Managing the Complexities  of Asian e-Commerce
cleverbridge  Full-service, cloud-based e-commerce provider          for software & SaaS companies  • Founded 2005  • 200+...
Speakers Doug Caviness Head of SaaS Solutions, cleverbridge  20 years of experience in   technology & software industries...
Speakers Yosuke Ito General Manager, cleverbridge Tokyo  25 years of experience in B2B &   B2C software business in Japan...
Speakers Noriyuki Matsuda President & CEO SOURCENEXT   Experience in Japan’s    technology industry spans    mobile, reta...
Asia-Pacific e-Commerce    A Growing Opportunity
IT Global Market Share(business and government)  APAC:  • 23% of Global    IT Market  • 9% annual    growthSource: Forrest...
Forecasted Online Revenues by Category                                  Computer hardware and softwareSource: Forrester Re...
Primary Markets • South Korea, India, Australia, China   and Japan • Country-by-country highlights:    Market share    O...
South Korea • $25 billion IT market • 2011 online revenue of   $16.8B ($22B by 2016) • 50 million population • 94% have br...
India • $34 billion IT market • 2011 online revenue of   $1.6B ($8.8B by 2016) • 1.2 billion population • 9% have broadban...
Pricing and Piracy – Challenges in EmergingMarkets Country               Conversion                  Software             ...
Australia • $48 billion IT market • 2011 online revenue   of $23B ($35.4B by 2016) • 23 million population              10...
China • $98 billion IT market • 2011 online revenue of   $165B ($356B by 2016) • 1.4 billion population • 34% or 513M user...
Piracy in China Remains a Major Issue Piracy of PC software   Country                  Pirated Value                      ...
Focus on Japan
Japan• $195 billion IT market• 2011 online revenue of $64B  ($97.6B by 2016)• 128 million population• 80% have broadband  ...
Why Focus on Japan?• China is tomorrow; Japan is today• 2nd largest IT market in the world• Largest and most mature APAC m...
Go-to-Market Models
Selecting a Go-to-Market Model
Complexities to Consider • Localization   (language, web design, currency, payments) • Customer support • Quality assuranc...
Localization – Text Is Just the Beginning…   Home page of Rakuten.co.jp, the “Amazon” of Japan
Localization – Text Is Just the Beginning…  Zoom-out of Home page of Rakuten.co.jp, the “Amazon” of Japan
What e-Commerce Payment Methods areUsed by Japanese Consumers?                                   0%           10%         ...
Great ExpectationsSource: Building Keystones
Local Pricing Strategy –Charge Premium Prices                           $90 USD equiv.
Go-to-Market Models • Direct via e-Commerce • Direct via e-Commerce Managed   Services • Indirect via Publisher or VAR(s) ...
Sell Direct via e-Commerce Criteria: Generally need an estimated Japanese  market opportunity of $1M+ annually to justify ...
Sell Direct via e-Commerce Managed Services e-Commerce platform and transaction support, plus: • Localization service prov...
Sell Indirect via Publishers / VARs  Criteria: Typically > $500,000 gross revenue  expectation per licensor for B2C       ...
Publisher Example -- SOURCENEXT Cloud computing products in retail???          Yodobashi Akiba                 Evernote re...
Publisher Example – SOURCENEXT(continued) “Herd mentality” – consumption by consensus       “Becky”            In store pr...
Sell via Joint Ventures      Criteria: $10 million + over three years; B2B       sales require an established local player...
Sell via Wholly-Owned Japanese Entity  Criteria: Typically $1-10 + million annual  gross revenue expectation              ...
Sell via Hybrid – Examples  Japanese entity for direct sales, support, and promotion  Sells into retail via SOURCENEXT a...
Key Take Aways• APAC region cannot be ignored – simply too big  and rapidly growing• Japan represents the lion share of th...
Q&A
Select Resources •   Forrester Research        Asia Pacific Online Retail Forecast, 2010-2015        Asia Pacific Tech M...
Thank You
Additional Data
Software Sales in APAC(business and government)Source: Forrester Research Inc.
Japanese SaaS GrowthCompound Annual Growth Rate (CAGR): 57.24%Source: Forrester Research Inc.
Cloud-Based SaaS Trends (B2B)                                              0%            10%          20%         30%     ...
e-Commerce Market SizeSource: Building Keystones
Language and LocalizationSource: Building Keystones
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Managing the Complexities of Asian e-Commerce

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cleverbridge general manager of Japan, Yosuke Ito, and SOURCENEXT CEO and founder, Noriyuki Matsuda, share their experiences around the complexities of Asian e-commerce. Get the latest market data, discuss pros and cons of different go-to-market business models, and strategies for success in the Asia-Pacific region.

