$59.1 billion, and Japan accounted for a tiger’s share of the sales. But things are changing.

eMarketer forecasts that B2C e-commerce sales in the region will grow at a 23.3% annual rate, reaching $168.7 billion in 2011.

"Japan was the largest market in the region, by far, with a 62.3%
share of online sales in 2006," says Jeffrey Grau, eMarketer Senior
Analyst and author of the new report, Asia-Pacific B2C E-Commerce: Focus on China and India.
"But by 2011, Japan and South Korea, the region’s other mature market,
will both lose share to two up-and-coming online markets—China and
India."

Both China and India are growing rapidly, but they are far from reaching their vast potential.

"A number of hurdles, common to both countries, must be cleared to
ensure sustainable long-term growth," says Grau. “Immature online
payment systems, poor delivery networks and distrust between buyers and
sellers, to name just a few.”

According to a China Internet Network Information Center
survey, the top reason that Internet users in China do not buy online
is uncertainty about the security of the online shopping process.

Smaller developing countries in the region, such as Thailand, the
Philippines and Malaysia, are also on track to become viable e-commerce
economies.

"For Western e-commerce firms with global aspirations, the challenge
is to decide what to do in this region and how to do it," says Grau.
"These markets are very different, so prospective entrants must seek
local solutions."

Before jumping in, however, companies should be warned that it will
take longer for e-commerce to advance from its formative stage in India
and China and other developing countries in the region than it did in
advanced industrialized countries like the US, Japan and Western
Europe.

"Most countries in the region, particularly China and India, lack a
nationwide credit card system or an efficient delivery network," says
Grau, "essential infrastructures that have greatly facilitated
e-commerce growth in more advanced countries."

In addition, in developing countries, the online shopping process is
often at odds with traditional business practices. B2C transactions in
China and India are conducted on a cash-basis, requiring e-commerce
companies to provide alternative-payment methods, such as cash on
delivery and wire transfers.

"Still, no matter what the obstacles, the markets of the region are simply too big to be ignored," says Grau.

Via eMarketer