Melanie Sanders: Asia’s Retail Ecosystems

The retailing boom in Asia, particularly online, has fueled the emergence of retail ecosystems, which are redefining consumer expectations and reshaping value chains. Melanie Sanders, a partner with Bain's Retail practice, explains how these ecosystems work and what companies can do to compete.

Read the Bain Report: The Future of Retail: Asia’s Ecosystems

Read the transcript below.

MELANIE SANDERS: So retail is booming in Asia. It's growing at twice the rate of the rest of the world. And online retail is growing at four times the rate. [In China] we have some of the highest rates of online shopping anywhere in Asia.

And that boom is creating this new thing called the retail ecosystem. These retail ecosystems are vast communities of consumers, retailers and partners, and they're really reshaping the whole retail landscape. The most famous retail ecosystems and most well known are Alibaba, Tencent and Amazon. But the retail ecosystem's not unique just to China. We're seeing retail ecosystems emerge in India, in the US, in Korea and in Europe.

Retail ecosystems are really redefining consumer expectations and reshaping retail value chains. There's a clear retail success formula to these ecosystems. They start with a very sticky set of consumer services all combined, often in a platform or an app. And they combine things like chat, streaming, gaming, booking services and payments in a way that's really powerful. It's a one-stop shop for the consumer. And that's getting huge adoption and getting huge customer bases, which in turn is incredibly attractive to retailers who want to access that customer base.

For the retail ecosystem, that starts to create scale and a whole lot of privileged assets that confer competitive advantage, such as data assets or deep proprietary logistics networks that are really hard to replicate. For a retailer facing a retail ecosystem in their market, they've got a really difficult set of choices. Do they go it alone? Do they build their own proprietary ecosystem? Do they join the ecosystem, join an open platform, or perhaps even sell out as RT-Mart and Whole Foods have done? The decision will be a multifaceted one. But at the heart of it will be: Does the retailer have the capital, the capabilities and, frankly, the customer franchise to compete against an ecosystem?

Read the Report

The Future of Retail: Asia’s Ecosystems

Asia's retail sales boom has given rise to a new concept with massive implications.