MANILA, Philippines — Emerging markets in Asia will be one of the major contributors to the sustained growth of online retailing in the region.
In a report, London-based think tank Economist Intelligence Unit (EIU) said online retail is among the sectors most likely to succeed this year after its exponential growth in 2020.
The height of the pandemic last year gave birth to more online transactions in many economies, like the Philippines, due to government protocols on mobility restrictions and social distancing.
“The sector will continue to expand its share of total retail sales – rising from about 10 percent in 2019 to nearly 20 percent by 2025. Much of this growth will come from emerging markets in Asia, Latin America and the Middle East,” the think tank said.
Emerging markets in Asia include China, India, Indonesia, Korea, Malaysia, Pakistan, the Philippines, Taiwan and Thailand.
Last year, global online retail sales expanded by 32 percent to $2.6 trillion while the overall retail market contracted by over two percent.
“After such a record year for online retail, growth will inevitably slow from 2021, but online retailers will not easily give up the ground they have gained,” EIU said.
“The uncertainties over the rollout of COVID-19 vaccines and the emergence of new strains of the virus will keep social distancing measures in place in many countries in 2021,” it said.
This means that online shopping and home delivery will remain to be attractive options to many consumers. EIU said online grocery stores would retain their momentum over other categories of goods until at least 2023, when non-food retailing will start to accelerate again.
To address the continued boom, EIU said online marketplaces and multi-brand retailers need to explore ways to widen their seller networks after the pandemic.
“The popularity of online shopping, wider adoption of digital payments and increased use of social media for marketing have given many entrepreneurs the option to trade from home, without having to invest capital in renting stores or office spaces,” it said.
On the other hand, there will be losers from the transition amid opportunities of online retailing.
For one, the report said franchise business model would face challenges in the new retail landscape especially for smaller ones while bigger franchises will also see their businesses shrink.
It will likewise affect employment as lockdowns and the decline in consumer demand for non-essentials have resulted in furloughs and lay-offs across the retail sector over the past year.