E-Commerce Retailers: The Next Billion $ Opportunity Are We Ready? - CDNetworks
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e-Commerce Retailers: The Next Billion $ Opportunity Are We Ready? A Frost & Sullivan White Paper in Collaboration with CDNetworks
e-Commerce Retailers - The Next Billion $ Opportunity - Are We Ready? frost.com
Executive Summary...................................................................................................................... 3
Heading Towards a Paradigm Shift in Shopping................................................................. 6
Challenges in the ASEAN e-Commerce Market................................................................... 10
Impact of Latency on e-Commerce Providers’ Businesses.............................................. 12
Winning Big by Thinking CDN................................................................................................... 13
Customer Experience in the New Competitive Battleground......................................... 14
Litmus Test Criteria for Online Businesses to Select the Right CDN Provider........... 15
CDN Solution by CDNetworks................................................................................................... 17
Conclusions - Laggards will Pay the Price............................................................................. 21
Case Study: Qoo10........................................................................................................................ 22
CONTENTS
e-Commerce Retailers - The Next Billion $ Opportunity - Are We Ready?
E-COMMERCE MARKET IN ASIA-PACIFIC
$3015B $1892B
2018 Global e-Commerce 2018 APAC e-Commerce
CHINA
• By 2019, 20.3% of total sales will be through e-Commerce.
• China accounts for 40% of the world’s retail e-Commerce sales.
• By 2019, China will command a worldwide share of 55.1% at $1 T.
KOREA
• By 2019, 19.6% sales will be through e-Commerce.
• In 2015, the e-Commerce spending was $36.76 B.
• It has one of the fastest Internet systems in the world.
JAPAN
• Half of all online transactions are made via smartphones/
tablets.
• In 2015, e-Commerce spending was $79.22 B.
• 97% of Internet users shop online.
SINGAPORE
• In 2016, $4.13 B sales was recorded through e-Commerce.
• Singapore and Malaysia generate half of SEA’s e-Commerce
sales.
• By 2020, the e-Commerce market will reach a revenue of
$6.5 B.
INDIA
• In 2016 e-Commerce INDONESIA
market was $25 B. • In 2015, e-Commerce grew by 55%.
• It will grow up to $55 B • By 2018, e-Commerce will be a $11 B industry.
by 2018.
MALAYSIA
• In 2016, $1.2 B sales was recorded through e-Commerce.
• By 2020, an estimated $2.86 B will be through e-Commerce.
By 2018, Asia-Pacific will lead worldwide in e-Commerce growth and sales.
KEY TRENDS DRIVING GROWTH
MOBILITY REWARD LOYALTY
Mobile devices will be the Reward systems and customer
‘retail destination’. loyalty will be important
differentiators.
EFFICIENT & SECURED UNDERSTAND CUSTOMERS
Secured transactions, including The ones who understand customer
mobile payments and wallets, and emotions, their mental state, and
efficient delivery will be the key. their needs will win ultimately.
All rights reserved © 2016 Frost & Sullivan 3e-Commerce Retailers - The Next Billion $ Opportunity - Are We Ready?
EXECUTIVE SUMMARY
The e-Commerce industry has witnessed unprecedented growth across the Association for
Southeast Asian Nations (ASEAN) region, surpassing US$10 billion in revenue in 2015. The
high growth is driven primarily by technology adoption, with the proliferation of smart phones,
broadband, and 3G/4G Internet, as well as the trustworthiness of online sales channels in
the minds of customers. This expeditious movement in the online shopping arena may be
perceived as just the beginning. The industry has also undergone a paradigm shift in the
way customers shop-not only are physical attributes enabled but related products are made
visible to millions of customers that would otherwise have not been purchased.
With explosive growth in countries such as India, China, Japan, and South Korea, Asia-Pacific
(APAC) is set to become the leading region in e-Commerce in the world. By 2018, APAC is
expected to generate sales of $1,892 billion at the regional level and $3,015 billion globally.
The retail e-Commerce segment accounted for 10.2% of the total retail sales in APAC in 2015,
which is projected to grow to 20.3% by 2019. Among the APAC countries, China leads with a
projected 19.6% of total e-Commerce sales, followed by South Korea with an estimated 14.7%,
by 2019.
e-Commerce
2016 Average 2015 Internet
Revenue Growth
Revenue per User Penetration
(2016-2020)
China 14.28% 725 47%
South Korea 11.73% 844 88%
Singapore 11.69% 1390 81%
Malaysia 24.30% 88 66%
Indonesia 18.82% 327 28%
Philippines 20.67% 45 44%
Source: Frost & Sullivan analysis
4 All rights reserved © 2016 Frost & Sullivane-Commerce Retailers - The Next Billion $ Opportunity - Are We Ready?
Many e-Commerce retailers may not be able to sustain themselves in this high-opportunity
and challenging business environment with insatiable customer expectations. In an already
crowded market space, where companies strive to achieve internal efficiencies and provide
the best customer experience at competitive prices, establishing a reliable e-Commerce
infrastructure that meets customer expectations at all times can become difficult. Research
proves that one of the top drivers that contribute to the switching of customers from one
e-Commerce company to another is due to the slow loading speed of the Web page. Today’s
customers are restless beings; s/he is ready to abandon the shopping cart and, for that matter,
the e-Commerce Web site owing to a few milliseconds of page-loading delay, called latency.
