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Research - AUGUST 24, 2017

Asia Pacific e-commerce sales growth exceeds Europe and North America

by Andrea Waitrovich

GlobalData estimates the Asia Pacific e-commerce market at $1.4 trillion in 2017, up from $535 billion in 2013, representing a compound annual growth rate of 27 percent between 2013 and 2017. This is much higher than the increase of online sales in Europe and North America, which registered compound annual growth rates of 14 percent and 13 percent, respectively.

The growth in online sales has been a big driver of the strength of the industrial property market in recent years.

The bulk of online spending in Asia comes from China, which surpassed the United States in 2014 to become the largest e-commerce market globally. China alone accounts for 75 percent of e-commerce sales by value among the 15 Asian markets covered in GlobalData’s E-commerce Analytics database. Japan and India are the second and third largest e-commerce markets, accounting for 10 percent and 3 percent of e-commerce by overall transaction value, respectively.

“More interesting than fast growth is Asian consumers’ advanced approach to e-commerce when compared to consumer behavior in most developed economies where consumers still use cards as the preferred payment method. Consumers in Asia prefer to use digital and mobile wallets — for example Alipay, Paytm, etc. — when shopping online,” said Ravi Sharma, analyst at GlobalData’s Payments Practice.

As shown by GlobalData’s Consumer Payments Insight Survey results, 47 percent of total e-commerce transaction value in Asia Pacific was carried out using digital and mobile wallets in 2017. Payment cards, bank transfers and cash/checks account for 28 percent, 13 percent and 11 percent, respectively.

The growth of new payment methods in Asia Pacific largely comes at the expense of debit and credit cards. The total share of digital and mobile wallets for e-commerce payments in Singapore doubled from 10 percent in 2013 to 22 percent in 2017, while debit and credit cards account for 42 percent — declining from 55 percent in 2013. Similarly, in India, the share of digital and mobile wallets tripled from 7 percent to 29 percent during the same period. GlobalData’s Consumer Payments Insight Survey also finds comfort and security are increasingly important drivers of choice when it comes to digital and mobile wallets, which are perceived to be more secure than card payments.

“The rest of the world is likely to follow Asia as digital wallets now offer a secure, quick and more convenient way to make online purchases,” noted Sharma.

According to JLL Research, e-commerce sales in China will represent more than 50 percent of global e-commerce sales by 2018, and China's online retail transaction value is expected to double from 2016 to 2029. E-commerce sales in Japan (the fourth-biggest market) are on a similar growth trajectory and estimated to double in size to ¥25.1 trillion ($226.1 billion) in 2020, at an annual compound annual growth rate of 12 percent. In South Korea, the modern warehousing industry has been one of the fastest growing sectors between 2000 to 2015, growing threefold to reach 2.3 trillion won ($2 billion) in 2015.

With connection to industrial markets, Asian markets remained the world's most expensive as demand for top-quality warehouses and distribution centers continued to outpace supply globally, according to a new report from CBRE Commercial Real Estate Services.

The second annual Global Industrial & Logistics Prime Rents Report showed prime industrial rents in 70 major markets around the world increased by 2.2 percent on average in first quarter 2017 compared with the same period a year ago. That growth rate continues a string of several years of growth in the measure.

Hong Kong tops the list this year, with warehouse rents at $32.40 per square foot per year, with Tokyo second ($18.22 per square foot) and London third ($17.86 per square foot). Six of the 10 most expensive markets are in the Asia Pacific region.

On a regional basis, the Americas registered the most growth in prime logistics rents at 3.8 percent. That is followed by a 1.4 percent gain in Asia Pacific and a 1.2 percent gain for Europe, the Middle East and Africa.

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