Strategic partnerships offer an often untapped yet effective route to capitalising on Asia’s growing e-commerce opportunity.
The race to stake a claim in Asia Pacific’s e-commerce boom is on. Based on growth forecasts, this is no surprise. The region’s e-commerce market size is estimated to hit US$4.2 trillion in 2024, and then to reach US$6.76 trillion by 2029, reflecting a compounded annual growth rate of 10% during that time.1
For companies looking to benefit from this surge in consumer demand, creating a commercially viable e-commerce strategy is easier said than done. Partnerships play an increasingly important role as a route to success. “Partnerships can elevate e-commerce businesses across sales, marketing, customer acquisition and retention, especially if businesses use technology and data to support them” explained Terence Yong, Group Head of Sales, Global Transaction Services at DBS.
More specifically, he explained, management should look to leverage existing relationships with financial and other strategic partners to drive e-commerce growth.
Smarter marketing for greater reach
Working with banking partners, for example, can enable a company to reach a wider pool of targeted customers directly.
This might be achieved by offering customers a discount on a product or service if they pay for it using the credit card from the partner bank. Such promotional activities can be as broad or targeted as a company wants.
This also offers potential for directing warm leads to a company’s e-commerce business. For example, if a white-goods company is looking to sell products directly to consumers online. They could partner with a bank to tap on their home loan customer base and these new homeowners are warm leads as they are likely be seeking offers on new home appliances.
The results are typically win-win situations – the e-commerce store acquires more consumers, while the bank processes more transactions and is able to offer additional value to its own customers beyond traditional banking services.
Such partnerships can go beyond promotions to embed more integrated strategies to boost activity for both parties. For example, companies can potentially develop an online subscription platform in conjunction with the bank to enable customers to pay for certain goods or services via fixed monthly amounts. In turn, this might give them certain privileges, such as early upgrades, depending on the product.
Levande’s platform, which offers all-in-one appliance subscriptions, has found this type of approach to be effective, especially in a market that has so many messages out there. “To do that, we have to forge partnerships,” said Gaurav Julka, Head of Appliance-as-a-Service for Electrolux in APAC and MEA.
DBS Marketplace is a prime example. “We put our products online so DBS consumers looking for home renovation loans or other services from DBS come on the Marketplace page and can access our products from our own website,” Julka explained.
Fulfilling the e-commerce promise
A successful online shopping experience also relies on customers receiving their purchase as swiftly as possible. Without a physical store presence, it is essential for companies to manage the process of delivering the product to the right person, as well as handling any returns efficiently.
This requires reliable partnerships with third party logistics (3PL) firms that specialise in handling end-to-end e-commerce fulfilment. These 3PL players have the ability to manage business inventory, warehousing, taxes and custom duties, and even refunds.
E-commerce fulfilment can create further value for the business in terms of generating insights from the large amounts of transactional data that gets created. Some useful metrics that businesses harness to make smarter business decisions include real-time inventory levels, sales orders, delivery times and purchase-to-refund ratios.
“This information can also be used by companies to seek better financing terms from banks,” explained Yong.
In particular, the granularity, precision and real-time nature of the e-commerce data offers lenders a more accurate and holistic picture than traditional merchants can provide. “This also potentially extends to a new source of credit for online merchants,” Yong added, “where e-commerce platforms can also partner with banks to offer alternative data-led financing for their merchants. JD Logistics achieved this with DBS to provide financing to Hong Kong-based SMEs to fund their cross-border e-commerce import businesses.”
Mapping a path for e-commerce success
Sustainable e-commerce growth also relies on banking expertise that supports companies which might be selling online for the first time, or want to expand into overseas markets given the borderless opportunities that exist.
For newcomers to e-commerce, they might suddenly start receiving queries and requests from customers in multiple countries. They will need the ability to collect payments in different currencies, as well as pay a variety of merchants and suppliers who could operate in other countries and, therefore, different currencies.
These same companies must also ensure they can access inventory on e-commerce platform providers to sell an aggregated pool of items – either as part of a general resale or on a proprietary basis.
Similar challenges await those companies looking to deepen their e-commerce footprint. In their case, they might need greater capacity to keep up with the growth and complexity in order or payment volumes.
“These needs make it essential for companies to partner with a financial institution which has experience in a specific region, to be able to address potential hurdles around payments and currency regulations that may arise,” said Yong.
That approach can accelerate a firm’s growth. “Building our own capabilities, especially in an asset-heavy industry, can be time-consuming and challenging,” added Wee Hou Kooh, Head of Commercial for Ninja Van. “Forging partnerships with industry experts allows us to tap into the partners’ expertise and we get to leverage their existing infrastructure and latest innovations and technologies without the need to build them ourself.”
Banking on the right partners
Ultimately, whether through acquiring and retaining customers, gathering data-led insights to fuel expansion, or facilitating transactions, aspiring e-commerce leaders cannot underestimate the degree to which success in Asia Pacific will hinge on a mutually beneficial banking partnership.
“E-commerce is multi-faceted. We have worked closely with many companies on a variety of areas to support their growth ambitions,” said Yong.
For businesses large and small with an e-commerce ambition, DBS offers a path to open doors for strategic and profitable growth. The bank has worked closely with many companies to provide solutions ranging from optimising customer payment acceptance, facilitating global collections and settlements, cultivating warm leads to grow business to leveraging e-commerce data to meet future financing needs. Partnering with a bank that has the necessary expertise can lead to smarter decisions and ensure e-commerce success.
(Read more insights in the DBS white paper on ‘Accelerating growth in the age of e-commerce’ here)