An advantage of 250 milliseconds of page load time can be the difference between a satisfied
customer and an ex-customer.
Top e-Commerce companies across the globe use various technologies and solutions to ensure
a fast and reliable shopping experience for their customers, irrespective of the device used.
Content Delivery Network or CDN is one of the most successful solutions. CDN is a network
of servers that stores content from Web pages, videos, graphs, images, and databases and
delivers them to the desired audience, ensuring high availability, performance, and speed.
This improves the user experience with efficient network resource utilisation. CDN not only
guarantees a faster page load time with every click that a customer makes-ensuring increased
sales-but it also saves on hardware and software costs.
How does that translate into revenues? With the use of CDN solutions, e-Commerce merchants
are able to boost their Web performance tremendously-one second of speed boost increases
sales by 3% per customer.
This whitepaper examines some of the core issues and challenges-latency in particular-faced
by e-Commerce customers and how an e-Commerce participant can identify the appropriate
CDN solution to provide seamless customer experience that is cost effective, fast, reliable, and
efficient for providing coverage across operational countries.
All rights reserved © 2016 Frost & Sullivan 5e-Commerce Retailers - The Next Billion $ Opportunity - Are We Ready?
HEADING TOWARDS A PARADIGM
SHIFT IN SHOPPING
Growing Acceptance and Importance of Online Shopping as a Viable Alternative
The move towards online shopping can be tracked to the 90s, when companies such as eBay
and Amazon introduced their e-Commerce solutions. The industry has grown significantly in
terms of capacity in the last 2 decades. Consumers have the option to shop at e-Commerce
sites for a wide range of products-ranging from fashion, jewellery, electronics, music and
videos, books, and toys to sports, travel, and much more.
The ‘always-on-shopping’1 mode is now a reality, where the customer can shop 24x7x365
from any location and on any device or platform-desktops, laptops, or mobile phones. This
reiterates the importance of how e-Commerce retailers need to not only provide a flexible
platform but also a reliable buying experience for shoppers.
Besides evolving consumer needs, the increasing use of smartphones and tablets has aided in
the overall growth of the e-Commerce industry. It is estimated that up to 30% of e-Commerce
sales in developed and developing countries is attributed to this increased proliferation of
mobile/smartphone devices. Though smartphone penetration in the ASEAN region is less
than 40%, it is increasing at a fast pace and is expected to exceed 80% by 2020. Other factors,
1 3 e-Commerce Trends You Need to Know for a Profitable 2015 by Shopify
6 All rights reserved © 2016 Frost & Sullivane-Commerce Retailers - The Next Billion $ Opportunity - Are We Ready?
such as larger disposable income among the growing middle income group across the globe,
are also contributing towards the rapid growth. ASEAN has close to 65% of its households
in the middle income group, where the purchasing power is increasing rapidly2. Considering
the fact that this is the only industry experiencing double-digit growth on a global level,
generating more than a trillion dollars3, the potential for e-Commerce is immense.
Exhibit 1: ASEAN e-Commerce Market (2014–2020)
25
20 3.42 ASEAN-6 e-Commerce
Markets and Penetration
3.12 (2014-2020)
2.96
CAGR 16%
15 2.74
2.71
2.97
2.42
2.52
2.62
2.13
2.35
10 2.22 4.59
1.86 Thailand
2.19
1.53
1.84 3.94 Singapore
2.05 3.36 Philippines
1.47
1.92 1.12 2.76 Indonesia
2.34 3.91
5 0.83 3.56 Malaysia
1.90
1.58 3.19 Vietnam
2.84
2.51
2.19
1.90 3.70
3.03
1.69 2.06 2.50
1.15 1.38
0
2014 2015 2016 2017 2018 2019 2020
Source: Frost & Sullivan
The revenue generated in the global e-Commerce market in 2015 exceeded US$1.5 trillion;
however, this only contributed to 6.7% of the total global retail sales, showing that there
is significant potential for the industry to grow. The United States, which is the 2nd largest
e-Commerce market (after China), saw 7.3% of its 2015 total sales revenue coming from
online sales4. Peering closer into the ASEAN region, made up of Indonesia, Malaysia, Thailand,
Singapore, Vietnam, and the Philippines, the combined e-Commerce market is expected to
grow from US$10.2 billion in 2015 to US$21.6 billion in 2020, at a CAGR of 16%. This represents
a huge opportunity for e-Commerce retailers at the regional level.
