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Strategic partnerships offer an often untapped but effective route to capitalizing on the growing e-commerce opportunities in Asia.
The race to claim the Asia-Pacific e-commerce boom continues. Based on growth forecasts, this is not surprising. The region’s e-commerce market size is estimated to reach US$4.2 trillion in 2024, before reaching US$6.76 trillion by 2029, reflecting a compound annual growth rate of 10%% over the period.1
For companies looking to capitalize on this surge in consumer demand, creating a commercially viable e-commerce strategy is easier said than done. Partnerships play an increasingly important role on the path to success.
Terence Yong, Head of Global Transaction Services Sales at DBS
“Partnerships can improve e-commerce business performance in sales, marketing, customer acquisition and retention, especially when businesses leverage technology and data to support them.”
In particular, he explained, management should seek to leverage existing relationships with financial and other strategic partners to drive e-commerce growth.
Smart Marketing for More Reach
For example, working with banking partners can allow a company to directly reach a wider range of target customers.
This can be achieved by offering customers a discount on a product or service if they pay for it with a credit card from a partner bank. Such promotional activities can be as broad or targeted as the company wishes.
This also opens up opportunities to funnel warm leads to the company’s e-commerce business. For example, if a home appliance company wants to sell products directly to consumers online. They could partner with a bank to leverage their mortgage customer base, and these new homeowners are hot potential customers as they will likely be looking for deals on new appliances.
The result is typically a win-win situation: the online store attracts more consumers, while the bank processes more transactions and can offer additional value to its customers beyond traditional banking services.
Such partnerships can go beyond promotions and include more integrated strategies to increase engagement on both sides. For example, companies could potentially work with a bank to develop an online subscription platform so that customers can pay for certain goods or services in fixed monthly amounts. In turn, this may give them certain privileges, such as early updates, depending on the product.
Levande, a platform that offers subscriptions to all-in-one devices, has found that this approach is effective, especially in a market with so many messages. “To do this, we need to build partnerships,” said Gaurav Julka, head of Devices-as-a-Service for Electrolux in Asia Pacific and the Middle East and Africa.
DBS Marketplace is a prime example of this. “We put our products online so that DBS consumers looking for home improvement loans or other services from DBS go to the Marketplace page and can access our products from our own website,” Julka explained.
Delivering on the E-Commerce Promise
A successful online shopping experience also depends on customers receiving their purchase as quickly as possible. Without a physical store presence, it is important for companies to manage the process of getting the product to the right person, as well as efficiently handling any returns.
This requires strong partnerships with third-party logistics (3PL) firms that specialize in end-to-end e-commerce fulfillment. These 3PL players have the ability to manage inventory, warehousing, taxes and customs, and even refunds.
E-commerce fulfillment can create additional business value in terms of gaining insights from the large volumes of transactional data generated. Some useful metrics that businesses use 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,” Yong explained.
In particular, the granularity, accuracy and real-time nature of 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-driven financing to their merchants. JD Logistics has achieved this with DBS by providing financing to Hong Kong SMEs to finance their cross-border e-commerce import business.”
Chart your path to eCommerce success
Sustained growth in e-commerce also relies on banking expertise to support companies that may be selling online for the first time or looking to expand into overseas markets given the endless opportunities that exist.
Newcomers to e-commerce may suddenly start receiving queries and requests from customers in different countries. They will need the ability to collect payments in different currencies, as well as pay different merchants and suppliers who might operate in different countries and therefore in different currencies.
These same companies must also provide access to the inventory of e-commerce platform providers to sell an aggregate pool of goods—either as part of a general resale or on a private basis.
Companies looking to expand their e-commerce presence face similar challenges. In their case, they may need more capacity to keep up with the growth and complexity of orders or payment volumes.
“These needs make it necessary for companies to partner with a financial institution that has experience in a particular region to be able to address potential payment and foreign exchange regulatory obstacles that may arise,” Yong said.
This 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 Kuh, the company’s head of commercial. Ninja Wang. “Partnering with industry experts allows us to leverage partners’ expertise and leverage their existing infrastructure, as well as the latest innovations and technologies, without having to build them ourselves.”
We rely on the right partners
Ultimately, emerging e-commerce leaders cannot underestimate the extent to which success in Asia Pacific will depend on mutually beneficial banking partnerships, whether through attracting and retaining customers, gathering data-driven insights to drive expansion, or facilitating transactions.
“E-commerce is multifaceted. We have worked closely with many companies in various fields to support their growth ambitions,” said Yong.
For businesses large and small seeking e-commerce, DBS offers a path to strategic and profitable growth. The bank has worked closely with many companies to provide solutions ranging from optimizing customer payment acceptance, facilitating global collections and settlements, generating warm leads for business growth, to leveraging e-commerce data to meet future funding needs. Partnering with a bank that has the right expertise can lead to smarter decisions and ensure e-commerce success.
(Read more in the DBS white paper, Accelerating Growth in the E-Commerce Age. Here)
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