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Managing the Complexities of Asian e-Commerce

  1. 1. Managing the Complexities of Asian e-Commerce
  2. 2. cleverbridge Full-service, cloud-based e-commerce provider for software & SaaS companies • Founded 2005 • 200+ employees • Offices:  Cologne  Chicago  Tokyo
  3. 3. Speakers Doug Caviness Head of SaaS Solutions, cleverbridge  20 years of experience in technology & software industries  Responsible for cleverbridge’s e-commerce solutions for B2B & B2C SaaS / cloud providers & other digital product companies with subscription billing
  4. 4. Speakers Yosuke Ito General Manager, cleverbridge Tokyo  25 years of experience in B2B & B2C software business in Japan as well as U.S. for Japanese  Industry experience spans financial, security, utilities & gaming  Extensive e-commerce & localization expertise
  5. 5. Speakers Noriyuki Matsuda President & CEO SOURCENEXT  Experience in Japan’s technology industry spans mobile, retail and online  Helps companies enter the Japanese business market  SOURCENEXT (4344:Tokyo) manages the planning, development & distribution of software products
  6. 6. Asia-Pacific e-Commerce A Growing Opportunity
  7. 7. IT Global Market Share(business and government) APAC: • 23% of Global IT Market • 9% annual growthSource: Forrester Research Inc. In $billions
  8. 8. Forecasted Online Revenues by Category Computer hardware and softwareSource: Forrester Research Inc.
  9. 9. Primary Markets • South Korea, India, Australia, China and Japan • Country-by-country highlights:  Market share  Online revenue  Population  Internet accessibility  SaaS adoption
  10. 10. South Korea • $25 billion IT market • 2011 online revenue of $16.8B ($22B by 2016) • 50 million population • 94% have broadband internet access (42M users) 5% of APAC • SaaS adoption is slowly 6% growth progressing; planning & implementation stages
  11. 11. India • $34 billion IT market • 2011 online revenue of $1.6B ($8.8B by 2016) • 1.2 billion population • 9% have broadband 7% of APAC 14% growth internet access (80M users) • SaaS market will be largest segment of cloud services, reaching $115 million revenue in 2012
  12. 12. Pricing and Piracy – Challenges in EmergingMarkets Country Conversion Software Per Capita Rate Piracy Rate GDP USA 42% 19% $48,665 Japan 39% 21% $45,659 China 9% 77% $4,833 India 9% 63% $1,382 7% of APAC USA price: $49.99 India price: $18.72 (USD equivalent) India Discount: 62.6% off USA price *Screenshot taken in India on Sept 20, 2012. Exchange rate was $1:RS 53.37 Sources: -Conversion Rates are sample data from the cleverbridge platform -2011 Piracy Rates: Business Software Alliance “2011 Global Piracy Study” -2011 GDP Stats: IMF.org
  13. 13. Australia • $48 billion IT market • 2011 online revenue of $23B ($35.4B by 2016) • 23 million population 10% of APAC 70 7.9% growth • 90% have internet access (19M users) • SaaS/cloud adoption is the highest in APAC; 36% of organizations use cloud-based services, up from 22% in 2010
  14. 14. China • $98 billion IT market • 2011 online revenue of $165B ($356B by 2016) • 1.4 billion population • 34% or 513M users 21% of APAC have internet access 12.9% growth • SaaS adoption is slow; has large potential to grow for basic business applications
  15. 15. Piracy in China Remains a Major Issue Piracy of PC software Country Pirated Value Legal Sales Piracy Rate USA $9,773 $41,664 19% China $8,902 $2,659 77% India $2,930 $1,721 63% Japan $1,875 $7,054 21% South Korea $815 $1,223 40% 7% of APAC Australia $763 $2,554 23% PC buyers in China spend an avg. of $542 for a new PC (excluding monitor), but buy just $8.89 of legal software to run it -- less than ¼ of the amount spent per PC in the other “BRIC” countries, and only 7% of what is spent in the USA. Source: 2011 Piracy Rates: “2011 BSA Global Software Piracy Study”
  16. 16. Focus on Japan
  17. 17. Japan• $195 billion IT market• 2011 online revenue of $64B ($97.6B by 2016)• 128 million population• 80% have broadband 7% of APAC internet access (102M users)• Online marketplaces dominate 21% of APAC 3.6% growth• SaaS adoption is rapid (esp. B2B)
  18. 18. Why Focus on Japan?• China is tomorrow; Japan is today• 2nd largest IT market in the world• Largest and most mature APAC market• SaaS adoption is growing faster than all other APAC tech markets combined• cleverbridge Tokyo – specific insight with local office & experienced general manager
  19. 19. Go-to-Market Models
  20. 20. Selecting a Go-to-Market Model
  21. 21. Complexities to Consider • Localization (language, web design, currency, payments) • Customer support • Quality assurance • Pricing & channel strategies
  22. 22. Localization – Text Is Just the Beginning… Home page of Rakuten.co.jp, the “Amazon” of Japan
  23. 23. Localization – Text Is Just the Beginning… Zoom-out of Home page of Rakuten.co.jp, the “Amazon” of Japan
  24. 24. What e-Commerce Payment Methods areUsed by Japanese Consumers? 0% 10% 20% 30% 40% 50% 60% Credit Card 56% COD (incl. CCOD) 48% Konbini 34% ATM or Teller @bank 31% Internet Banking 14% Carrier Billing 11% Japan is a cash-oriented society Cash / Cheque 1%Source: The Ministry of Internal Affairs and Communications of Japan
  25. 25. Great ExpectationsSource: Building Keystones
  26. 26. Local Pricing Strategy –Charge Premium Prices $90 USD equiv.
