Venture capital investment in e-commerce reached a record high in 2018
E-commerce has come a long way since its inception more than 40 years ago. Following widespread use of the internet since the 1990s and the subsequent application of mobile internet, e-commerce has significantly altered the consumer landscape. Not only does the consumer and the economy benefit from e-commerce, but as do related sectors including mobile payment and logistics.
Private equity & venture capital investment in the e-commerce sector in Asia has seen significant growth, recording a total deal value of $34bn in 2018. As a burgeoning region, Asia plays an important part in the world’s economy. How far will the e-commerce sector continue to expand and grow in Asia?
Asia and E-Commerce: A History
With a population of more than four billion and with two billion internet-users, there is no doubt that Asia is a prosperous and promising market for e-commerce. As seen in the chart below, even though the total number of venture capital deals has decreased in the past three years, the total value of venture capital investment in the e-commerce sector in Asia has grown continuously. In 2018, 942 deals were completed for a record-high total value of $34bn.
Emphatically, China has dominated the e-commerce market in Asia, recording 503 deals in 2018 which amounted to $21bn – this accounts for 62% of the total deal value in the e-commerce sector in Asia in that year. Among the notable transactions, Pinduoduo, Inc.’s Series C funding raised $3bn from Tencent and Sequoia Capital, taking its valuation to $15bn. Pinduoduo, Inc. is a mobile social e-commerce platform and is backed by various private equity firms including Sequoia Capital, IDG Capital, Gaorong Capital and New Horizon Capital.
China and Singles’ Day Success
Without a doubt, China boasts a booming e-commerce market. According to CNNIC (China Internet Network Information Center), 610 million people in China shopped online at some point in 2018. Every year on 11 November in China, there is a popular shopping festival called Singles’ Day, which was initiated by Tmall, an e-commerce platform operated by Alibaba Group. This huge festival has smashed the record for total sales each year. At the 2018 Singles’ Day, the sales record on Tmall reached CNY 214bn.
In recent years, China has become the largest cross-border e-commerce market and can boast the highest growth rate in the world. Off the back of this, the Chinese Government has recently implemented a new e-commerce law and is improving the existing policies on both domestic and cross-border e-commerce to unlock consumer potential.
ASEAN Signs E-Commerce Agreement
Elsewhere in Asia, ASEAN is another economy that recognizes the significant value of the e-commerce market. In 2018, the ASEAN Economic Ministers signed the ASEAN agreement on e-commerce, which focuses on boosting the industry by creating a regulatory environment conducive to the growth of e-commerce in the region.
Future Growth Almost Certain
Even though the e-commerce industry was birthed in the US, which is traditionally considered the dominant e-commerce market, Asian countries support the development of the sector and have taken steps to improve the regulatory environment. Together with the large number of potential internet users in the region, it clear that the e-commerce sector in Asia will continue a positive growth trend in the foreseeable future.
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