Commerce as a Service: Fueling Growth in the Asian Market
The Evolution of 'Commerce' and the Rise of 'As-A-Service' Models in Asia
The Commerce landscape in Asia has transformed dramatically in recent decades. No longer confined to traditional brick-and-mortar stores and linear supply chains, Commerce in Asia now thrives in a dynamic, digital-first environment. This shift has been fueled by rapid technological advancements, changing consumer behaviours, and the increasing interconnectedness of global markets.
Amidst this transformation, a new breed of enablers, known as "as-a-service" companies, has emerged. These companies stand behind brands, providing them with the tools, infrastructure, and expertise to navigate this complex new landscape. From establishing a physical presence to managing online sales, marketing, and logistics, as-a-service models are redefining how brands operate and grow in the Asian market.
This article explores the evolution of commerce in Asia, specifically focusing on various as-a-service models that have emerged to support brands in this new era. I also discuss the benefits and challenges of using these models and how brands can leverage these solutions to achieve sustainable growth in the dynamic Asian market. But first, let's look at what's driving this change.
Challenges of Traditional Commerce in a Digital Age
In the past, establishing a commerce presence in Asia meant investing heavily in physical stores, navigating complex supply chains, and managing many operational challenges across fragmented markets - each with its own complexities. The ever-changing shopping behaviour, fuelled by the shift towards online platforms, has added another layer of complexity as it now demands a new level of agility and customer-centricity from brands. Today's Asian consumers are more discerning than ever, expecting personalized experiences, seamless shopping journeys, and fast, reliable delivery.
At the same time, access to technology and resources has dramatically shortened product innovation life cycles, leading to a plethora of new brands and concepts entering the market every day, each vying for consumer attention and shelf space. Traditional retail models struggle to keep up in this dynamic and fragmented market characterized by diverse cultures, languages, and consumer preferences.
As-a-service models have emerged as a powerful solution, offering brands the flexibility, scalability, and localized expertise needed to navigate this complexity and thrive in the new era of commerce.
Commerce as a Service ( CaaS): The key to unlocking a brand potential
In response to the challenges and opportunities in the Asian ecosystem, a range of as-a-service models have emerged, each catering to specific needs and providing brands with the flexibility and scalability needed for growth. Here are four models which reflect how Commerce As a Service has evolved over time.
Retail-as-a-Service (RaaS): Agile Physical Presence
RaaS is where providers offer brands a flexible and cost-effective way to establish a physical presence without the traditional burdens of long-term leases, high upfront costs, and complex operations. Think of it like a WeWork in the retail world, where brands can strategically adjust their presence in terms of space, duration and services utilized, enabling them to scale their operations up or down as needed. By offering shared retail spaces, pop-up shops, staffing, inventory management and in-store technology solutions, large department stores have started using RaaS to help brands test new markets and easily engage with customers.
For instance, GoPopUp, a Singapore-based RaaS provider, enables brands to open pop-up stores in high-traffic areas across Asian markets. This provides a low-risk way to test product-market fit and gather valuable customer insights. Large department stores in many locations have begun opening their floor spaces to this model.
E-commerce-as-a-Service (EaaS): Simplifying Online Commerce
EaaS providers offer a comprehensive suite of e-commerce solutions, from e-commerce platform setup and management to digital marketing, logistics, and customer service. This allows brands to focus on their core competencies - product development, brand management, and customer engagement - while leveraging the expertise and infrastructure of their EaaS partners to navigate the complexities of digital commerce. As a result, brands can quickly launch their products online in new categories or markets without extensive development efforts, reducing time-to-market substantially.
This model has experienced rapid growth in Asia, with multiple players in different geographies—aCommerce, Leap Commerce, Intrepid in SEA, Baojun in China, ANS Commerce, and GreenHonchos in India, to name a few. These providers offer end-to-end e-commerce solutions, including store management, performance marketing, customer care, and fulfillment, enabling brands to expand their online presence quickly and efficiently.
Beyond RaaS and EaaS: Modern Distributors and House of Brands
Beyond the traditional RaaS and EaaS models, other as-a-service solutions have emerged to cater to the diverse needs of brands in the Asian market.
Modern Distributors: Enabling Omni-Channel Commerce
Modern retail distributors are omnichannel enablers. As evident from the name, they enable brands to sell across multiple channels—online marketplaces, branded e-commerce stores, social media platforms and physical stores. They provide a combination of RaaS and CaaS services to help brands navigate the complex retail landscape, including physical and digital stores, inventory management and logistics, and marketing and consumer insights.
Singapore-headquartered Luxasia, as well as Hong Kong’s Bluebell, exemplify this model by helping brands enter and expand in new markets in Asia Pacific through their multi-channel, multi-category and multi-model approach
House of Brands: Consolidating and Scaling Brands
Consider this model as a combination of ‘Modern Distributor + Venture Capital’. House of Brands, also known as roll-up companies, essentially acquire and consolidate multiple smaller e-commerce brands, typically niche D2C brands or those selling online. By leveraging economies of scale, operational expertise, and shared resources, they accelerate the growth of the acquired brands and help them expand their reach across new channels and markets.
These roll-up firms have been thriving in Asia for the last few years, given the region’s large fragmented market, which provides acquisition opportunities, increasing e-commerce adoption, which creates a huge customer base, and ample venture capital, which enables rapid expansion.
India’s Mensa Brands and GlobalBees and Singapore’s Una Brands and Rainforest are prime examples of roll-up companies in Asia. They acquire D2C brands across various categories and provide them with capital, marketing expertise, and operational support to scale their businesses.
Navigating this 'As a Service' landscape and choosing a suitable model is extremely important. The optimal AaS model will depend on a brand's unique needs, target audience, product categories, and growth objectives. Brands must carefully assess their priorities, conduct thorough research, and choose partners that align with their long-term vision.
The Future of Commerce in Asia: A Customer-Centric, Technology-Driven Approach
Technology lies at the heart of this evolution of commerce. E-commerce platforms, social media, and mobile apps have empowered consumers to shop anytime, anywhere, while data analytics and AI have enabled brands to gain deeper insights into consumer preferences and personalize their offerings.
As-a-service models represent a paradigm shift, empowering brands to adapt to the changing commerce landscape. By leveraging the provider's technology infrastructure, operational capabilities, and strategic partnerships, brands can navigate the complexities of modern commerce, unlock new growth opportunities, and build lasting relationships with their customers.
The rise of 'Commerce as a Service' in Asia signifies a move towards a more customer-centric, technology-driven, and agile approach. Brands embracing these models are well-positioned for success in this ever-evolving commerce landscape of the future.