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Strategic partnerships represent an untapped yet effective means of capitalizing on Asia's growing e-commerce opportunities.
The race is on to take the lead in Asia Pacific's e-commerce boom. Based on growth forecasts, this is not surprising. The region's e-commerce market size is projected to reach US$4.2 trillion in 2024, then US$6.76 trillion by 2029, at a compound annual growth rate of 10%.1
For businesses looking to benefit from the surge in consumer demand, building a commercially viable e-commerce strategy is easier said than done, with partnerships playing an increasingly important role as a path to success. “Partnerships can improve sales, marketing, customer acquisition and retention for e-commerce businesses, especially when companies use technology and data to support them,” explains Terence Yong, group sales head of Global Transaction Services at DBS.
More specifically, he explained, management should seek to leverage existing relationships with financial and other strategic partners to drive e-commerce growth.
Expand your reach with smarter marketing
For example, working with banking partners allows businesses to directly reach a wider audience.
This can be achieved by offering discounts to customers when they pay for goods and services using the affiliated bank's credit card. Such promotional activities can be as broad or targeted as the business desires.
This could also potentially drive qualified leads to a company's e-commerce business. For example, if a white goods manufacturer wants to sell products online direct to consumers, they could partner with a bank to tap into their mortgage customer base. These new homeowners are likely to be on the lookout for offers on new home appliances, and therefore represent hot leads.
The result is usually a win-win situation: the e-commerce store reaches more consumers, and the bank is able to process more transactions and provide added value to its own customers beyond traditional banking services.
Such partnerships can go beyond promotions and incorporate more integrated strategies to drive activity on both sides. For example, a company could work with a bank to develop an online subscription platform that allows customers to purchase certain goods or services for a set amount each month. This could provide customers with certain perks, such as early upgrades for some products.
Levande's platform, which offers an all-in-one home appliance subscription, has found this kind of approach to be effective, especially in markets with a lot of messaging. “To do that, you need to build partnerships,” says Gaurav Yurka, head of Appliances as a Service for Asia Pacific and Middle East and Africa at Electrolux.
DBS Marketplace is a great example: “We put our products online so DBS consumers looking for home improvement loans or other DBS services can visit our Marketplace page and access our products through our website,” Julka explains.
Delivering on the promise of e-commerce
Part of the success of online shopping is ensuring that customers receive their purchases as quickly as possible. Without a physical store, you need to manage the process of getting products to the right people and handling returns efficiently.
This requires a trusted partnership with a third-party logistics (3PL) company that specializes in handling end-to-end e-commerce fulfillment. These 3PL companies have the ability to manage a company's inventory, warehouses, taxes, duties, and even refunds.
E-commerce fulfillment can create additional value for businesses in terms of generating insights from the large amounts of transactional data it creates. Real-time inventory levels, sales orders, delivery times, purchase-to-refund ratios and more are some of the useful metrics that companies can leverage to make smarter business decisions.
“This information can also be used by companies to seek better loan terms from banks,” Yong explained.
In particular, the granularity, accuracy and real-time nature of e-commerce data provides lenders with more accurate and comprehensive information than traditional merchants can provide. “This could also become a new source of credit for online merchants,” Yong added. “E-commerce platforms can also partner with banks to offer merchants alternative data-based financing. JD Logistics partnered with DBS to provide loans to Hong Kong-based SMEs to fund their cross-border e-commerce import operations.”
Plotting your path to e-commerce success
Sustainable e-commerce growth will also depend on banks’ expertise in supporting businesses selling online for the first time or those wanting to expand into foreign markets given the cross-border opportunities that exist.
If you're new to e-commerce, you may suddenly be receiving inquiries and requests from customers in multiple countries, and you'll need the ability to collect payments in different currencies, as well as the ability to pay different merchants and suppliers who may operate in other countries and use different currencies.
These businesses will also need to ensure that they have access to the e-commerce platform provider's inventory to sell aggregated pools of items, either as part of a general resale or on a proprietary basis.
Similar challenges await businesses looking to expand their e-commerce footprint, which may require greater capacity to accommodate the increasing volume and complexity of orders and payments.
“These needs make it imperative for businesses to partner with financial institutions with experience in specific regions to help them navigate potential hurdles around payments and currency regulations,” Yong said.
This approach can accelerate a company's growth. “Building your own capabilities can be time-consuming and challenging, especially in asset-heavy industries,” added Wee Hou Kooh, head of commercial at Ninja Van. “By partnering with industry experts, we can leverage our partners' expertise and take advantage of their existing infrastructure and the latest innovations and technologies without having to build it ourselves.”
Rely on the right partner
Ultimately, those aspiring to be e-commerce leaders – whether through acquiring and retaining customers, gathering data-driven insights to drive expansion, or facilitating transactions – should not underestimate how much their success in Asia Pacific will depend on mutually beneficial banking partnerships.
“E-commerce is multifaceted. We have worked closely with many businesses in different sectors and supported their growth ambitions,” Yong said.
DBS offers businesses large and small with e-commerce ambitions a path to unlock strategic and profitable growth. The bank has worked closely with many businesses to provide solutions ranging from optimizing customer payment acceptance, facilitating global collections and settlements, and uncovering hot leads to grow your business, to leveraging e-commerce data to meet future financing needs. Partnering with a bank that has the expertise you need can help you make smarter decisions and ensure your e-commerce success.
(Read more in the DBS white paper, “Accelerating Growth in the E-Commerce Era.”) here)
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