Clicking with online consumers

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As the popularity of e-shopping booms – pegged to be a 1.1 trillion euro business in 2014 – several factors including the rise of the Asian online customer are driving the phenomenon. For the air freight industry, this presents opportunities and challenges. 

Regardless of where you live, you have probably bought one of the following items online recently: a book, a piece of clothing or an accessory, or perhaps a health or beauty-related product. You are not alone, as these items are the digital top sellers worldwide.

Since the start of the online shopping era almost two decades ago (Amazon.com launched in 1995) the business has expanded rapidly. This year e-commerce is estimated to net 1.1 trillion euros, which represents a growth of 20.1 percent over 2013, with the Asia Pacific consumer projected to spend more on e-commerce purchases than the North American consumer, according to the leading research firm eMarketer

This will make Asia Pacific the world’s largest regional e-commerce market. “Asia Pacific will claim more than 46 percent of digital buyers worldwide in 2014 – though these users will only account for 16.9 percent of the region’s population,” predicts eMarketer

Asian potential

This massive market opportunity – with more than 80 percent of the Asia Pacific market untapped – is good news for companies such as Finnair, which has built its strategy on providing the best flight connections between Northern Europe and Asia. 

“We do expect volumes to grow, especially for volumes from Europe to Asia in the luxury goods segment (for fashion, as well as luxury food items such as live seafood from Norway, Belgian chocolate, Spanish jamón and other delicacies) as well as for pharmaceutical products. These are less price sensitive than most of the other segments,” says Roman Lübitch, Finnair Cargo’s business development manager.

Despite the economic slowdown in many parts of the world, the global market for luxury goods has remained steady according to Bain & Company, a leading management consultancy based in Boston. It predicts that accessories will be the strongest driver of the market’s performance, followed by high-end jewelry, watches, and other so-called hard luxury goods; apparel and beauty products will see more modest growth while men’s bags and menswear are trending.

Coupled with the rise of a health-conscious and affluent aging population, this translates into air freight opportunities.

Speed matters 

“Cargo carried by air is usually time sensitive – good examples are pharmaceuticals and food. We do, of course, carry a lot of other goods such as electronics, live animals, machinery parts, and such”, says Lübitch.

Despite the double-digit growth rate of online shopping, Lübitch remains cautious. 

“It’s important to remember that the e-commerce segment is extremely price sensitive. Because of customers’ price sensitivity, most e-commerce companies are trying to find cost-effective delivery solutions, usually by ground or sea, which can offer low-cost options versus air cargo. Therefore, we need to secure fast, seamless service through air, giving e-commerce companies high-value, value-for-money offering”, says Lübitch. 

“It’s not that we don’t see business potential in e-commerce, but we are still looking to find a solution that would generate a win-win situation for both the shipper and Finnair Cargo. And we are not alone in the air cargo industry in grappling with this challenge, we need to beat the competition”, he adds. 

Nonetheless, Lübitch is optimistic: “We believe there will always be customers who want their goods delivered in a few days instead of a few weeks. Air cargo won’t fade out anytime soon.” 

Top 3 trends driving online purchasing 

1. Mobile purchasing goes mainstream. One-third of the world’s population is online, which represents an increase of 528 percent over the past decade. Consumers are moving away from purchasing items via desktop or laptop computers and using mobile phones or tablets instead. 

2. Decreased delivery times. As many online retailers move to free shipping, they are also shortening delivery times. 

3. Personalization possibilities. Technological manufacturing advances are allowing more retailers to offer customers what is known as “mass customization,” or the ability to personalize everything from shoes to mobile phones. 

Source: The Fiscal Times
www.thefiscaltimes.com

Text by Katja Pantzar
Photo by iStock

 

Published July 25, 2014

Category: Market updates

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