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Strengthening E-Commerce in the Asia Pacific: Analytical Essay

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Introduction

The acute awareness of building strong multilateral ties within Asia and the Pacific saw the establishment of the ASEAN Regional Forum (ARF) – a platform aimed at discussing confidence-building measures. This includes trade and commerce and the challenges surrounding it.

By 2021, e-commerce in Asia-Pacific (APAC) is expected to reach $3.5 trillion. This multi-trillion dollar e-commerce market is the world’s largest, and almost three times larger than North America[footnoteRef:1]. Whilst the projected growth is slightly slowing in the coming years, it still signifies a stabilizing growth trajectory with regions’ developed, emerging and frontier markets offering investors various opportunities[footnoteRef:2]. Comment by HOW JACKSON : Awkward phrasing. Try “the e-commerce market is expected to value at $3.5 trillion by 2021.” Comment by HOW JACKSON : Should include a brief introduction to e-commerce (aka what constitutes e-commerce based on general understanding) and what is driving the growth of e-commerce [1: https://go.rakutenmarketing.com/hubfs/201808-GMT-1014-RM-APAC-eCommerce-Report-FINAL.pdf] [2: https://sbr.com.sg/economy/asia/apacs-e-commerce-growth-hit-142-in-2019-fitch-solutions]

As e-commerce becomes increasingly international, the retail supply chain will need to continuously evolve to keep up. Today, over 50% of all the online shopping for retail goods and services in the world takes place in the Asia-Pacific region. However, Asia’s e-commerce market remains highly heterogeneous. In terms of e-commerce readiness, the Republic of Korea ranks fifth globally while Afghanistan ranks 132. Potential investors would also have to navigate some challenges, particularly with emerging Asia markets, as political risks and poor telecommunication services continue to hinder the region’s progress. In addition, cybersecurity remains a key concern to ensure safe e-commerce transactions. There is thus an increasing struggle to combat sophisticated cyber threats and the search for appropriate solutions to address them. Comment by HOW JACKSON : Quite sure the nature of e-commerce is such that it thrives on international business. Can look deeper into why e-commerce is proving to be much more popular as compared to retail shopping (convenience maybe) Comment by HOW JACKSON : I have few issues with the content here, just take note that the following comments are aimed at how you portray the information available to you. Also, try to refine this paragraph a bit in terms of its clarity. There are far too many issues in this paragraph (admittedly, all of them are important and relevant) but the entire paragraph lacks focus as a result. If you intend to broadly sweep across multiple issues with e-commerce is facing, might be better to add a signal phrase such as:“Broadly speaking, there are several impediments to the spread of e-commerce. These include the (whatever it is you deem fit to add)”However, on a closer read you seem to be delving into the challenges facing e-commerce, if that is the case, do make it clearer by eliminating the first two sentences (which expound on the physical vs. online shopping debate). Comment by HOW JACKSON : When referring to varied penetration and spread of e-commerce within Asian markets, heterogeneous as a description is not inaccurate. It might be better if you can consider the target audience of the guide and fit the language to the delegates (also by showcasing the varied levels of penetration of e-commerce into Asia-Pacific markets, you get to drive delegates’ understanding of the topic and shape debate) Comment by HOW JACKSON : Can also define this term in an embedded sub-clause or in parentheses Comment by HOW JACKSON : Consistency is better. If you used the full “Republic of Korea” previously, use “Islamic Republic of Afghanistan” here

The discussion at hand will then require delegates to consider the complexity of the issue, including the political, economic and social aspects. In the ARF, delegates are expected to formulate solutions to overcome barriers for the Asia Pacific to achieve greater e-commerce connectivity. Delegates are also expected to mitigate the existing infrastructural and security limitations to strengthen cybersecurity in the region.

Comment by HOW JACKSON : To be very honest, all issues are complex so this sentence serves no purpose. What you can say is that e-commerce is inexplicably linked to a multitude of issues (cyber-security, telecommunication networks, investor confidence, smart countries etc.) amidst a world where telecoms can be targeted or utilized as tools for surveillance and politicking (Huawei in the US and Google in China for example) and delegates will do well to keep all these issues in mind even as they attempt to achieve e-commerce connectivity

[bookmark: _vfjucwtypvrt]Definitions Comment by HOW JACKSON : I’m not sure if this had been briefed/taught, but do share this around as well. Definitions need not be just textbook definitions of technical terminologies within the scope of the topic. In fact, definitions can be used to scope the debate for the delegates. In this case, I may even take this chance to define “capacity building” or even “cybersecurity” to hint to delegates the possible actions they can take. In fact, if I was feeling a little less helpful, I would just define problems plaguing e-commerce such as Online Identity Verification, Customer Loyalty, Data Security or even technical terms such as “Snooping” or even “Data Leakage” and let delegates decide what measures they intend to come up with.Admittedly, I have not done as much research as you did hence I am unable to offer more specific examples but these should suffice to guide you.

