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E-commerce or electric commerce in Southeast Asia is the buying and selling of products and services over the internet in the countries of Southeast Asia. These practices reached Southeast Asia during the dot-com mania in the 1990s. After the dot-com bust, local e-companies have seen promising growth in this sector.
The Internet and the beginning of e-commerce in the 1990's made it practical for Southeast Asian consumers to purchase items from American and European companies that would be delivered in their countries. The dot-com companies’ stock prices then skyrocketed, and native companies felt they needed to catch up to the other high selling e-commerce countries, choosing to underestimate the risks of launching many e-companies and letting the market decide which ones would succeed.
Asia had begun to receive nearly half of the total capital inflow from developing countries, attracted by the high interest rates. The economies of Malaysia, Singapore, Thailand [1] and Indonesia [2] saw high GDP growth rates up to 12 percent, due to the stable Asian economies, the World Bank and the IMF for the benefit of the Asian local companies. [3]
Purchasing power [ clarification needed ] was growing as well as the number of e-commerce companies in each market, which promised a bright future for e-commerce.
After 2000, the e-commerce market was mainly dominated by business-to-business (B2B) transactions due to consumer mistrust after going through the 1997's financial crisis in Southeast Asia and the bubble burst. The only way e-commerce companies could re-enter the business-to-consumer (B2C) market was to earn back consumer trust. Companies like Amazon.com, for example, spent almost a decade, in coordination with the Southeast Asian governments that became more “internet-friendly," to rebuild that trust. [3]
In addition to consumer mistrust, e-companies have to face low internet usage. According to Nielsen, the average Southeast Asian internet penetration was around 38% among the 15 and over population, [4] with the exception of Singapore where the use of internet is widespread (~ 67%). [5] This number is comparatively low to the rest of the world with Australia (78.9%), United States (78.1%), Germany (83%) and Japan (79.5%). [5]
Others hurdles to overcome are cultural. For example, the number of credit card owners in Asia, and those who use payments other than cash, is small. Trust of the bank system and the electronic payments is traditionally low but government initiatives such as Thailand's PromptPay is trying to push for a "cashless society." The payments by credit or debit card are, however, on the rise, allowing the development of internet services and retail. The high rate of fraud and corruption in some countries also discourages people from paying over the internet.
While payment and credit card usage is one element, the massive differences in cultural sensitivity differ greatly between e-commerce in Singapore and those of e-commerce in Indonesia and many other predominately Islamic countries, leading to interregional advertising confusion.
Lack of information in the industry is also a major concern as reliable market data is scarce and employees lack the digital experience needed to grow quickly. Market research brands such as ecommerceIQ are trying to fix this problem by published and sharing research and insights regarding e-commerce in Southeast Asia. The market research brand launched officially in February 2016 with Google Thailand.
In response to these challenges, emerging e-commerce service providers such as WeLoveShopping, iTrueMart and aCommerce provide cash on delivery (COD) in order to penetrate second and third tier cities in Southeast Asia, as demonstrated by the 42% sales rate outside of the Thai capital, Bangkok. [6]
When participating in mobile commerce campaigns in the region, brands also noticed an uptick in sales of luxury items. "What was most surprising to us was how well high price point items sold. We believe this is driven by the fact that customers have the option to pay via cash on delivery (COD), which reduces the perceived risk for the customer and also enables brands to target customers in regions with lower credit card penetration," said aCommerce Regional Chief Marketing Officer, Sheji Ho. [3]
The Cambodian e-commerce market [7] is less developed compared to the other nations in the ASEAN region. Lack of internet infrastructure outside of major towns and cities, audience insecurity about purchasing online, delivery systems and logistics within the country to credit cards usage, and taxes, as well as many other factors, have been major stumbling blocks in this development.
With bankruptcies of many dominant international companies at the beginning of 2000[ citation needed ] Southeast Asian companies were able to take over the Internet: Blogs, reviews social networks and others started flourishing.
It was not until the end of 2011, however, that e-commerce really re-established itself in Southeast Asia. Foreign companies no longer just ship there but actually offer products and services focused on and responsive to regional needs, from local offices to warehouses.
Photobook Malaysia started in 2005 with a seed fund of RM1.4 Million, offering a service where people can print their digital photos and turn them into photo books, which later turned into a multinational company.
Rocket Internet was the first company to enter the online shopping market at a large scale in the region, through Singapore, with its fashion venture Zalora. Following that success, Rocket Internet launched Lazada Malaysia, an Amazon.com equivalent [4] offering a range of products from electronics, recreation, home appliances, books, video games, health and beauty products, toys, baby products, and fashion items such as bags.
The draw was cutting shipping time needed for favorite foreign goods from up to a month to just a few days. They did this by offering Southeast Asians the opportunity to get the same products that they used to purchase through foreign companies along with local products from an online company just around the corner.
