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Is South East Asia the new most popular ecommerce proliferating area ?

September 6, 2018

Internet penetration around the globe has been remarkable in the last decade. With this unprecedented growth, the cyberspace has gradually become an invincible marketplace. The result is a fast paced growth in e-commerce. However, if a business wants to jump into the digital bandwagon in Asia, it should be now.

 

Indeed, Sebastian Lamy of Consumer Product Practice says that their research with Google shows that 150 million consumers in Asia are already digital consumers, stating that 1 out of 4 are ready to search and engage in buying products online. This is consistent with Google and Temasek’s report ''Unlocking the $200B Digital Opportunity'', in which both claim that E-commerce in South East Asia (SEA) is expected to grow to over $200 billion in the next 10 years.

 

 

 

But still, one question remains. What are the brakes and grounds of ecommerce in South East Asia? Let’s remind us basic features.

 

Developing online shopping varies upon different factors:
 

  • The country's level of development (national income, technological progress etc.) The richer the country is, the more ecommerce platforms there will be. Consequently, the more attractive the country, and the more online transactions there will be. As most of SEA countries are developing (Vietnam, Cambodia, Laos etc.), ecommerce is not fully commonplace. 

 

  • The geographical area and the level of modernisation of infrastructures. Ecommerce platforms can’t prove relevant if the area is unaccessible, for deliveries won’t reach customers. Yet governments need to invest a lot more in road infrastructures.

 

  • Finally the age of the population. Online shopping is more commonplace by the younger generation than the older one.

 

 

 

It is important to note that these variables not only pertain to South East Asian countries but also to developing countries in general. What are the challenges  hindering growth in e-commerce?

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  • Inadequate e-payment solutions are a hindrance to online shopping. The payment mode preferred by most is 'cash on delivery', which has its risks and additional costs for the merchants.

 

  • Lack of local appropriate talent and professionals has seen the reliance on expatriates. But even if a lot of expatriates enjoy settling in SEA, countries cannot rely on such an uncertain factor. Education must surely have a role to play in order to encourage individual initiatives.

 

  • Internet penetration is still low due to geographical and regulatory constraints. In some countries, internet speed is too slow for a smooth online shopping experience.

 

  • Due to the high level of fraud and cyberspace insecurity sometimes associated with online shopping, some consumers are reluctant to make online transactions.

 

  • Inaccessibility due to poor logistical infrastructure. Poor rail and road networks hinder efficient delivery of goods and services to the detriment of the wary customer.

 

  • Government regulations which sometimes stand in the way of e-commerce advancement.

 

South East Asia has great potential for the e-commerce sector. However, it is instructive to note that only a quarter of the population above 16 years of age has ever made an online transaction. The market is also highly fragmented with many companies. One of the most effective tools for successful companies has been localization and customization of products in response to different preferences and customs. Local and regional players have an edge in this market mainly because they provide a tailor-made experience for the consumer, and this they do better than their global competitors.

 

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