Asia’s eCommerce investment environment and Why it is the right time to enter eCommerce business.
Welcome to the Future!
Since 2010 Asian eCommerce companies have attracted $6.9Bl of investment (source: CB latest report on Asian eCommerce market). India and China are the leaders (India in volume, China in the meatier investment) while India averaged $ 6.4 Ml per investment, for China this figure is $58Ml (154 Indian companies got invested in with $ 980 Ml while 83 Chinese companies got funded with $4.8 Bl) clearly, the angel/seed finding game in India seems to be picking up, the volumes might remain low but more number of funded companies means many more chances of successful companies coming out of the fold.
Uptick in 2012 and 2013:
There were 29 exits of eCommerce companies in 2012, in 2013 we already have seen 14 so far.
Indians are again exiting faster, accounting for almost 50% of the exits in the eCommerce domain in Asia collectively.
Right time to enter eCommerce business? What does the future behold and why:
Asia will account for around 50% of the population by 2020 and home to around a third of world’s consumer spend, middle class and its spending power has been on a strong rise across the region. Also with the increased internet penetration and better broadband facilities, somehow the convergence of technology with increasing spending power and people’s openness and final embrace of online model of business, we have approached (or in some areas very near) to the 15-18% user acceptance (see Simon Sinek talk about his model of diffusion) and have reached a tipping point (India for example has around 48% internet penetration in the age group of 18 to 24 and around 40% of this number either buys or compares online before buying, this brings us to a figure of around 19% eCommerce ready users in that age group! Figure in Metros is definitely higher) .
Why is this number important? The System has Tipped!
In any industry there are these around 16% of the prospective users who are early adopters on any innovation or new technology, these are those folks who stand in a long line for hours together to buy that new iPhone when they could get it within minutes the next week, these are the folks who just get your business model and are those who are ready to try out new things. It is the next set of early majority and Late Majority that bring in the huge wave of adoption, now these folks won't try anything until the innovators and early adopters have already tried your stuff, once we reach this ~16% of adoption level the biggest challenge to get beyond this number to convince these early majority, once the early majority starts adopting the technology, the system tips! this is what has happened in all the major markets in Asia, India and China in particular!
This is going to usher in a huge wave of eCommerce growth and I feel it is the right time to enter the online business. Welcome to the future!
[I also run Connecting Dots, a business & technology consulting and software services company. At Connecting Dots, we help startups and emerging companies build great businesses, we are also Magento solution partners and build great eCommerce portals]