Zalora and Lazada Malaysia rapidly spread out to neighbor countries and are now among the top most visited and most efficient websites in Southeast Asia. That is why international investors such as JP Morgan, Kinnevik and Summit Partners invested millions of dollars in Lazada, seeing the huge potential in the Southeast Asian market. [8]
In Thailand, WeLoveShopping was established in 2004 as a C2C online marketplace by Ascend Group, a spin-off of True Corporation and a subsidiary of C.P. Group. The site has recently changed its business model from earning revenue from rentals of online stores to earning commissions from transaction fees ranging from 2.9 to 13%. [9] Payments for products will be placed in Escrow with cooperation with TrueMoney, and only when the product is delivered to the buyer satisfactorily will the seller get paid. [10] Ascend Group also went on to set up iTrueMart in 2013 as a B2C e-commerce platform. [11] In 2015, iTrueMart turned to Amazon Web Services (AWS) to run its e-commerce website and launched in the Philippines. [12]
To overcome the mistrust of the consumers, e-companies adapted themselves to the market and its difficulties. In the case of Rocket Internet and aCommerce, they decided to offer the payment methods such as credit card payment and cash on delivery. [13] Furthermore, they updated methods compared to the brick-and-mortar businesses to meet market expectations: They launched the “14 day return” policy and free and fast delivery in all countries to attract consumers back. [8]
Soon after the appearance of Lazada and Zalora, Rakuten, Japan's largest B2B2C online retailer, also decided to reach into the same market by launching Rakuten in Malaysia. Even though they were already working with local and small e-commerce companies in a low customer catchment area, in Thailand in 2009 and Indonesia in 2011, their Malaysian venture is their biggest achievement in the region. They also had to match consumers’ expectations by offering attractive payment methods and appealing customer service. [14]
The second largest country in Southeast Asia, the Philippines is a large and rapidly developing market for e-commerce. In 2018, there were 37.75 million eCommerce users in the Philippines, with an additional 18.02 million users expected to be shopping online by 2022. By then, these 45.77 million eCommerce users will spend an average of US$48.72 online. Total Filipino eCommerce revenue across all product categories is US$1.49 billion, and is expected to grow to US$2.62 billion by 2021. Electronics & Media is currently the leading product category in the Philippines, accounting for US$618.6 million market share, followed by Toys, Hobby & DIY, which generates US$336.5 million in sales. 47% of Filipino shoppers like to pay with cash on delivery when shopping online. [15]
In response to the significant growth in the number of online retailers, price-comparison websites became another e-commerce business on the rise. They compile product database from online retailers, traffic users to their websites, before redirecting to the designated merchants. Examples of these websites are Priceza, iprice, PricePanda and Pricetory.
Despite the lack of trust in e-commerce and several cultural issues coming from the recent financial crisis, the market for e-businesses has been growing at a double-digit rate and seems poised to become one of the most profitable sectors.
The e-commerce sector has grown rapidly over the past few years. This is due to the fact that more businesses are using digital technology such as online shopping, social media marketing, etc. Especially during the Covid pandemic time, when e-commerce platforms grew even more. In Malaysia, the e-commerce revenue was recorded at RM279.0 billion, a jump of 17.1 per cent year-on-year in the third quarter of 2021. [16]
Based on mobile app Monthly Active Users
Based on monthly web visits
Source: iPrice
E-commerce is the activity of electronically buying or selling products on online services or over the Internet. E-commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. E-commerce is the largest sector of the electronics industry and is in turn driven by the technological advances of the semiconductor industry.
In non-Asian countries, an Asian supermarket largely describes a category of grocery stores that focuses and stocks items and products imported from countries located in the Far East.
Rakuten Group, Inc. (楽天グループ株式会社) is a Japanese technology conglomerate based in Tokyo, founded by Hiroshi Mikitani in 1997. Centered around the online retail marketplace Rakuten Ichiba, its businesses include financial services utilizing Fintech, digital content and communications services such as the messaging app Viber, e-book distributor Kobo, and Japan's fourth-most used mobile carrier, Rakuten Mobile. Rakuten has more than 28,000 employees worldwide, operating in 30 countries and regions, and its revenues totalling US $12.8 billion as of 2021. Rakuten was the official sponsor of the Spanish football club FC Barcelona from 2017 until 2021, and the Golden State Warriors of the NBA as of 2022. It is sometimes referred to as the "Amazon of Japan".
Online shopping is a form of electronic commerce which allows consumers to directly buy goods or services from a seller over the Internet using a web browser or a mobile app. Consumers find a product of interest by visiting the website of the retailer directly or by searching among alternative vendors using a shopping search engine, which displays the same product's availability and pricing at different e-retailers. As of 2020, customers can shop online using a range of different computers and devices, including desktop computers, laptops, tablet computers and smartphones.
Transnational eSolutions, Inc., also known as TeSI, is a Philippine-based e-Commerce Company. It is a member of the Transnational Diversified Group of Companies (TDG), an entity with over 30 member companies with business interests which include Air and Travel, Shipping and Ship Management, Logistics, BPO, and ICT.
PricePanda is a price comparison shopping website and distributed content store, founded in 2012 by Christian Schiller and Louis Iskandar in Berlin. The managing director is Philip Wegener.
