FedEx Research Shows E-commerce Opportunities set to Soar for SMEs
The latest e-commerce trend report commissioned by FedEx Express, a subsidiary of FedEx Corp. (NYSE: FDX), and one of the world's largest express transportation companies, shows that small and medium sized Enterprises (SMEs) and consumers agree that there’s room for further growth in the already booming e-commerce sector. Leveraging e-commerce growth is an especially golden opportunity for Australia and Asia Pacific SMEs where cross-border e-commerce is estimated to grow at a 13% annual growth rate (CAGR) between 2020-2025 to USD247.5 billion.
The What’s Next in E-Commerce survey polled small and medium sized enterprises (SMEs) and consumers in 11 markets within the Asia Pacific, Middle East and Africa region (AMEA) including Australia, in July 2022 to explore the continuing evolution of e-commerce in the region and identify the trends that could fuel their future growth.
“COVID has accelerated our lifestyles to a pivot point where shopping online has been normalized across all demographics, and there’s no going back. With that, e-commerce is set to take a growing proportion of total consumer spend.” said Kawal Preet, president of the Asia Pacific, Middle East and Africa (AMEA) at FedEx Express. “With more people shopping online consumer preferences are becoming increasingly sophisticated. As SMEs and e-merchants evolve their online sales platforms, our research uncovers opportunities for businesses to capitalize on what consumers want. Customer experience is the driving force behind how e-tailers engage with their customers and how we are innovating our shipping solutions. With an expanded portfolio specially developed for e-commerce businesses, FedEx is well positioned to support the changing expectations of consumers and the continuation of e-commerce growth.”
E-commerce sector matures but further growth ahead
Australia2 is the eleventh largest eCommerce market in the world with US$31.3 billion in revenue in 2021. The Australian eCommerce market grew by 15% in 2021, contributing to the 15% global growth rate. E-Commerce sales are expected to increase over the coming years as new markets emerge and global growth continues, with this development propelled by East and Southeast Asia with their growing middle class and lagging offline infrastructure.
Asia Pacific, which includes the world’s biggest e-commerce markets like India, Mainline China, Japan and Korea, will see revenue from e-commerce sales reaching US$2.09 trillion this year as 57% of the region’s population shops online. Additionally, Asia Pacific and Australasia will account for more than 45% of the global absolute value growth in e-commerce during 2020-2025.
Both SMEs and consumers are maturing in their use of e-commerce and both groups agree that the pandemic-driven utilization of e-commerce is here to stay. Eight in ten SMEs believe e-commerce will become more important in their business in the next three years, with nine in ten believing they are well prepared for the challenge. Regionally, 80% of consumers reported that e-commerce had taken a greater share of their total purchases over the past three years, while 71% see further increases ahead.
SMEs in Australia acknowledge the increased importance of e-commerce to their business seen over the past three years, with 77% also agreeing it will continue to become even more important in future. Nine in ten SMEs are excited by this and believe they are well positioned to capitalise on this growth.
For Australian consumers, nine in ten see the growth of e-commerce through a positive lens; with the biggest perceived benefit the ability to access products cross-borders at the click of a button. It’s estimated1 that cross-border e-commerce in Asia Pacific and Australasia will grow at a 13% CAGR over 2020-2025 to reach USD247.5 billion by 2025.
Expectation mismatch on service experience touchpoints
As more consumers participate in the on-demand economy and increasing shipment volumes puts pressure on e-tailers, maintaining customer service quality is critical. The survey data reveals a significant 15% gap between how Australian SMEs rate their own e-commerce customer experience and how consumers view it. The biggest gaps appeared in having an efficient returns service (15%) and access to customer support (13%).
Deliveries taking too long was named the number one pain consumer point (49%) followed by handling returns (39%). Consumers typically expect delivery within three days to one week, but there is a clear desire for delivery to be at least more reliable if not faster.
Regionally, there are too few experienced people for too many jobs
While the impacts of staffing shortages and resignations have been less pronounced in Australia than in most other AMEA markets, 65% of AMEA e-tailers reported they were struggling to handle the growing number of orders they were receiving. Further, amid surging demand for talent, recruitment has proven challenging for SMEs with 73% experiencing extremely high levels of resignations over the past 12 months as the global Great Resignation phenomenon has impacted the region. Regionally, 62% believed there were too few people for too many jobs, with e-commerce marketing and sales experience being most in demand. SMEs are adopting a dual approach in response, recruiting talent from outside their business and upskilling current staff through training to meet demand in a tight employment market.
Logistics providers are here to support
“The growth of e-commerce, changing consumer behaviours and the evolving expectations across Australia and beyond has opened up new and exciting opportunities for businesses to succeed,” said Peter Langley, Senior Vice President of FedEx Australasia “By providing simple, streamlined solutions we make order fulfillment easier, and enable SMEs to ride this wave of growth and remain competitive. Our What’s Next in E-Commerce white paper reveals that there is plenty of fertile ground for e-tailers to experiment with new approaches that can help build their customer base.”
FedEx is integrating its services with e-commerce marketplaces so e-tailers can generate FedEx shipping labels and use additional FedEx features, such as Express Shipping Services and International Shipping Documentation Service, without leaving the platforms. Easy to use, friction free services like these make it easy to onboard new staff and help improve the work experience. In addition, FedEx® International Connect Plus (FICP), launched last year was recently expanded to benefit e-tailers across fourteen markets in AMEA, including Australia. This value-for-money international shipping solution delivers most shipments between 1 to 3 business days within the AMEA region, which meets consumer expectations for speed of delivery according to our survey. . And, delivery customization solutions like FedEx® Delivery Manager allows e-tailers to offer their customers the personalized service, and freedom to manage and control their shipping preferences, which today’s consumer demands.
About the What’s Next in E-Commerce Survey
The online survey was conducted by Harris Interactive in July 2022 across 11 markets including Australia, Hong Kong, India, Japan, Malaysia, Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam. 300 small and medium businesses with less than 250 employees) engaged in e-commerce were polled in each market alongside 500 consumers (1,000 in India) over the age of 18. To access the full report click https://www.fedex.com/en-au/shipping/industry-solutions/ecommerce/whitepaper.html