2 Frost & Sullivan’s Mega Trends Report - 2015
3 Retail Sales Worldwide will Reach $22 Trillion this Year by Emaketeer
4 Quarterly Retail e-Commerce Sales 4th Quarter 2015 by US Department of Commerce
All rights reserved © 2016 Frost & Sullivan 7e-Commerce Retailers - The Next Billion $ Opportunity - Are We Ready?
Competition Among Online Retailers Intensifying Every Day
During the initial phase of mass marketing in the 1990s, most e-Commerce companies
originating from the US dominated in terms of global market share. Since then, many local
or regional companies have emerged and are thriving. Research shows that only Amazon,
eBay, and Craigslist are among the top 10 global participants within the e-Commerce space.
A similar trend is being observed in the ASEAN countries, where either local or regional
participants, such as Lazada, Zalora, and Qoo10 (ex-Gmarket from South Korea), and several
large Chinese global participants, such as Alibaba, Taobao, and Aliexpress from the Alibaba
Group, operate.
Exhibit 2: Global and ASEAN Top e-Commerce Retailers (2016)
GLOBAL VIETNAM MALAYSIA INDONESIA
• Alibaba • 123mua • 11street • Alibaba
• AliExpress • 5giay • Alibaba • Bhinneka
• Amazon • Amazon • eBay • Blibli
• Craigslist • Chotot • Ensogo • Bukalapak
• eBay • Hotdeal • Goshop • Elevenia
• JD • Lazada • Groupon • Lamido
• Rakuten • Nhattao • Lazada • Lazada
• Taobao • Sendo • Lelong • Olx
• Walmart • Thegiodidong • Mudah • Qoo10
• Tiki • Rakuten • Tokopedia
• Vat Gia • Taobao
THE PHILIPPINES SINGAPORE THAILAND
• AliExpress • Alibaba • Alibaba
• Amazon • AliExpress • AliExpress
• eBay • eBay • Amazon
• Ensogo • Lazada • Boxza
• Lazada • Luxola • Cdiscount
• Metrodeal • Qoo10 • Central
• Olx • Rakuten • eBay
• Zalora • Reebonz • Ensogo
• Taobao • J.I.B
• Tmall • Kaidee
• Zalora • Lazada
• Tarad
• Weloveshopping
Source: Frost & Sullivan
8 All rights reserved © 2016 Frost & Sullivane-Commerce Retailers - The Next Billion $ Opportunity - Are We Ready?
There are already more than 1 million online stores in ASEAN5, with the top 20% of e-Commerce
retailers contributing 63% to the total revenue. This trend of intensifying competition within
the e-Commerce provider space is expected to accelerate as the industry grows.
Consumers Evaluating their Online Service Providers Continuously During Every Log
In, at Every Purchase, and at Every Return
While there have been various improvements and enhancements during the last 20 years to
make the overall online shopping experience more pleasant, it is still far from perfect. While
the challenges faced could range from the Web site design and technical specifications of the
e-Commerce platform to the payment gateway, this paper will focus on the common issues,
faced by both retailers and consumers alike.
5 ASEAN e-Commerce 2015 - Frost & Sullivan
All rights reserved © 2016 Frost & Sullivan 9e-Commerce Retailers - The Next Billion $ Opportunity - Are We Ready?
CHALLENGES IN THE ASEAN
E-COMMERCE MARKET
In the midst of huge business opportunities owing to the growing middle class, higher
smartphone and Internet penetration, growing number of e-Commerce participants, more
logistics options, and alternative payment methods, the ASEAN region faces unique challenges.
Managing customer expectations and perceptions related to speed and reliability of delivery
and online payment fraud; cross-border issues related to custom duties, taxes, logistics, and
corruption; lack of low-cost and reliable logistics infrastructure designed for e-Commerce;
and each country’s regulations with regard to e-Commerce and foreign ownership are some
of the challenges that deter customers from shopping online, as well as new participants from
starting operations.
Crossing the Chasm
Reaching out to the regional market and meeting cross-border transaction complexities,
cross-border e-Commerce is on the rise globally.