Pakistan's e-trading mainly involves buying and selling goods, and services using internet or telephone, through the use of electronic means such as computer, fax machine, cellular phone, automated teller machines (ATMs), and other electronic appliances with or without using the internet. Online banking, e-tickets, share trading in stock exchange are few examples of e-commerce of modern advancement. With its potential, e-trading can reduce the cost per transaction, increase efficiency, support contest, lower prices and boost international demand. It can open new areas for business in the service sector like online education, medical services, consultancy, and data exchange. It can also provide expansion in trade through domestic and international market research, advertising and marketing. In the financial services area, it can make easy and speedy transactions and transfer of money at a minimum risk. The interesting feature of online trading is that an investor simply sitting in his office or home can buy or sell through the Internet via mobile/tablet or PC and before being an experienced trader he may learn a lot by watching market screens or web portals at his convenience.
Priceza is a shopping search engine and price comparison tool, with local websites in six Southeast Asian countries:
The ShopBack Group is Asia-Pacific's leading shopping, rewards, and payments platform, serving over 38 million shoppers across ten markets. ShopBack offers a suite of products to their users - from Cashback through purchases both Online and In-Store, Vouchers and deals, as well as payment options.
Carousell is a Singaporean smartphone and web-based consumer to consumer and business to consumer marketplace for buying and selling new and secondhand goods. Headquartered in Singapore, it also operates in Malaysia, Indonesia, the Philippines, Cambodia, Taiwan, Hong Kong, Macau, Australia, New Zealand and Canada. Carousell is available on both iOS and Android devices.
Grab Holdings Inc. is a Singaporean multinational technology company headquartered in One-North, Singapore. It is the developer of a super-app for ride-hailing, food delivery, and digital payment services on mobile devices that operates in Singapore, Malaysia, Cambodia, Indonesia, Myanmar, the Philippines, Thailand, and Vietnam.
WhatsNew Group is a Thailand based e-commerce company that is parent to multiple e-commerce brands which includes Petloft, Venbi, Sanoga (health), Lafema (beauty) and MOXY. The company leverages technology and the Internet to make home life and online shopping easier for people in Southeast Asia. Headquartered in Bangkok, WhatsNew Group sells both international and local brands under each e-commerce vertical. It is one of the portfolio companies of Ardent Capital, a venture capitalist based in Thailand. As of January 2016, the company merged with Bilna, Indonesia's e-commerce platform for mothers and announced a regional rebrand to the name Orami.
Lazada Group is an international e-commerce company and one of the largest e-commerce operators in Southeast Asia, with over 10,000 third-party sellers as of November 2014, and 50 million annual active buyers as of September 2019.
iPrice Group Sdn Bhd is a privately owned online shopping aggregator based in Kuala Lumpur, Malaysia. The company is an online aggregator that simplifies a consumers shopping experience by allowing them to browse for products and compare prices from various online stores. iPrice is a funding and investment product of Asia Venture Group and currently operates in eight Asian countries; namely Hong Kong, Singapore, Indonesia, Philippines, Thailand, Vietnam, Malaysia and Australia. As of May 2017, iPrice hosts a catalogue of over 110 million products from over 1000 merchants across the region, including big e-commerce sites like Lazada and Zalora.
Honestbee was an online grocery and food delivery service as its core business, a concierge service, and also a parcel delivery service for its B2B clients. The company provided personal shoppers that pick products for its clients. Consumers utilized the company's mobile app or website to interface with the company, and the store pickers and retail stores also utilized the mobile app. In Singapore, honestbee also provided laundry collection services.
Ascend Group is a privately owned e-commerce company headquartered in Bangkok, Thailand as a spin-off of True Corporation. It marked its $150-million expansion by launching their affiliates in the Philippines and Indonesia, Vietnam, and also hard to reach economies like Myanmar and Cambodia.
Aden Business Center, known simply as Aden, is a privately owned e-commerce enabler, fulfillment and logistics company headquartered in Bangkok, Thailand, as a subsidiary of Ascend Group.
SK Planet Co., Ltd., a subsidiary of SK Telecom, was established in 2011 and is an internet platform development company located in Pangyo, South Korea’s silicon valley with operations in 8 countries. SK Planet was spun off from SK Telecom to focus on online services and has since evolved to focus on three core business services: e-Commerce, Online-to-Offline services, and digital marketing.
Global Fashion Group (GFG) is an international online fashion and lifestyle retailer headquartered in Luxembourg. The company was founded in 2011 as a joint venture between Rocket Internet and Kinnevik. It serves as an umbrella organization for multiple regional e-commerce platforms specializing in fashion, including Zalora in Southeast Asia, Dafiti in Latin America, and THE ICONIC in Australia and New Zealand.
Shopee Pte. Ltd., under the trade name "Shopee," is a Singaporean multinational technology company specialising in e-commerce. It is a subsidiary company of Sea Limited. It was launched in 2015 in Singapore, before its global expansion.
