E-Commerce in SEA

E-Commerce in SEA

E-Commerce is supposed to be the next big thing in South-East Asia if investments are any indication. Let’s correct that: E-Commerce is the next big thing in Asia. In the last couple of month Rocket Internet received more than 300 million USD investment for Lazada (totaling at 486 million USD) and Zalora (212 million USD in half a year). Duriana announced a 800k USD investment on the 11th of Dec and record-breaking e-commerce numbers were reported by Alibaba, Paypal and alike. E-Commerce is big around the world, but it’s actually quite small in SEA and China, considering that most of the world’s population is living here. This is about to change. There is significant space to grow. In the UK the average online shopper spends 1736 USD on goods and services per year, while in China it’s merely 33 USD. In 2014 E-Commerce from India to Tokyo will surpass the online shopping numbers in the US and Europe, leveling at 500 billion USD, and it is projected to grow to more than 700 billion USD by 2016.


Reasons for this growth are plenty but the major ones are:

  • A very young population – 20 percent of Asia’s population is between 15 and 24.
  • Adoption of Mobile Devices – connectivity everywhere, always.
  • Governments pushing e-commerce to help domestic retailers and producers sell goods internationally, resulting in eliminating the middleman.

While the opportunity is looming on the horizon, Asia is not there yet, and the question is what is holding it back? There are several reasons, and most have to do with typical problems in emerging markets and middle-income countries. Still low Internet penetration, payment solutions, missing infrastructure, trustworthiness and reliability, and customers that are either not aware of their options, or have not adopted a mindset that suits online shopping – yet. Finally, the majority of the population just does not have the money to consume.

Internet Penetration


Internet penetration rates are rising and it is less and less of a barrier to entry. ComScore reported that Vietnam added 2 million internet users within a year, and the growth rate in the Philippines is at 22%. This can be found to a certain extend in all SEA countries. Unlike western countries though, most of the traffic is generated through mobile devices, suggesting that most of the population just skipped everything desktop. Barely does one see desktop computers at home, and why should there be any? Small condominiums do not even have kitchens – and large screen smartphones and tablets are much more versatile, albeit more expensive. In rural areas feature phones are still dominating, but this is about to change with entry-level smartphones from China entering the country. In rural areas Internet Cafes often allow the young generation to take part in the information exchange, however most of the time they participate in online games and on social media pages. A positive side effect of online gaming is that the players get used to in-game purchases and hence online shopping/ payments.

Payment Solutions


Credit Card penetration is still very low – particularly in the rural areas. Within urban centers like Bangkok, the credit card penetration is actually very high. Interestingly, credit card penetration might not matter too much for e-commerce after all.

Credit Cards, while without a doubt being convenient, are not everywhere as popular as one might think. In Germany for example it is very often possible to pay by bill after receiving the delivery and it is usually not necessary to have a credit card to buy goods online.

E-Commerce providers in Thailand, and SEA in general, might have to face a similar reality. Some alternatives are:

In store payments. Particularly in Thailand, 7Eleven’s can be reached within 2 minutes from almost every spot in Bangkok, very often one can reach two. They are ridiculously easy to access and they don’t boost any (!) electronic payment method – apart from their in-house solution. At 7Eleven payments are made in cash, for everything from products to bills.

ATMs – Like 7 Eleven’s they are everywhere and they can be used to not only pay bills but also transfer money. Most ATMs have a bar code scanner somewhere and bills can just be scanned and paid without any problems. Transferring money is also very easy and cheap. Keying in the payment details takes not more than a minute and the transfer is done immediately – unlike in some European countries where the transfer between banks takes up to three days.

Payment on delivery – Most large e-commerce stores offer payment on delivery, just like all food delivery. This method seems to suit the local taste. When it comes to warranty, customer service and trustworthiness South-East Asia is not the best place in the world and it eases the consumers mind if they can touch and test the product.