2014 Global
Cross-border
e-Commerce market 2025 Global Cross-border e-Commerce market
$80B $600B
15% Others 20% N. America 25% Europe 40% Asia
In Southeast Asia, 40% of e-Commerce transactions are cross-border;
the most commonly bought goods & services include:
Airline Tour & Hotel Electronics Clothes
Ticket Reservation
This is further expected to increase with new trade initiatives, such as the ASEAN Economic Co-
operation (AEC), which will lower trade barriers and are expected to further increase regional
trade by 60%. However, managing performance, especially for cross-border international
trade, can be both costly and complex.
10 All rights reserved © 2016 Frost & Sullivane-Commerce Retailers - The Next Billion $ Opportunity - Are We Ready?
Browsing Speed Crucial for Cross-border Trade
The complication is magnified in ASEAN, where different countries have varied levels of
Internet infrastructure. The host server for the e-Commerce Web site could be in a country
situated thousands of miles away from the shopper’s location, which impacts the overall
quality of speed for the buyer.
1. High bounce rates and low search engine optimisation (SEO) rankings: In a study,
47% of the consumers surveyed mentioned that they expected the Web site to load
within 2 seconds and 40% stated that they would leave if it did not load within
3 seconds. Another study inferred that close to 60% of ASEAN consumers would
look for an alternative place to purchase a product, if the Web site failed to load
on time. This translates to tremendous loss in revenues for e-Commerce retailers.
Furthermore, search engine companies such as Google, Bing, and Yahoo take into
account Web site load times as a parameter in their algorithm for producing organic
search ranking. A longer load time will impede an e-Commerce retailer from getting
a high rank. This affects the company while attracting new visitors to its site, though
it may have the product or service that the prospective customer is looking for.
2. Complexity issues while working with multiple vendors: Many ASEAN companies,
especially those in the e-Commerce space, tend to have the misconception that it is
cheaper to manage their infrastructure, including the distributed network of proxy
or caching servers, by using products and services from multiple vendors6, with the
aim to provide a seamless Web browsing experience. In consequence, not only are
costs likely to escalate due to the lack of bundled pricing options, but it can also
lead to integration and interoperability issues, which can affect the overall end-user
experience.
6 A Unified Approach to Accelerating Web Sites and Web Applications by CDNetworks
All rights reserved © 2016 Frost & Sullivan 11e-Commerce Retailers - The Next Billion $ Opportunity - Are We Ready?
IMPACT OF LATENCY ON E-COMMERCE
PROVIDERS’ BUSINESSES
Based on survey results7, e-Commerce retailers experience multi-fold losses due to the lack of
ability to provide a solid and seamless online shopping Web site experience.
Customers Cannot Wait. Period.
Today’s customer is hungry and impatient. As much as s/he wants new products at cheaper and
competitive prices, s/he craves for high loading speeds, easy navigation, secured browsing and
purchase experience, and much more. The most important factor that pushes a customer off a
Web page is slow speed.
Examples:
• An e-Commerce Web site making daily sales of $100,000 is expected to lose $2.5
million annually due to a one-second page delay8.
• Web pages taking 3 seconds to load deter 40% of visitors, which translates to an
enormous 40% loss of sales.
• 62% of ASEAN buyers rated latency of an e-Commerce Web site as the most important
factor for overall satisfaction-more than the breadth of products and services (46%)9.
• 70% of the customers are not likely to visit an e-Commerce Web site if they were
dissatisfied with its previous performance.
Companies in APAC, such as Singapore-based start-up Reebonz and South Korea-based
11street, face challenges not just due to cross-border transactions across Asian countries, but
also due to poor customer experience. Online markets, such as 11street, place high importance
on offering pleasant shopping experiences from the moment a consumer gets online all the way
through to the delivery of the purchased items. Global companies, such as Amazon, employ
an ever-improving e-Commerce strategy to drive sales and volumes, attract customers, and
provide back-end support-every 100 milliseconds of latency costs them 1% of their sales.
7 How Loading Time Affects Your Bottomline by Kissmetrics
8 Why is Web Site Speed Critical for Online Retail Success in 2015 by CDNetworks
9 ASEAN E-Commerce Survey – Frost & Sullivan 2015
12 All rights reserved © 2016 Frost & Sullivane-Commerce Retailers - The Next Billion $ Opportunity - Are We Ready?
WINNING BIG BY THINKING CDN
With the growing consumer demand for fast and uninterrupted access to applications and
sites, fuelled by advanced technologies and broadband proliferation, most e-tailers are
looking for ways to reduce inherent Internet latency and congestion, leading to poor end-
user experience. This is particularly true for e-Commerce companies that deploy applications
generating dynamic content to display on the Web sites. But, at what cost?
Online retailers look out for optimum solutions that can considerably improve the performance
of their portal at a reasonable cost. Constructing their own data centres is an option, but it
induces latency from geographically dispersed data centres, as well as high costs, potential
risks, and resource barriers. Foreign hosting is another alternative; however, it is often highly
priced, besides opening possibilities of manageability issues while dealing with additional
parties.
