MasterCard Online Shopping Study 2010

APMEA Online Shopping Study 2010

The results of the index show the gap in online shopping is closing in the Asia/Pacific, Middle East and Africa (APMEA) region; last year we saw a huge spike with India and Thailand jumping in terms of their increasing ease of shopping online, bringing them close to numbers for some of the more mature markets like China, Singapore, Hong Kong and Malaysia. While scores in India and Thailand have stabilized since last year, this year we see a jump in markets like China and Malaysia. Markets like South Korea, Australia, New Zealand and Taiwan - already well-established in online shopping - have also stabilized and continue to maintain a lead over other markets. Japan is an exception which has interestingly shown a continuous decline in its propensity for online shopping since 2008. The drop is primarily due to more people seeing their preference to shop in-store and to look at the physical product as a barrier to online shopping, fewer people perceiving online shopping as convenient and fewer people disagreeing that they feel insecure shopping online. The index score was based on the following questions: * For what purposes do you usually use the internet? * How likely is it that you will make an online purchase in the next 6 months? * Proportion of those who did not state ''prefer to shop in-store, to look at the physical product'' as a reason for not purchasing anything online in the past 3 months * To what extent do you agree or disagree with each of the following statements: 1. It is convenient to shop online 2. I do not feel secure shopping online Table 1. APMEA Regional Online Shopping Index A brief note on the weighting methodology used for the Online Shopping Index Market Index Scores The Market Index scores were weighted by internet penetration statistics for each of the markets. These statistics were primarily based on data from Euromonitor International, United Nations, Department of Economic and Social Affairs, Population Division, but some calibrations were also done for certain markets using some secondary sources: In many Asian markets, we know that there is a substantial difference in internet penetration in urban versus rural areas. Therefore for markets having a significant proportion of rural areas, namely, China, India, Malaysia, Philippines, Thailand and Indonesia, we took into consideration urban internet penetration rates, to ensure that their internet penetration did not get unduly deflated to the significant rural base. * Further, we know that our sample, which is based on a self-selected panel of respondents, are more skewed towards Tier 1 cities and corresponding urban areas. Therefore, in markets such as China and India, we calibrated the internet penetration rates to adjust for the higher penetration found in higher-tier cities. Regional Composite Score To compute the regional score, the Market Index Scores were multiplied by the urban population in the respective market (based on Euromonitor scores) and then added up. This figure was then divided by the total urban population across all the markets covered, to provide the regional composite score for the respective year. Online Shopping and Purchase Intent Leading markets for online shopping: * South Korea (85%), China (84%) and Japan (75%) continue to lead the way in terms of being the most likely to access the internet for online shopping. * They also led in terms of the number of items purchased online in the last three months * China averaged 5.6 items, up from 5.1 items in 2009 * South Korea and Japan remained stable in the number of items purchased at 5.9 items and 5.1 items respectively * China, South Korea, India and Thailand are also the most likely to make a online purchase in the next six months: Some of the other markets, like India and Thailand, who showed huge spikes last year are seeing continued moderate growth in 2010: * India is up to 67% in 2010 from 54% in 2008 * Thailand up to 67% in 2010 from 43% in 2008 But the biggest story is Malaysia, which is now comparable to Australia in terms of intent to make a purchase online in the next six months as well as accessing the internet for online shopping.   Table 2. How likely is it that you will make an online purchase in the next 6 months? In 2009, the markets that were the least likely to access the internet for online shopping were the UAE (29%), Philippines (30%) and Malaysia (33%). While the Philippines is still low (27%), this year we are seeing a big jump in the percentage of people accessing the internet for shopping in Malaysia and UAE: * Malaysia is up to 55% in 2010, from 33% in 2009 * UAE is up to 42% in 2010, from 29% in 2009 The future outlook for these markets looks good as well, with 69% of people from UAE (compared to 62% in 2009) and 74% from Malaysia (versus 54% in 2009) saying that they are likely to make an online purchase in the next six months. It seems that in terms of future plans however, some of the more mature online shopping markets - Australia and Japan for example, are actually showing declines in their likelihood to make an online purchase in the next six months. * Japan is down to 62% from 85% in 2008 * Australia is down to 72% from 84% in 2008 This is despite the fact that there is still a high percentage of respondents who access the internet for online shopping. Table 3. For what purposes do you usually use the internet?  