Australia
China
India
Indonesia
Japan
Malaysia
Philippines
Singapore
South Korea
Taiwan
Thailand
Vietnam
In recent years, Asia’s e-commerce industry has emerged as a global powerhouse, driven by a burgeoning middle class, rapid urbanisation, and increasing internet penetration. According to Statista, the Asia Pacific region was the leader in the global e-commerce market in 2022, recording nearly $1.7 tn in revenue.
“Consumers around the region have started to focus on online shopping due to expanding internet access and the quick, efficient, and effective distribution of goods,” says Mordor Intelligence.
China, as the leading player in the global e-commerce landscape, accounts for nearly 50% of worldwide transactions. Last year, e-commerce revenue in China reached approximately $1.2 tn, exceeding the $811.03 bn worth of e-commerce revenue generated in the US.
Apart from China, other Asian countries like Japan and South Korea are also among the largest e-commerce markets in the world. Japan, in particular, is the fourth largest e-commerce market globally after China, the US and the UK.
According to Japan’s Ministry of Economy, Trade, and Industry, the size of the country’s business-to-consumer sector reached 22.7 tn yen ($152.6 bn) last year. Notably, this market has experienced significant growth, more than doubling in size over the preceding nine years, starting at 11.2 tn yen ($75.3 bn) in 2013.
Following Japan closely, South Korea boasts the world’s fifth-largest e-commerce market, states Oberlo. GlobalData reports a CAGR of 17.4% for the South Korean e-commerce industry from 2018 to 2022, culminating in a value of $108.2 bn last year. The trend is anticipated to persist in 2023, with an expected 10% increase in e-commerce sales.
India and Indonesia also feature in the world’s top 10 largest e-commerce markets. All in all, the e-commerce market in Asia is expected to exhibit a CAGR of 9.94% to $4,703 bn by 2028.
“Southeast Asia’s e-commerce sales will grow faster than any other region. Five of its countries will be in the 2023 top 10 list for fastest growth,” reveals a report by Insider Intelligence and eMarketer.
Asia’s e-commerce market is not without challenges
Despite Asia’s e-commerce industry exhibiting robust growth and dominating the global landscape, a few issues in this arena still remain.
The diverse geography of Asia presents logistical challenges, impacting the efficiency of supply chains and last-mile delivery. Experts suggest that navigating the complexities of transportation networks across multiple countries demands innovative solutions to ensure timely and cost-effective deliveries.
Additionally, cross-border e-commerce faces complexities related to regulatory variations, customs procedures, and diverse consumer preferences. Also, economic disparities within and between Asian countries impact consumer purchasing power.
“Also, A critical barrier to the widespread diffusion of e-commerce is the lack of trust among the fundamental players— distributors, business platforms, consumers, and delivery services,” says the Asian Development Bank.
“Consumers commonly have a fundamental lack of faith to engage with online business platforms, which involve requiring personal information and money,” the bank adds.
How to invest in Asia’s e-commerce industry?
Despite the challenges facing Asia’s e-commerce sector, it continues to drive growth in global online retail sales. Faced with this, we have compiled a list of three stocks for investors to take part in this growth story.
JD.com
JD.com, alternatively recognized as Jingdong, stands as one of the prominent e-commerce giants in China and ranks among the nation’s leading internet corporations in terms of revenue. Established in 1998, JD.com operates as a one-stop e-commerce platform, providing a diverse range of products to over 580 million active customers.
In the year ended December 2022, the company’s revenues increased by 9.9% year-on-year to 1,046.2 bn yuan ($147.26 bn). JD.com also recorded a net profit of 10.4 bn yuan ($1.46 bn) during the period, compared to a net loss of 3.6 bn ($506.72 mn) in 2021.
The company’s stock is listed on the Hong Kong Stock Exchange (HKG: 9618) and Nasdaq. (NASDAQ: JD). JD.com has a market capitalisation of $48.49 bn. The company’s stock has fallen by 46.27% in the past year, however, it climbed 15.18% over the past month. Over the past five years, the stock surged 43.28%. It has a PE ratio of 13.23 and a price-to-book ratio of 1.38.
Coupang
Coupang is a South Korean e-commerce company that operates through web platforms and mobile applications, offering a diverse range of products, including home goods, electronics, and food products. Founded in 2010, it has become a major player in the Korean retail market.
The company saw a 12% year-on-year rise in revenue, amounting to $20.6 bn in the fiscal year ending December 2022. During the same period, gross profit spiked by 60% year-on-year to $4.7 bn. Coupang’s net loss also shrank to $92 mn in 2022 from $1.5 bn in 2021.
Coupang stocks are listed on the New York Stock Exchange (NYSE: CPNG). The company has a market cap of $28.89 bn. Since last year, the company’s shares have fallen by 17%. Along with that, Coupang shares have a PE ratio of 66.86 and a price-to-book ratio of 9.87.
Rakuten
Rakuten is Japan’s largest online marketplace, playing a prominent role in the country’s e-commerce landscape. Additionally, the company is actively involved in e-commerce innovation, with a focus on technology advancements in the field.
For the year ending December 2022, the company saw a 14.6% increase in revenue to 1.9 tn yen ($12.72 bn). Profits for Rakuten in the period amounted to 375.91 bn yen ($2.51 bn). “Non-GAAP operating income for domestic e-commerce grew significantly to 95.6 bn yen ($640.43 mn), up 36.6% YoY, for the year,” notes the Japanese e-commerce giant.
The company has a market cap of $8.23 bn and is traded on the Tokyo Stock Exchange (TYO: 4755). Additionally, American Depository Receipts (ADRs) for Rakuten are listed on Nasdaq (OTCMKTS: RKUNY) and can be traded through over-the-counter transactions. The company’s shares have fallen by 11.04% since last year. It has a negative PE ratio of 3.18 and a price-to-book ratio of 1.28.
Editor’s note: All stock movement figures as of November 22, 2023.