The most suitable choice to address the issue of latency with regard to Web performance
at low operational costs is the use of global CDN. CDN enables an unparalleled end-user
experience by accelerating the Web performance, which includes dynamic content. CDN
reduces the Internet middle mile by bringing content closer to users, shortening round trips,
and, as a result, reducing latency and increasing page-loading speeds at a much lower cost
than what would be incurred from the construction of data centres and foreign hosting.
Furthermore, CDN considerably reduces site abandonment by customers and increases
sale conversion rates by utilising its global presence, scalability, and managing massive and
unexpected traffic spikes due to special marketing campaigns. CDN is operational right from
the time the customer opens the Web site until s/he purchases the product and closes the
post purchase activities, viz., information gathering of the product, shipment, and/or customer
service.
As more aspects of daily life move online, organisations are increasingly using a dedicated
CDN provider to accelerate static, dynamic, and mobile content, e-Commerce transactions,
video, voice, and games, among others. In addition to offering superior Web performance
resulting in better user experience, CDN providers subscribe to the best practices in security
standards, such as the Payment Card Industry Data Security Standard (PCI DSS), to protect
customers from various security threats.
All rights reserved © 2016 Frost & Sullivan 13e-Commerce Retailers - The Next Billion $ Opportunity - Are We Ready?
CUSTOMER EXPERIENCE IN THE NEW
COMPETITIVE BATTLEGROUND
Exhibit 3: Customer Experience
Similar to most technology solutions, ‘one size does not fit all’ is the case with CDN as well, as
the perspectives and requirements of each organisation are unique.
14 All rights reserved © 2016 Frost & Sullivane-Commerce Retailers - The Next Billion $ Opportunity - Are We Ready?
LITMUS TEST CRITERIA FOR ONLINE
BUSINESSES TO SELECT THE RIGHT CDN
PROVIDER
More often than not, Web businesses approach a technology solution blindfolded. They either
go by word-of-mouth from a colleague who runs an online shop in some other part of the
world or by going for companies that cater to a wide spectrum of businesses with a solution
that is, most of the times, not a custom one.
In this technology industry, many CDN providers focus on key benefits, including increasing
Web performance. However, there are 3 criteria that should be regarded as the golden rules
while selecting the right service.
Criteria 1: Global Businesses (and Local Needs)
Online shoppers across ASEAN have unique requirements; however, one that is common
across the world is the need for speed.
Web sites of today and tomorrow, including local dominant participants, are going global by
the day. With increasing globalisation of Web businesses, there is an increasing need for CDN
service providers that are localised to each operating country, supported by personnel who
can understand local issues and identify solutions that provide a unified customer experience
for the users, irrespective of where the data is consumed.
All rights reserved © 2016 Frost & Sullivan 15e-Commerce
e-Commerce Retailers
Retailers—The
- The Next
Next Billion
Billion $
$ Opportunity
Opportunity -- Are
Are We
We Ready?
Ready?
Criteria 2: Security
No user would want to shop on an e-Commerce Web site that does not guarantee the security
of online transactions.
PCI certifications ensure compliance; however, they do not check the occurrence of Distributed
Denial of Service (DDoS) attacks, though the compliance to PCI would reduce their likelihood.
As applications are becoming more accessible on the Web across industries the threat of
increasingly complex attacks against Web applications is growing. Hence, a CDN service
provider must ensure that it has built-in DDoS mitigation and proactive site-monitoring
features and sends alerts in the event of such an attack. From a user’s perspective, these
attacks might mean temporary unavailability of services, which will not result in a positive
user experience, as they would be unaware of the reasons.
Additionally, CDN providers should provide intelligent Web Applications Firewall (WAF)
technology from a trusted security provider that can stop attacks such as DDoS, SQL injections,
and behaviour-based complex logics. Mitigation, monitoring, and alerting services will help in
controlling and containing the issue quickly and effectively.
Criteria 3: Efficient Architecture
One of the most important criteria is to select a CDN operator that has application acceleration
and a robust cloud load balancing solution. Load balancing is critical for any Web site with a
widely distributed customer base. An agile and flexible content delivery architecture allows
fast response to changing business and end-user requirements. A domain name system (DNS)-
based cloud load balancer for traffic management allows for optimal resource allocation
and business responsiveness, along with the reduction of capital expenditure (CAPEX) and
operational expenditure (OPEX). The solution must have flexible policies and allow complex
conditions to address unique situations that can be modified by administrators easily. The
infrastructure needs to remain available to maintain business continuity, even during periods of
massive, unpredictable traffic to prevent loss of revenue. Cloud-based acceleration improves
middle mile performance by reducing the number of data round trips necessary to complete
a Web request. This proves invaluable to retail sites that incorporate interactive applications,
such as social commentary and inventory look-up.