E-commerce

E-commerce involves the purchase and sale of products (such as physical goods, digital products or services) transacted over computer networks. Technologies such as the internet and electronic data interchange over devices such as personal computers, tablets, and mobile phones can be used for such purposes. Major e-commerce categories include business-to-consumer (B2C), business-to-business (B2B), and consumer-to-consumer (C2C). Comment by HOW JACKSON : Try not to put in technical terms (even though these are pretty straightforward ones) inside your definitions without explanations at least ya?

Confidence Building Measures (CBMs)

CBMs are measures undertaken by states to communicate the motivations and intentions behind their military activities to other states in a bid to reduce uncertainty, and minimise suspicion and room for misinterpretation. CBMs include 3: Comment by HOW JACKSON : Okay while skimming through this is quite alarming to the delegates. No delegate will even see the link between e-commerce and military activities so your definition ends up causing far more confusion than necessary.

  1. Principles/declaratory measures
  2. Transparency measures
  3. Constraining measures

Historical Progress Comment by 19Y6C22 YI SHIQI: for this part do i search for govt policies? mostly there are only policies on trade so do i add those here? and do i add companies progress here or govt? Comment by 19Y6C22 NICHOLAS SOH KAI SERN: https://www.crunchbase.com/organization/bukalapak#section-overview Comment by 19Y6C22 NICHOLAS SOH KAI SERN: touch more on APC e-commerce companies

Time

Issue/Significance

1991 – The Beginning

In 1991 the internet was opened up to commercial use; since then many businesses have taken up residence at websites. Comment by 19Y6C22 NICHOLAS SOH KAI SERN: this is super generic. what u mean by open up? The first e-commerce website was established? Comment by 19Y6C22 YI SHIQI: Yea ok i find a specific eg on this Comment by HOW JACKSON : Can just rephrase it into “the World Wide Web became publicly available”

1994 – Money Online

Third-party payment services for processing online credit card sales began to appear, together with the establishment of the first Online Bank. In October 1994, Stanford Federal Credit Union became the first financial institution in the U.S. to offer internet banking to all of its customers.

(https://www.gobankingrates.com/banking/history-online-banking/ https://www.templatemonster.com/blog/history-of-ecommerce-timeline-infographic/)

1995 – Changing the Playing Field

eBay was founded in Pierre Omidyar’s San Jose lback in September 1995. eBay is an American multinational corporation and e-commerce company, providing consumer-to-consumer and business-to-consumer sales services via the Internet. It changed the playing field for e-commerce. (http://www.ebay.com/)

2000 – The Collapse

Dot-com collapse when thousands of internet of internet businesses folded. Despite the epic collapse, many of the worlds’ most established traditional brick-and-mortar businesses were emboldened with the promise of e-commerce and the prospect of serving a global customer base electronically. (http://www.spirecast.com/history-of-e-commerce/) Comment by HOW JACKSON : Yeap.

2000 – E-commerce Changed

A great number of business companies in the United States and Western Europe represented their services on the World Wide Web. At this time the meaning of the word e-commerce was changed. People began to define the term e-commerce as the process of purchasing available goods and services over the Internet using secure connections and electronic payment services. (http://www.ecommerce-land.com/history_ecommerce.html) Comment by HOW JACKSON : Can also define terms such as these.

2002 – Shopping Made Easy

Google spotted a gap in the market and started what is today known as Google Shopping. Back in 2002, Google Shopping was a price comparison search tool that would crawl all online products and display them in the “Shopping” tab and was a great way for smaller businesses to advertise their products for free. Comment by HOW JACKSON : An oft-used term between techies but you may want to avoid using lingo such as these t avoid confusion. (http://www.yoma.co.uk/blog/20-years-ecommerce-history-timeline/)

2003 – Amazon

In 2003 the company made its first annual profit which was the first step to the further development; at the outset Amazon.com was considered as an online bookstore, but in time it extended a variety of goods by adding electronics, software, DVDs, video games, music CDs, MP3s, apparel, footwear, health products, etc. The original name of the company was Cadabra.com, but shortly after it was changed to Amazon because of popularity. (http://www.ecommerce-land.com/history_ecommerce.html) Comment by HOW JACKSON : I believe an appropriate manner of describing this would be “expanded its catalogue” or something to this effect.Do avoid such awkward phrasing.