  27. 27. Go-to-Market Models • Direct via e-Commerce • Direct via e-Commerce Managed Services • Indirect via Publisher or VAR(s) • Sell via Joint Venture (JV) • Sell via wholly-owned Japanese entity • Hybrid of the above
  28. 28. Sell Direct via e-Commerce Criteria: Generally need an estimated Japanese market opportunity of $1M+ annually to justify creating localized products Pros Cons • 100% control of brand • By itself, may not fully leverage • Low investment required market opportunity • Relatively easy entry • Requires dedicated team and resourcesMarket Examples:
  29. 29. Sell Direct via e-Commerce Managed Services e-Commerce platform and transaction support, plus: • Localization service providers  Product localization  Web localization  Quality assurance – testing on several platforms • eMarketing services providers  Pricing strategies, SEO/SEM • Affiliates (Softonic Japan, etc.)Market Examples:
  30. 30. Sell Indirect via Publishers / VARs Criteria: Typically > $500,000 gross revenue expectation per licensor for B2C Pros Cons • Easy entry with turnkey provider • Loss of some control of brand • Low investment required • Might not fully leverage full market • Leverage multiple sales potential for vendor willing to make channels (B2B, etc.) a large investment • Complete solution for customersMarket Examples:
  31. 31. Publisher Example -- SOURCENEXT Cloud computing products in retail??? Yodobashi Akiba Evernote retail box display the largest retail store in Japan with around $1.5 billion sales with 100 million visitors per year
  32. 32. Publisher Example – SOURCENEXT(continued) “Herd mentality” – consumption by consensus “Becky” In store promotion SOURCENEXT corporate spokesperson
  33. 33. Sell via Joint Ventures Criteria: $10 million + over three years; B2B sales require an established local player Pros Cons • Relatively easy entry • Loss of some control of brand • Leverage the sales, marketing, • Complex and might require service, goodwill/credibility and significant investment assets of an established partner • Higher risk • Potentially lower investment requirement • Complete solution for customersMarket Examples:
  34. 34. Sell via Wholly-Owned Japanese Entity Criteria: Typically $1-10 + million annual gross revenue expectation Pros Cons • 100% control of brand • Expensive to set up and maintain • Ability to fully leverage • Higher risk market opportunity • Complete solution for customersMarket Examples:
  35. 35. Sell via Hybrid – Examples  Japanese entity for direct sales, support, and promotion  Sells into retail via SOURCENEXT and uses other partners for e-commerce  Japanese entity for direct sales, OEM, and via VARs  Use SoftBank BB for retail channel distribution
  36. 36. Key Take Aways• APAC region cannot be ignored – simply too big and rapidly growing• Japan represents the lion share of the opportunity today• Each market is different and presents unique complexities• No one path for all companies
  37. 37. Q&A
  38. 38. Select Resources • Forrester Research  Asia Pacific Online Retail Forecast, 2010-2015  Asia Pacific Tech Market Outlook for 2012  Sizing the Cloud Markets in Asia Pacific, 2012 • Innopay  Online Payments 2012, Moving Beyond the Web • Business Software Alliance  Online Payments 2012, Moving Beyond the Web • Factbrowser.com/tags/ecommerce • Emarketer.com  Ecommerce Sales Topped 1 Trillion for the First Time in 2012 • Building Keystones (buildingkeystones.com)
  39. 39. Thank You
  40. 40. Additional Data
  41. 41. Software Sales in APAC(business and government)Source: Forrester Research Inc.
  42. 42. Japanese SaaS GrowthCompound Annual Growth Rate (CAGR): 57.24%Source: Forrester Research Inc.
  43. 43. Cloud-Based SaaS Trends (B2B) 0% 10% 20% 30% 40% 50% 60% Server 35.2% File Sharing 34.7% Data Backup 17.3% Intranet Portal 29.8% Mail Server 48.1% Schedule Sharing 35.2% Project Management 3.0% Extranet 9.4% Sales Force Automation 13.2% R&D 1.4% Web 4.2% e-learning 6.2% Accounting/HR 20.4% Order Management 6.7% Purchasing Management 6.6% Logistics/Supply Chain Management 8.8% Payment 3.5% Authentication 2.2% Others 7.9%Source: The Ministry of Internal Affairs and Communications of Japan
  44. 44. e-Commerce Market SizeSource: Building Keystones
  45. 45. Language and LocalizationSource: Building Keystones

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