16 All rights reserved © 2016 Frost & SullivanGlobal Reach SEA/China Expert Web/App Acceleration
e-Commerce Retailers—The Next Billion $ Opportunity - Are We Ready?
Cloud Security Cloud Acceleration Mobile CDN
(DDoS/WAF/PCI) (DNS/Storage Load Balancing)
CDN SOLUTION
CDNetworks is a widely acclaimed and high-performing global CDN service provider. With a
Tier I network performance across 6 continents and 200+ global points of presence (POPs), it
ensures constant and reliable content acceleration under any network conditions. CDNetworks
has accelerated the Web performance of more than 40,000 Web sites and cloud services.
CDNetworks delivers Web content to the end-user via the most efficient path-through globally
deployed, high-capacity edge-servers across 100+ cities, providing rapid response times. It
has satisfied users even during periods of high congestion or dramatic spikes in traffic.
CDNetworks is the only multi-national CDN with expertise and infrastructure in China, Russia,
and other emerging markets, which enables it to understand and address local issues and
needs with world-class solutions trusted by thousands of customers worldwide. As the Web
matures into a platform for delivering mission-critical applications, CDNetworks provide the
services to control, optimise, and monitor the applications over the public cloud. Its Web
Performance Suite seamlessly combines all the services necessary for reliable and speedy
delivery of robust Web sites and applications.
What Sets it Apart?
CDNetworks provides an optimised user experience for its customers by offering speedier
site performance than other service providers, uniquely facilitated by local support, combined
with specialised knowledge across 6 continents. CDNetworks empowers customers to give
a new lease of life to their Web sites and applications ranging from e-Commerce companies
to businesses in finance/forex, travel, learning management, technology, manufacturing, and
media. Companies such as Tesco, Shopify, Dell, Mailup, Monin, Agent Provocateur, River Island,
All rights reserved © 2016 Frost & Sullivan 17e-Commerce Retailers—The Next Billion $ Opportunity - Are We Ready?
Hyundai, Bang & Olufsen, and Samsung trust CDNetworks as the go-to CDN service provider.
End-customer’s Perspective-Every Millisecond Counts
Asian countries offer huge market opportunities for online retailers to kick-start their operations
and flourish. With growing competition among global and local online retailers, customers are
getting spoilt for choices. With new companies offering unique products mushrooming every
day, new market leaders emerge every year and there is only one recipe for success: clear
understanding of customers-their current, future, implicit, and latent needs.
CDNetworks enables Web business companies to focus on their core businesses and not
worry about costs and Information Technology (IT) scale-up. It offers end-to-end CDN
solutions across the world for a unified customer experience without the need for a separate
CDN or data-centre solution for each country of operation. Its unique features not only help
organisations boost their Web performance globally, but also stay protected against Web
attacks and security threats. CDNetworks provides services across the globe with offices in
Singapore, China, South Korea, Japan, US, and the UK.
Southeast Asia and China-Huge Market Opportunities in Line with the Vast and
Growing Internet Community
China offers a gigantic business opportunity, due to its Internet-savvy population, with the
Internet penetration at 52%, as well as supplier and user market base. Keeping in mind the
market opportunities for new online Web businesses and the entry barriers in the country,
CDNetworks is uniquely positioned to help online retailers capitalise on extensive knowledge
and experience, navigating the business and governmental landscape. With a robust CDN/
Application Delivery network (ADN) infrastructure that optimises content and application
delivery across China’s multiple Internet Service Providers (ISPs) and global operations,
CDNetworks provides full scalability, reliability, and performance for content delivery and
CDNetworks provides 25 POPs in Mainland China with application performance with its
a 55Gbps capacity to local users, complementing China Acceleration Solution.
200+ POPs located across 6 continents, providing
a global capacity of >3.7 TBps. It is the highest With presence in Southeast Asia
performing global CDN with the lowest latency in in countries such as Singapore,
China and advises clients on ISP and Internet Content South Korea, Japan, Vietnam,
Provider (ICP) licensing to ensure access into the Indonesia, Malaysia, Thailand,
Chinese domestic market. Myanmar, Taiwan, Cambodia,
Mongolia, and the Philippines,
CDNetworks covers almost every
18 All rights reserved © 2016 Frost & Sullivane-Commerce Retailers—The Next Billion $ Opportunity - Are We Ready?
important country, making it an attractive service provider.