2006 – Targeting

Facebook signed a deal with Microsoft to provide and sell ads on their site so as to start making a profit. This was much to the pleasure of e-commerce businesses as they could now reach out to an audience who were mostly tech-savvy and open to the idea of buying online; now targeted ads, video ads and timeline ads. Comment by HOW JACKSON : A broken phrase here. I am going to assume you did not finish typing.

(http://www.yoma.co.uk/blog/20-years-ecommerce-history-timeline/)

2008 – B2B

Business-to-business electronic commerce accounts for the vast majority of total e-commerce sales and plays a leading role in global supply chain networks. In 2008, approximately 40 percent of manufacturing sales and 16.3 percent of wholesale sales in the United States were e-commerce related. (http://www.supplychainquarterly.com/columns/scq201102monetarymatters/)

2013 – Taobao in Singapore

Alipay for Taobao payments

2016 – Lazada Acquisition in SEA

Redmart Acquisition Comment by HOW JACKSON : Where are the descriptions for these events?

Alibaba Group

Alibaba Group launched its Electronic World Trade Platform (eWTP) initiative. It aims to facilitate cross‐border trade for SMEs, by removing some of the obstacles that make them reluctant to sell online to foreign buyers. This includes helping SMEs establish e‐fulfilment hubs in their home country, as well as assisting with matters such as e‐payment. There is even the potential for foreign governments to agree to digital free‐trade zones, where regulation is kept to a minimum. The first eWTP digital free‐trade zone (between China and Malaysia) was announced in March 2017.

2017 – Rise of M-commerce

It is believed the as e-commerce grows it will turn more and more into m-commerce as smartphones become increasingly the norm in the day to day life; 55% of time spent with online retail today occurs on smartphones and tablets—imagine what that figure will be in five years. (https://www.internetretailer.com/2014/04/28/e-commerce-and-m-commerce-next-five-years) Comment by HOW JACKSON : Be careful of what you copy. This is an academic document not some sensational news article

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Multi-Shopping Comment by HOW JACKSON : I originally gave you the benefit of doubt as I read through the timeline but as I read on, it became painfully obvious that most if not all of these were directly copied from various sources with minimal edits. Forgive me if this is untrue but it just speaks volume about the level of effort put here. Fragmented phrases, emotive language and even directly referencing delegates with “Customers might see your product” are all hallmarks of poorly written/copied articles. I urge you to process whatever information is available in the sources and explain the events in such a manner as to showcase why these events were important or the impacts of these events on the development of e-commerce. The whole idea of including a timeline is to showcase the evolution of e-commerce and its challenges.

Nowadays, consumers don’t just have options for where they shop; they also have options for what they want to shop on. Customers might see your product while window shopping at the mall, check it out on their smartphones, conduct further research on their tablets, and finally buy the product on their desktops. They move fast between devices and expect brands to keep up. (https://www.curalate.com/blog/future-of-ecommerce/)

Affiliation

Amazon is one of the first e-commerce businesses to establish an affiliate marketing program, and nowadays the company get about 40% of its sales from affiliates the third party sellers who list and sell goods on the web site. (http://www.ecommerce-land.com/history_ecommerce.html)

2019 – Steady rise of E-commerce

One big reason e-commerce will continue its steady march of growth is simply because more people worldwide will hop online and start spending money. In 2015, the number of digital buyers stood at 1.46 billion; in 2019 that figure is expected to cross the 2 billion mark. (https://www.curalate.com/blog/future-of-ecommerce/)

2020

According to eMarketer, the region with the highest total of e-commerce sales – Asia-Pacific, where e-commerce sales overtook North America in 2014. According to Forrester, the e-commerce market trend in the Asia-Pacific region will reach $1.4 trillion in 2020. eMarketer attributes the growth of the Asia-Pacific market to the development of technology in the region, allowing customers to make online purchases. (https://www.demoup.com/blog/six-new-ecommerce-trends-shaping-the-future-online-retail/)

