Ecommerce in Taiwan and What Every Business Needs to Know

Ecommerce in Taiwan and What Every Business Needs to Know

The ecommerce market in Taiwan continues to grow at a rapid pace. Experts valued the market at US$37.6 billion in 2016 and expect it to grow at an average rate of 10-20 percent over five years. Because of this growth, these experts expect to see the country’s online retail platform sales overtake physical retail store sales. They feel these sales will make up over 50 percent of the multi-billion retail sector. The e-commerce penetration rate remains among the highest in the world today. 

The Compound Annual Growth Rate

According to Ken Research, Taiwan saw a compound annual growth rate of 9.8 percent for the period between 2012 and 2018. They examined the gross merchandise value to come to this conclusion. The company expects to see a 4.4 percent compound annual growth rate for the period between 2018 and 2023. Ken Research believes this growth comes from the country’s well-developed digital infrastructure, the increase in the urban population, high smartphone penetration, and growing user traffic on popular social media sites. However, other factors also play a role in this growth. 

Top Shopping Categories

Taiwanese consumers don’t discriminate when online shopping. While clothing and accessories remain the most popular items, men and women purchase from a wide range of categories. This includes hotel reservations and tours along with airline reservations. The CAGR for the online travel industry was 26.8 percent for the period between 2013 and 2018 when looking at the gross transaction value. Experts predict this will increase by 13.2 percent for the period between 2018 and 2023. Other popular categories include event tickets and fast-moving consumer goods. 

Men and women in the country turn to the internet when they wish to buy groceries, household products, skincare, and more. They often buy computers and accessories online, along with items for mother and baby. Collectibles remain a hot ecommerce item, as do computers and video games. 

Emerging online retail categories include home improvement and gardening. Pet care and home care online sales continue to grow, and consumers now purchase more health items online. Those who turn to the internet for their online travel purchases do so for leisure packages, holiday packages, and more. 

Online Payment Options

Consumers in Taiwan choose from several payment options when shopping online. Quite a few men and women choose to use their credit cards for purchases they make over the internet, but this isn’t the case with all. Some buyers pay at a convenience store or wait until they receive the item to pay. Online banking payments serve as the preferred choice for many shoppers in the country, while some individuals place credit card orders by fax. Mobile payments, bank transfers, and wire transfers remain other options consumers may benefit from when shopping online.

The Marketing Intelligence and Consulting Institute (MIC) reported in 2019 that 77 percent of consumers used a credit card to complete an ecommerce transaction. However, 63 percent make use of convenience store pickup when making an online purchase. Eleven percent of consumers turn to ATM bank transfers when they need to pay for an item they purchased online. However, mobile payments continue to increase in popularity as more men and women in the country get and use cell phones.

Smartphone User Penetration

Smartphone user penetration helps to drive ecommerce in Taiwan. According to the Taiwan Network Information Center, internet penetration in the country reached 93 percent of the population in 2019. The center found 98 percent of individuals in the country accessing the internet did so with the help of a mobile phone. Fifty-nine percent used a laptop or desktop to access the internet and 51 percent used a tablet. 

Ken Research points to the convenience of shopping online to explain the growth in ecommerce in the country. Consumers have no time and place constraints when purchasing goods and services in this manner. Furthermore, they turn to product reviews when making a decision and choose to buy their basic goods online, saying they believe doing so saves them money. 

Social Media

Social media also plays a role in the rise in ecommerce in Taiwan. Facebook and Line, a messaging app, account for a significant portion of this growth. In fact, social media serves as the main online market outlet in the country today. According to MIC, the top five channels consumers use when purchasing online goods are Yahoo, Facebook, TV commercials, internet celebrity promotions, and Line. 

For those countries with 50,000 or more residents, social media penetration remained highest in Taiwan in 2016. It came in at 77 percent. Furthermore, the country led in Facebook and Twitter penetration during that same period, featuring a rate of 67 percent. These statistics show the importance of social media and digital marketing in Taiwan, and companies in need of help in this area often turn to a local digital marketing agency for help. 

Consumers also turn to the internet when they want information about a product or service. MIC reported in 2018 that consumers get this information from sites such as online shopping sites, the Google search engine, Facebook, and price comparison sites before turning to friends and family for their input. In addition, many companies work with public relations firms when it comes to promoting their products or services.

To encourage ecommerce within the country, the Taiwan Ministry of Finance reduced withholding taxes for foreign enterprises to six percent. The Ministry imposes these taxes on Facebook ads, and the prior tax rate was 20 percent. The reduction applies to those companies offering cross-border electronic services to consumers in Taiwan.

Loyalty Points

Many companies in Taiwan reward their ecommerce customers with loyalty points. The shopper earns these points for interacting with the site and may then redeem the points for payment of a product or gift. Shopee serves as a good example of a reward program. Shoppers download the app and earn rewards toward various perks when engaging with the app. The app offers four tiers of rewards, and shoppers move up in the levels by shopping on the site. They then redeem the points for perks such as free shipping, exclusive deals, or vouchers. The reward system encourages shoppers to engage in more ecommerce activities. 

Cross-Border Ecommerce

Taiwan’s proximity to Japan and China has led to an increase in cross border ecommerce. Taiwanese individuals purchase from Japanese and Chinese sites, and Chinese and Japanese shoppers visit Taiwanese sites when they wish to buy items. Many international shoppers appreciate the quality of Taiwanese products and return in the future when they need items. In fact, Yahoo Hong Kong recently announced they are launching a cross-border ecommerce platform serving Hong Kong and Taiwan. 

MIC reports Taiwan’s cross-border ecommerce increased by 5.4 percent in 2018, with consumers purchasing items such as clothing, home appliances, daily necessities, and designer articles. Consumers in Taiwan purchased items from China, Japan, the United States, and more. However, certain barriers remain that limit ecommerce today. This includes language barriers, tax regulations, warehousing, customers, and shipping costs. 

Business-to-Business Ecommerce

One reason ecommerce thrives in Taiwan involves the business-to-business transactions that take place. The Taiwan External Trade Development runs two web portals devoted to these interactions. TaiwanTrade offers information on suppliers, distributors, and manufacturers, so businesses only need to search one location when they need a product or service. IDealEZ Online Marketplace serves as the other platform. Here, businesses find they can purchase small quantities of items to sample them before committing. This platform allows them to interact with the suppliers rather than working through a middleman. The information technology, textile, and chemical sectors have the most developed business-to-business ecommerce streams at this time. 

Top Online Ecommerce Sites

Certain companies have made their way to the head of the ecommerce market in Taiwan. They succeeded in doing so by offering great products, promoting their offerings, rewarding loyal customers, and marketing their goods in creative ways. Ruten and PCHome serve as two examples of companies that dominate the ecommerce industry, with Yahoo Shopping Taiwan! and Shopee knocking at their doors. However, with the right strategy in place, any company in Taiwan can increase sales with the help of ecommerce, and there are several reasons for this. 

Changes in consumer behavior continue to be seen in Taiwan. These changes drive increased demand for online retail and social media usage boosts consumer engagement. As a result, companies see they have a range of opportunities available to them when it comes to growing their customer base and bottom line. The country is seeing a shift from retail store sales to online shopping, and experts predict this trend will continue. 

The online payment industry facilitates the growth of the ecommerce industry, as it makes online transactions fast, easy, and secure. As more customers feel confident shopping on the internet, online sales will continue to skyrocket. In the future, all transactions may be completed online. Only time will tell if this is the case, but it does appear Taiwan is headed in that direction. 



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