Dynamic Web Acceleration Critical for Online Retailers and Software-as-a-Solution
(SaaS) Providers to Deliver High-quality Experience to an Increasingly Dispersed
User Base
Unfortunately, even the most optimised origin servers cannot guarantee high and consistent
levels of performance, because they are susceptible to delays and other performance problems
caused by Internet latency and congestion. Technologies such as caching, content delivery,
and intelligent routing do not adequately address the performance requirements of dynamic,
Web-based applications, as they are non-cacheable and time-sensitive. The real culprit for
disparity between a low round trip time and multi-second latency impact lies within the TCP
and HTTP protocols.
CDNetworks’ dynamic Web acceleration is an on-demand Web application acceleration service
that enables organisations to quickly and reliably deliver applications and dynamic content
from the cloud or a centralised infrastructure to users around the world. By speeding up and
optimising the way servers interact with the Internet, the solution accelerates application
response times.
The platform comprises a global network featuring 2 types of specialised server clusters:
EDGES, through which users access the network, and SHIELDS, through which customers’
applications are made available to end-users. Its global DNS re-direction and IP address-
mapping system transparently directs users to customer applications optimised by dynamic
Web acceleration services.
Match Made in Heaven
With an open platform solution, ease of integration, and novel ways to approach TCP/
HTTP inefficiencies, CDNetworks is an ideal choice for the Southeast Asian market’s Web
businesses that use dynamic and interactive Web applications. When compared to other
CDNs, CDNetworks approaches TCP/HTTP inefficiencies differently. It caches the same
content, and at the same time, optimises major portions of the content that are dynamic
and non-cacheable and does not distribute content or application code, but utilises a high-
performance transport protocol across the middle mile instead. The result is that distance-
induced delay is greatly minimised.
All rights reserved © 2016 Frost & Sullivan 19e-Commerce
e-Commerce Retailers
Retailers—The
- The Next
Next Billion
Billion $
$ Opportunity
Opportunity -- Are
Are We
We Ready?
Ready?
Swords and Shields
In the digital, data-intensive, and connected world of today, as businesses increasingly
move online-be it e-Commerce or a Web site of a Fortune 500 company-organisations are
challenged to protect their Web sites and infrastructure without sacrificing performance.
Today’s online retailers spend sleepless nights worrying about cyber attacks that can not only
cripple the Web infrastructure but also jeopardise their biggest strength-the confidence of
their customers.
CDN aligns to the technical requirements of PCI During the RSA Conference held
Standards, regarding system-level and application- in March 2016, Cloud Security
level policies, including log data centralisation, Alliance (CSA) released a report
monitoring, and reporting for security and audit on the top security threats
purposes. organisations face while using
cloud-based solutions. Among
the major threats that caused
long-term implications were DDoS attacks, data breaches, and permanent data loss.
A DDoS attack cripples the Web site server, so that it does not respond to legitimate user
requests and often renders the Web site useless for hours, or even days, resulting in loss of
revenue, customer trust, and brand authority. However, businesses want it all: secure data and
applications accessible anywhere from any device, which is possible with cloud technology,
although there are inherent challenges to making it a reality.
CDNetworks’ Cloud Security Solution Uniquely Integrates Web Performance with
the Latest in Cloud Security Technology to Keep Customers’ Web Sites Both High-
performing and Secure
CDNetworks addresses DDoS attacks through its intelligent, flexible, and scalable cloud-
based infrastructure and sophisticated monitoring systems. It identifies and disperses among
its multiple absorption POPs any unusual traffic spikes targeted at the original customer
Web site. It also provides intelligent WAF technology, fully integrated with the global CDN
and monitored 24x7, which can stop layer 7 attacks, including DDoS, SQL injections, and
behaviour-based complex logics.
Smartphone adoption in APAC will nearly double-from 1 billion users in 2014 to 2 billion in
2019. Growth markets such as India, Indonesia, Japan, Malaysia, Thailand, Vietnam, and the
Philippines will drive this growth across all age groups. With the region set to become the
20 All rights reserved © 2016 Frost & Sullivane-Commerce Retailers - The Next Billion $ Opportunity - Are We Ready?
largest e-Commerce market in the world, mobile devices are ‘a retail destination’, as they allow
people to access supermarkets, marketplaces, boutiques, and niche stores on-the-go. With
the increasing proliferation of mobile phones and devices for e-transactions, mobile content
delivery is a unique challenge that needs to be addressed for a unified customer experience.
CDNetworks’ mobile CDN technology enables mobile network operators (MNO) to achieve
up to 30% faster mobile content delivery and 20% reduction in mobile data traffic. Its mobile
CDN technology enhances the mobile user experience with radio access network (RAN)
acceleration at the same time. It uses technologies such as text compression (to reduce
mobile data traffic), video pacing (to reduce excessive progressive video downloading), and
TCP acceleration (tuned to fit the mobile operator’s network environment) to enable a faster
mobile accessing service.