Rules, Regulations and Infrastructure

Jim Barber, President of UPS International, spoke to the American Chamber of Commerce in Singapore about the future of e-commerce in the light of ASEAN 2015 and the challenges to overcome – particularly a reform of customs. The value of e-commerce for customers is zero if shipments take weeks to arrive, or don’t arrive at all, and “E-commerce companies cannot afford the high costs of determining import requirements and completing excessive paperwork, risking their reputations with customs holds, late deliveries, or inefficient return procedures – all of which are common across Asia.” –and add up to 15% of the price of goods sold. SEA in particular and Asia in general is – one could say – plagued by different laws, customs, cultural and legal systems which is a reason for such a fragmented market. In this regard Ardent Capital is trying to ease pains of multinational and local stores alike, aiming to introduce

Trust and reliability


South-East Asia has not exactly the best consumer protection laws. Therefore consumers have to make sure they don’t just send their hard-earned money to some scam store. Frederik Kraß, founder of the Malaysian startup TrustedCompany, says “You probably know the situation when you want to buy any product or service online from a company you have no prior experience with. The price seems attractive and the company promises to deliver within short time. However, you might ask yourself the following: Can I actually trust this company? Will they deliver in time? In general, how do I know this company is trustworthy and reliable? The biggest concern of people is that they get betrayed if they order a service online.” If you can’t answer those question consumers might opt for old-fashioned stores. It is quite interesting how Thailand is dealing with these circumstances. Pantip.com and Facebook are huge trading places. Pictures are posted, descriptions are added and interested users can just post a short messages mentioning the article, exchanging phone numbers, texting over Line, sending the money via ATM money transfer and later meeting up and exchanging goods, or sending it by mail. Not exactly the most convenient process, but because a personal relationship is established – trust is build. Page 365 is one of the companies trying to automate the backend process of Facebook stores, by providing shops with a system that can automatically respond to shopping queries and provides sellers with convenient tools to handle their inventory and shipping.

Team Photo

Nevertheless, this is not solving the trust problem. In Europe and the US services offer user-generated reviews and ratings about the reliability and trustworthiness of stores and TrustedCompany has brought this concept to South-East Asia. “TrustedCompany builds trust through its open review community for Asian consumers to identify trustworthy and reliable online companies, whilst online companies can use TrustedCompany.com’s tools to authentically display customer satisfaction with reviews leading to increased conversion and better Marketing ROI. While users can read reviews and share their own experience free of charge, we do charge e-businesses for the full use of our service. This includes Widgets and a Seal that display the company’s rating directly on their website, a Mediation Service that helps companies to deal with complaints, and the Automatic Customer Feedback that allows companies to automatically invite current customers to review their service.”, Fredrik said.

Facebook Commerce


Most people selling their goods through Facebook Pages do not have great knowledge of web technologies, which makes it challenging for them to keep products consistent among different social networks and web properties. PayWhere has developed a solution that integrates with all kinds of social media solutions from Facebook to LiveJournal, providing online storefronts for each network. There are obvious value ads for both, consumers and businesses. The latter have one centralized inventory management feature, which makes it easier to manage products as well as statistics on sales, orders, transactions and other key figures, across all setup stores. The platform also allows creating “shared promotions” that rewards customers when they actually share a promotion on their social networks. PayWhere also integrates all kinds of payment options, like ATM transactions, Paypal, Alipay, or Asiapay, among others.





Since mobile is ubiquitous, pure m-commerce solution making a lot of sense. Maybelline, part of the L’Oreal group, offered specifically branded products over Line Chat, which is used by about 25% of the Thai population. For shoppers in Bangkok the product was delivered on the same day of the order or the next day, while orders from other locations in Thailand, received their product within 2-3 business days. A few days earlier Line sold special iPhone cases as flash deals within 25 minutes after announcing the sale. While m-commerce is not yet widely established, the opportunity is certainly looming, particularly because the communications between Facebook sellers and shoppers is already worked out over Line Chat, and there is not really a reason why companies would wait to jump on board.


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