In the Philippines and Vietnam, dedicated e-commerce offices and agencies have been created to help reshape the regulatory environment. One example is an e-commerce Trustmark which is a logo displayed on the website to indicate that the business has been shown to be trustworthy by the issuing organisation (such as TRUSTe and VeriSign). Although intended as a way for shoppers to be reassured that websites are securely pr

Key Stakeholders

China, South Korea, Japan, Australia, New Zealand, Southeast Asia, India and the Pacific

China

With over 543 million digital buyers, China leads the way among APAC countries for e-commerce. Chinese consumers account for 52% of total e-commerce sales in APAC and are on pace to exceed 60% by 2021. Local Chinese tech champions such as Alibaba Group, Tencent and JD dominate a rapidly growing e-commerce ecosystem. The rapid development of this industry combined with a large and growing digital consumer base has fuelled tremendous growth both domestically and abroad via cross-border trade. This unique environment is propelling innovations in commerce and digital trade, with China serving as a testbed for new ideas that will propel the future of the global e-commerce marketplace. Comment by 19Y6C22 NICHOLAS SOH KAI SERN: include in the timeline

The Chinese e-commerce market’s success stems from factors including government support, the growing power of the middle class, increasing hi-speed network access and rapid adoption of new technology.

Japan, South Korea

East Asia has some of the world’s biggest and most advanced e-commerce markets (Kshetri 2018a). Japan is Asia’s second-largest e-commerce market and the fourth-largest in the world (Ecommerce Europe 2015). The Republic of Korea is Asia’s third-largest retail e-commerce market, and seventh worldwide (eMarketer 2015a).

Australia, New Zealand

In Oceania, both Australia and New Zealand have highly developed e-commerce markets. E-commerce consumers in Oceania shopped more cross-border than other economies in Asia and the Pacific. However, most largely prefer to shop offline due to shipping costs. Other reasons include concerns over the ability to return items (28%), lack of payment security (21%) and website legitimacy concerns (19%). Despite being a growing multi-hundred billion dollar economy, Australians are more wary of online shopping than any other APAC country.

Southeast Asia

In 2016, Southeast Asia was estimated to have 260 million internet users and is expected to have 480 million by 2020 (Google and Temasek 2016). As of 2017, however, only 3% of the 560 million people in Southeast Asia had shopped online (Wenyu 2017). Nevertheless, the young population, lack of big-box stores and an ever growing middle class will likely drive the region’s e-commerce in the future. (Google and Temasek 2016).

E-commerce is heavily cross-border in some Southeast Asian economies. For instance, one estimate suggests that 55% of e-commerce in Singapore and 40% in Malaysia’s are cross-border (Payvision 2013).

India

India’s dominant position in the subregion’s e-commerce market is driven by the country’s size. Nevertheless, the country is expected to see rapid e-commerce market growth. Investment bank Morgan Stanley reports India’s e-commerce market should reach $200 billion by 2026 (Bansal 2018). India has perhaps the most potential for growth in the Asia‐Pacific e‐commerce marker, as its citizens catch up with their neighbours in terms of access to the Internet, and transition from a traditionally cash‐based culture.

Scope of Debate

The Asia Pacific is far from being the e-commerce heaven due to a myriad of pressing issues that are presented below. Internet penetration, payment methods, customs administration and regulatory environment for cross border are just few of the many concerns that e-commerce businesses face.

ICT accessibility, availability, and affordability

52% of the world population lacked internet access in 2017, with 62% of these from Asia and the Pacific according to the International Telecommunication Union (ITU). Lack of internet access can be broken down further to factors including affordability, among others (Facebook 2016). In many least developed countries (LDCs) and developing countries in Asia and the Pacific, e-commerce use among firms is extremely low.

While the availability of broadband internet connections has been a key factor in fueling its growth, e-commerce requires substantial ICT infrastructure that allows sellers to transact business with buyers. The availability of secure internet servers is also key to the growth and sustainability of the e-commerce industry and market.

Another key concern in e-commerce development is the affordability of ICT hardware, software, and services. There is wide variation in fixed and mobile broadband prices across economies. All the above result in a wide variation in e-commerce development across the region.

