Local and regional players are on a roll, but don’t count out global players just yet

While Southeast Asia’s e-commerce is at nascent stages, it actually proceeds forward at a rapid pace in an ever-changing landscape.

1. Huge untapped potential for e-commerce

It is reported there are over 600 million people living in Southeast Asia. ASEAN leads this region in terms of being united and prosperous. Some even boldly claim this newly founded organisation could ascend to the fourth biggest economy, following U.S., China, and the EU, by 2030.

In terms of e-commerce, which is widely practiced in developed countries, Southeast Asia seems to be at a nascent stage and far left behind — only one-fourth of its population has actually made their first purchase. However, everything is changing at a swift pace, and e-commerce is at a tipping point in many categories, such as clothing, footwear, and travel. With more and more promising businesses and startups boosting the advancement of e-commerce, this region will see drastically explosive growth in the following years.

Also Read: Infographic: 5 Malaysian e-commerce trends that will define 2017

2. The domination of mobile usage in remote areas

Due to the insufficient infrastructure in most areas and the higher cost of getting desktops, acquiring access to the internet through mobile phones seems the best and affordable option. Hence, the increasing accessibility of mobile phone plays a major role in lifting e-commerce growth.

This phenomenon is especially significant in outlying areas which, in some extreme cases, lack the proper support of electricity. Rural residents increasingly rely on mobile devices to obtain the latest news and interact with e-commerce websites. Thailand and Indonesia, for example, are two countries wherein the heavy reliance on cellphone use for product search and ordering has been observed — 85 per cent and 79 percent of the total outlying population, respectively.

Given this, mobile interface optimisation and mobile marketing could grow into decisive factors for the remaining winners. The acquisition and application of mobile data would become extremely valuable for companies’ growth.

3. Fragmented channels for online purchase

The fragmentation of online purchase channels is something we need to watch out for. Nowadays, there is no any predominantly preferred e-commerce marketplace in every individual country. Singapore, the most developed country in Southeast Asia, for instance, is encroached by 12 different retail platforms. None of these retail platforms is the customer’s first preference for more than 20 per cent of users.

Undoubtedly, the phenomenon also takes place in other countries, causing more chaos and requiring more attention. Therefore, it’s integral to come up with comprehensive strategies to handle the baffling and fragmented channels, one of the best way being showing up your presence in the all top platforms.

Also Read: IoT and e-commerce: How platforms and marketers can benefit from increased connectivity

Having said that, you should consider the attribute of products and study the difference of every platform before hitting the shelves.

4. Local and regional players dwarf global giants

Even while having successful business models in other regions, global players — such as Amazon and eBay — are not performing very well in Southeast Asia, being unable to win the trust of online buyers. In contrast, local and regional players are, from the statistics, the top and first choices in the eyes of Southeast Asians and secure higher Net Promoter Scores — standing out from the intense competition.

The reason why global players don’t win the favor and stand out are, in large part, because these local and regional players have more understanding about their respective target markets, and are able to understand the needs of consumers. As a result, the better-tailored experience becomes the unique advantage to overcome global entrants.

Notes: The Net Promoter Score is calculated by subtracting the percentage of detractors (those with a score of zero to 6) from the percentage of promoters (those with a score of 9 or 10). – Cited from Bain & Company

5. Ever-changing landscape

While the aforementioned facts are clearly observed, the e-commerce landscape may become a dramatically different one in the near future with more and more resources invested into the industry. More precisely, even if local and regional players are among people’s first choices, the rank could be changed in the blink of an eye.

Moreover, it is expected that global players are going to allocate bigger budgets toward the fiercely harsh competition in order to reclaim overseas markets. The influences they bring will highly stimulate innovation in many ways, such as fulfilment and delivery systems, thereby making huge progress in e-commerce and benefiting more people.

Also Read: Branding basics: 6 steps to an effective e-commerce branding strategy

Finally, it is believed that a business model, which is developed based on social commerce, will come to the limelight soon, particularly from social media companies, LINE, for instance, is joining in, amid a harshly competitive e-commerce landscape. Even if there are more experiments and field-testings to be carried out, the impacts toward the existing e-commerce scene can never be neglected. You should always keep the power of the social network in mind.

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Source: Can Southeast Asia Live Up to Its E-commerce Potential?,  Florian Hoppe, Sebastien Lamy and Alessandro Cannarsi

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