The fast growth of the Asian market brings with it chances of expansion for European retailers. Customers in Asia are looking for luxurious products from Europe, and now is an excellent time to try and reverse the current flow of trade. I invited Artur Wojtaszek, CEO at OEX24.com, to talk about the barriers of entering this still-exotic market and driving revenue with sales in Asia.
Aleksandra Kwiecień: Artur, as OEX24.com, you specialize in support of global sale, logistics and exports. Asia is one of the primary directions of your expansion. According to your estimations, how large is the distance that separates market development in Europe and Asia?
Artur Wojtaszek: There is no doubt that the eCommerce market is expanding more and more dynamically with each passing year. While building the OEX24.com strategy, we were investigating the specificity and conditions on various markets, but above all, we looked at the needs of companies and consumers from Europe, Asia, UAE, the U.S. and all emerging markets. Our research revealed that universal access to the Internet means that, to the surprise of many experts, preferences and shopping habits of customers using the potential of eCommerce around the world are very similar. Looking through the prism of business development, we learned that we should look for the key differences not only in the customer’s behaviors, but also in the potential of individual markets regarding their scale and the dynamics of development of the digital area.
The European market has large access to the Internet. Among nearly 750 million residents, over 98% have permanent access to the network, and nearly 60% make regular online purchases. Such a situation results from the comfort associated with the small distances (logistics area), coherent legislation (EU) and very similar consumer needs to any entrepreneur who decides to start eCommerce in Europe. On the other hand, the same aspects cause significant saturation of the market, strong competition and necessity of winning customers on the basis of strategies that take into account not only standard value proposals, but also low price or fast delivery of the order.
In contrast, the entrepreneur developing eCommerce in the Asian market undoubtedly has the chance to build a much larger scale of business and participate in the extremely dynamic process of sales digitalization. The Asian market has over 4.5 billion inhabitants. The rapid development of IT technology and the Internet, much faster than in Europe, has resulted in over 90% of consumers shopping online using smartphones, and the majority of the payment transactions are based on digital solutions like WeChat or Alipay.
AK: The difference in the number of users who already seamlessly shop via mobile devices is overwhelming. What opportunities does it bring to European producers? Is there any particular segment of products that have a greater chance to break through in Asia?
AW: Yes, there are a few really good opportunities. Entrepreneurs interested in developing their business in the Asian market should be aware that, at the moment, products from Europe are highly valued by Asian customers. European companies specializing in the production and distribution of natural cosmetics, but also of fresh and ecological food have been successfully leveraging this trend in Asia for some time.
AK: Are there any other product groups that especially attract Asian customers? What is the reason for this interest?
AW: Inhabitants of Asia are very interested in European brands that they associate with the idea of beauty or luxury. As for now, we have focused on the health & beauty, childcare, and home appliance industries, but in fact, the specific market defines what demand its customers have.
AK: What can European producers and sellers win, if they decide to start offering their products to Asian customers?
AW: The largest potential of Asian markets is their scale, the immense number of consumers. They might have slightly different preferences regarding the purchase of certain assortment groups, chemical compositions of goods, or they may simply have different taste than the customers that we already know, but at the same time, the Asian market is incredibly diversified. If the goods are not accepted in, for example, Vietnam, it does not mean that they will not enjoy popularity in Indonesia or Malaysia, for example. After all, the population of each Asian country is tens or hundreds of millions of people.
AK: You’ve been cooperating with Asian producers, Chinese in particular, for many years. What are the tools that you have used to support bilateral trade?
AW: We started our partnership with Chinese companies over 10 years ago. Since then, we have been importing marketing materials and packaging for our clients from Europe. During our multiple visits to China, talks with Chinese partners aroused our interest in this export direction. We knew that to make this export effective, we had to create an online platform connecting all potential business partners. That’s how we begin to build the OEX24.com platform.
AK: During that time, what were the most significant barriers of entry for European retailers? What are the biggest differences in trade in Europe and Asia?
AW: Certainly, brands entering Asian markets will face many barriers related to the law and formal requirements of a given country. Each product entering the Asian market should be registered in local systems allowing them for sales. It is also worth checking what the future customers are interested in before we begin to sell in a given country. Different cultures have a different attitude to products or their ingredients. Also, tests that allow the sale of a given product might vary from country to country. For example, in the case of China, all cosmetics must be tested on animals, which usually doesn’t apply to producers selling in Europe.
Quite another type of barrier is operational and logistical difficulties. Sending parcels abroad is time-consuming and costly, it is worth having a reliable partner on the spot who will not only deliver the parcel to the customer but will also handle the possible return.
AK: Does the platform that you’re proposing to European entrepreneurs, OEX24.com, overcome these barriers?
AW: Well, OEX24.com is a complete ecosystem of services supporting producers in the digitization of their sales processes and expansion into foreign markets. As part of the solutions we offer, we minimize any potential entry barriers regardless of the size of the company or the width of its product portfolio.
In the first phase of cooperation, we support our producers in the field of professional preparation of the product offer for the needs of the online channel and presentation of its digital version on the OEX24.com platform. We also help in the optimization of the logistics area. The next step, aimed at increasing the competitiveness of producers on international markets, is a range of OEX24.com services, enabling the launch of B2C sales through the most popular marketplace platforms, and the opportunity to create a dedicated online store both on the domestic market and on the most promising markets.
At the same time, we support producers in the formal and legal areas that are extremely important both in the expansion in Europe and in Asian countries, and we offer access to professional knowledge and support in building digital marketing strategies through cooperation with proven marketing agencies and media houses.
AK: What are the most important tools and solutions that you offer within OEX24.com?
AW: The most important advantages are access to global B2B markets and clients from all over the world, low-cost entry barriers, comprehensive support in the digitization of sales processes and our distinguishing feature on the market: support in international logistics, marketing, legal and customs issues.
AK: That’s a complete toolbox for anyone wishing to expand their business on the Asian markets. I wonder, what can we expect from the Asian market in the coming years? Do you have any forecasts?
AW: Asia is certainly a market that needs to be observed and we must draw conclusions on a regular basis, while transforming them in parallel to the development of an eCommerce strategy. It is absolutely a market in which, in the short or long term, European companies that wish to grow must appear. Asia is a direction that cannot be omitted in global sales plans.
In terms of IT technology, eCommerce or the development of services and tools supporting digitalization, countries such as China are in many cases the leader dictating trends and boldly introducing numerous innovations. The population living in this geographical area is constantly growing, and access to the net is becoming more common, therefore one should expect both a further increase in the number of potential customers and, above all, a growing interest in products from Europe or the USA. Companies offering high-quality products or those that base their growth strategy on the current solution of consumer needs will most certainly be affected by the growing potential of the online market in Asia. Bearing in mind also the growth of purchasing power of Asians, we can expect unflagging interest in products from categories such as cosmetics, eco and fresh food, interior furnishings and various types of luxury products.
Artur Wojtaszek is a CEO at OEX E-Business and OEX24.com. Both companies are of OEX, a capital group specializing in providing services in the sales and customer service sectors.