Payment Methods

Security and reliability of payment is a major concern for most businesses and consumers in Indonesia, Philippines, Thailand and Vietnam. Cash On Delivery (COD) is still the preferred payment method in most of these countries. In Indonesia, as an example, credit card penetration is less than 15 per cent. In some countries, COD can be anywhere from 50–70 percent total orders shipped. In Malaysia, cross-border payments are getting more acceptances and the overall payment landscape is competitive. On the other hand, Singapore has the most mature e-commerce payment infrastructures in Southeast Asia. Singapore’s various payment systems are reliable and the overall credit card penetration is very high, which is attractive as a target market for cross-border e-commerce. Brands and retailers entering the Singapore e-commerce market can expect a mature online shopper with high trust in online payment methods.

Customs administration and foreign market access

Amongst most countries in ASEAN, custom transparency, and inconsistent custom procedures remain to be areas for concerns. Today, import procedures, VAT and duties differ across countries and for different product types. Singapore stands out in the region with strong clarity and consistency of the customs and borders process. Customs and tax procedures are straightforward and corruption is at a global record low.

In Indonesia, Philippines, Thailand and Vietnam, challenges remain for smaller international enterprises outside the countries to sell their products and services there, since there is a lack of regulations for e-commerce and non-tariff barriers still apply over a broad range of products. Malaysia has a large number of free trade agreements that allow foreign business access, but there are still some minor hurdles when accessing the market. Only the Singapore government recognises the value of lowering barriers to trade and actively pursues an agenda of open trade borders.

The regulatory environment for cross-border

E-commerce in Malaysia is relatively strong but enforcement of existing regulations could be improved. Singapore, on the other hand, has taken the lead across the region in adopting many forward-looking regulations that address e-commerce.

Potential Solutions

Proper legal frameworks

The legal and institutional environment can be a powerful facilitator for e-commerce adoption and development. Appropriate legislation is part of the backbone of the e-commerce industry. Weak legal and regulatory frameworks can result in low levels of trust in e-commerce transactions and thus reduce e-commerce use. Basic laws that are needed for e-commerce adoption fall into four categories: (i) e-transactions, including rules related to electronic signatures and authentication; (ii) consumer protection; (iii) data protection and privacy; and (iv) cybercrime.

Education on e-commerce

Social acceptance and awareness play a major role in the initial adoption stage for e-commerce development. The level of confidence, risk aversion, and inertia among firms are critical factors for adopting e-commerce, as are awareness, knowledge, and understanding of e-commerce opportunities. The consumers often have low level of (i) awareness and knowledge of e-commerce benefits; (ii) general and computer literacy, along with English proficiency; (iii) trust in e-commerce vendors, postal services, and other logistics; and (iv) perception of foreign products and/or vendors. This presents a variety of challenges for developing e-commerce

Developing e-payment systems

E-payment companies can take advantage of the fast growing e-commerce market in Asia and the Pacific. Two ways they can do this are by focusing on the unbanked or by partnering with local banks. Although there are plenty of options in advanced e-commerce markets (Chan 2017), less-advanced e-commerce markets have large growth opportunities.

Providing logistics and delivery services

There are many ways e-commerce firms and logistics service providers can increase delivery efficiency for products ordered online. For example, Lazada developed its own logistics and delivery infrastructure in Vietnam —and is ranked first in terms of e-commerce revenue in the country (Hanoitimes 2017). Additionally, DHL eCommerce—which offers end-to-end domestic delivery service to Thailand’s e-commerce merchants— has expanded its services to cover 100% of the Thai market in 2017, with the help of 200 service points from which one can send and receive parcels. The company has then added 300 more points in Thailand in the first quarter of 2018 and is planning to reach over 1,000 such points in the coming months (DHL 2017a, 2017b, 2018). Investment in new technology to enhance e-commerce business models Investment in latest technologies can help firms create powerful business models. For instance, Wifi “sniffers”, “beacons”, and other methods can be used to collect data on visitors to retail outlets.The data help determine store traffic flow. Other investments include the use of improved personalization of pages viewed by shoppers (Lucas 2017) and, as mentioned, use of drones for delivery (Huang 2017).

Bibliography

  1. https://www.econstor.eu/bitstream/10419/168517/1/Marcus-Petropoulos-Jitsuzumi.pdf
  2. https://www.adb.org/sites/default/files/publication/430401/embracing-e-commerce-revolution.pdf
  3. https://go.rakutenmarketing.com/hubfs/201808-GMT-1014-RM-APAC-eCommerce-Report-FINAL.pdf
  4. https://www.cloudways.com/blog/asia-pacific-ecommerce-challenges-opportunities/

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