LAGGARDS IN WEB BUSINESS
WILL PAY THE PRICE
For those Web businesses that do get it right, the rewards are overwhelming. Web performance
that is not only fast and nimble but also consistent across every click, everytime, and in every
device a customer uses, wins the customer’s heart.
The adoption of an immersive CDN supported by cloud security to increase the overall Web
performance for Web-based businesses explored in this paper will help organisations manage
their internal needs to provide seamless service to their customers. As technologies evolve,
the proliferation of Internet and smartphones increases, making competition intense. As
Web businesses feel the pressure from customers, smart services from companies such as
CDNetworks will be a boon to the online marketplace.
ASEAN is at the cusp of a digital revolution; however, only those who are ready will be able to
participate and reap the benefits.
All rights reserved © 2016 Frost & Sullivan 21Women’s Beauty
e-Commerce Retailers - The Next /Billion $ Opportunity - Are We Ready?
Men / Digital
Fashion Diet Sport
Entertainment Q-Deal / Ticket
Living Baby /
Food
GIF
TVO GIF
100 R UCHE
1
ing $
Case Study
Who is Qoo10 (Giosis)?
Giosis is a company backed by eBay, the world’s largest online marketplace, to become Asia’s
leading online marketplace. Giosis provides a powerful online platform that allows its buyers
to enjoy a highly secure and convenient shopping experience. Qoo10 was named Gmarket
initially and was renamed Qoo10 in 2009. Qoo10 is the fastest growing online marketplace in
the world and offers an innovative e-Commerce platform, providing customers fun, convenient,
price-competitive, and secure shopping experiences for reliable goods and services from all
over the world.
What Does it Do?
The company operates 7 localised online marketplaces in countries including Japan, Malaysia,
Indonesia, and Singapore and plans to operate in many more Asian countries. Its vision is
to bring together diverse buyers and sellers worldwide and provide an enjoyable shopping
experience.
Qoo10 sells a large variety of products including clothing lines, fashion products, sports
products, beauty and health products, digital and mobile products, and much more.
22 All rights reserved © 2016 Frost & Sullivane-Commerce Retailers - The Next Billion $ Opportunity - Are We Ready?
Qoo10’s Business Challenge
Qoo10 was rebranded from Gmarket, which has a huge following in South Korea, and was
launched across various Asian countries. Gmarket was a South Korean online auction and
shopping Web site, where people from all around the world could buy and sell goods and
services. With product procurement across multiple countries, as well as a diverse base across
various Asian countries, Qoo10 faced unique business challenges to serve all its customers
with the same spirit of customer experience.
With customer focus at the heart of its business strategy, Qoo10 aims at serving its customers
and its vendors with fast Web performance solutions to enhance their experience. When
the industry was in its nascent stage in Asian countries, specifically Indonesia and Malaysia,
Qoo10 had to act fast and implement a solution that creates an equitable status of service if
not an edge over competitors, as customers continue to adopt e-Commerce increasingly to
meet their shopping needs.
Qoo10 selected CDNetworks to provide content Solution for Qoo10
acceleration and dynamic Web acceleration to
improve its Web performance across the operating CDN not only accelerated page
countries. With growth and expansion plans across download times by reducing the
multiple Asian countries, choosing a CDN solution time taken to load a page by
such as CDNetworks appeared as an obvious choice 81%, but also reduced the total
considering its strong expertise in the region with data transferred by 97%. This
services in Southeast Asia-including China, which is helped in increasing the uptime
the most important consideration for Southeast Asian of the Web site, thus increasing
online shopping participants. the reliability and generating
- Hyunwook Cho, Country Manager, Qoo10 Indonesia a positive user experience for
users in the region. During busy
seasons, such as the Chinese New
Year when online shopping witnesses a spike across the region, Qoo10 was in a comfortable
position due to the use of content acceleration enabled by CDNetworks, which helped in
quickly scaling up the site’s capacity.
All rights reserved © 2016 Frost & Sullivan 23W E AC C E L E R AT E G R OW T H
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ABOUT CDNETWORKS
CDNetworks is a global content delivery network (CDN) with fully integrated cloud security DDoS protection
and Web application firewall. Our mission is to transform the Internet into a secure, reliable, scalable, and high-
performing application delivery network. CDNetworks accelerates more than 40,000 Web sites and cloud services
over a network of 200+ global POPs in established and emerging markets including China, Southeast Asia and
Russia. We have been serving enterprise customers for 15 years across industries such as e-Commerce, gaming,
finance, technology, manufacturing, and media. CDNetworks offices are located in Singapore, China, South Korea,
Japan, US and UK. For more information, please visit: www.cdnetworks.com.sg
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