Barriers and Bridges to Online Shopping Among respondents who haven't purchased anything online in the last six months, security still seems to be the primary reason, with 49% of respondents indicating that they are ''not sure that making transactions online is secure or safe.'' 69% of respondents suggest ''enhance payment security, improve users' confidence in online transactions'' as a way to improve online shopping. In Singapore, China, Malaysia and Thailand we are seeing the concerns around security being mitigated over time. In these markets there was a substantial decrease in respondents who do not feel secure shopping online: * China went down to 35% from 44% in 2009 * Singapore went down to 29% from 37% in 2009 * Thailand went down to 45% from 54% in 2009 * Malaysia went down to 40% from 48% in 2009 In China in particular, we see a substantial decrease in the number of people who cited preferring ''to shop in-store, to look at the physical product'' as reasons for not purchasing online - from 58% in 2009 to 34% in 2010. Table 4. To what extent do you agree or disagree with the following statement: ''I do not feel secure shopping online'' (Top two box scores)  Table 5. What are the reasons for not purchasing anything online in the past 3 months? ''Prefer to shop in-store, to look at the physical product''  There is a slight increase in the number of people going online to shop for bargains. Overall, the percentage of respondents who said that ''most goods are much cheaper online than offline'' went up from 46% in 2008 to 53% in 2010. This is most pronounced in China (where it went up from 78% in 2009 to 82%), UAE (where it went up from 37% in 2009 to 48%) and South Africa (where it went up from 34% in 2009 to 41%). Table 6. To what extent do you agree or disagree with the following statement: ''It is convenient to shop online''(Top two box scores)  Categories of Online Shopping: Airlines, online gaming, events ticketing, and music downloads and books are still the categories in which people spend the largest percentages online. Table 7. What is the proportion of your offline vs. online shopping for these merchant categories in the past 3 months?  However, we are seeing a substantial increase in the percentage of online spending in historically ''touch and feel'' categories such as restaurants or supermarkets. The increased statistics around online supermarket shopping is especially pronounced in markets like: * China went up from 27% to 33% online (from 2009 to 2010) * India went up from 39% to 46% * Japan went up from 17% to 47% * South Korea went up from 39% to 50% * Singapore went up from 24% to 32% * Taiwan went up from 48% to 61% Notably, when it comes to actual websites visited in the past 3 months, it appears that home appliances and books/dvds are more often visited, suggesting that that people look for these online but end up purchasing them elsewhere, or else not at all. Table 8. Which of the following merchant websites have you visited in the past 3 months?  Internet Access We see an increase in percentage of people accessing the internet via their mobile phones: * 19% of respondents say they access the internet from their mobile phone versus 8% who indicated that last year * Leading the charge in the Asia region in terms of mobile internet access are South Africa (39%), Singapore (33%), India (25%), Malaysia (20%), Thailand (20%), and UAE (20%)   The percentage of respondents who access the internet via Wi-Fi has also increased from 15% in 2008 to 31% in 2009. In UAE this more than doubled - from 28% in 2009 to 57% this year. Ethical Spending 70% of respondents across Asia have purchased items in the last 2-3 years because they were based on fair trade principles, up from 66% last year. * This is especially pronounced in Thailand (95%), Malaysia (85%), and China (86%) * China and South Korea lead in terms of making these types of purchases online (68% and 81% respectively) Respondents are generally willing to spend more for ''responsible products,'' i.e.: * 61% said they are willing to spend more for products that are environmentally friendly * 55% said they are willing to spend more for products based on fair trade principles 56% are willing to spend more if they know that a percentage will be donated to a good cause The most cited reason for making a purchase online was choice: * For those who purchased online for products that are environmentally friendly, 58% said it was because there was more choice online * For those who purchased online for products based on fair trade principles, 60% cited the same reason * For those who purchased online for products where a percentage was donated to a good cause, 50% cited the same reason. 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