Improving e-commerce in the Southeast Asian region

Last week, Google and Temasek Holdings, the Singapore sovereign wealth fund released a report suggesting that by the end of this year Southeast Asia’s internet economy would be worth $50 billion and worth four times more by 2025.


The number of Southeast Asian internet users keeps on increasing

The monthly number of users who use the internet actively is currently at 330 million and has risen by 13 percent from 2015 to 2017. Southeast Asia’s internet network is considered to be one of the fastest growing economies in the world. Its internet economy has grown from 1.3pc in 2015 to 2pc this year.

On average, Southeast Asia’s internet users spend around 3.6 hours of their time surfing on the internet compared to any other region across the globe. The report predicts that by 2025, the internet economy will largely expand and will include around 6pc of Southeast Asia’s GDP.

E-commerce carries a lot of potential

Many local businesses related to the field of technology believe that Myanmar has a promising and burgeoning e-commerce sector which could be the key factor that drives the country’s internet economy ahead. In fact, the main and largest contributor to Southeast Asia’s internet economy is due to retail e-commerce. The evolution of various online marketplaces and platforms such as Lazada, Tokopedia, and Shopee allow digital B2C (business to consumer) transactions to take place. It is expected that the value of these transactions will hit $10.9 billion this year.

Sumit Jasoria who is the regional managing director of Myanmar, Sri Lanka, and Nepal at Rocket Internet (responsible for controlling the largest online retail platform of the country Shop.com.mm) says that “over the next 3 years, internet usage in Myanmar will rise with cheap data and a new telecommunications operator entering the market. That will help to increase internet penetration and retail e-commerce in this country”.

Consumers use e-commerce platforms mainly at night

Actually, there is an increasing number of users and consumers who prefer to shop online because of the flexible e-commerce platforms and latest trends emerging. Jasoria also adds, “In the last year, we have seen a lot of people buying online especially at night, after office hours. Traffic on our website goes up after 8 pm, which was not the case before”.

Investing in online presence and marketing strategies

Rianne Roggema who is the creator and managing director of the local e-marketing start-up business Irie Digital also believes that as more companies decide to boost their business using online marketing strategies, the e-commerce industry will consequently grow more. According to her, “Myanmar is an incredibly large country with low population density, which makes offline marketing very time-consuming and costly. Online marketing is a more efficient way to reach people all around the country, especially with the introduction of data connectivity in the countryside”.

Roggema’s perspective is simple: Companies need to establish a strong operational presence online along with marketing strategies to make e-commerce flourish in Myanmar.

Helping aspiring firms to grow

Implementing such strategies will eventually attract the interest of investors and also help small and aspiring firms that lack the capital to raise an adequate amount to grow. As a matter of fact, internet companies in the Southeast Asian region were able to raise over $12 billion capital as compared to $1 billion in 2015. Around three-quarter of this capital was invested in start-up companies valued at over $1 billion. Right now, there are seven internet unicorn companies in Southeast Asia, including Sea Limited (formerly known as Garena), Grab, Go-Jek, Lazada, Razer, Traveloka, and Tokopedia.

However, in order to help these small local firms attract more funds and the interest of investors, it is important that the Myanmar government provides incentives. An example of such an incentive could be the setting up of a functional ecosystem where internet unicorn companies can function effectively. It is also important for banks and other financial institutions to contribute to making the required online payment and transfer systems better for the e-commerce industry.

Banks should invest in technology to support the e-commerce industry

Jasoria further adds that in Myanmar, “only 8 out of 80 online payment transactions are successful” because the banking infrastructure and e-commerce facilities that are provided are either inadequate or do not exist. He says, “Banks need to invest in technology so that their systems are ready for online payments and online transfers. The main thing would be enabling interbank money transfers, which is not happening as of now”. For Jasoria, the government should give more licenses to global logistics businesses as “these global companies will bring a lot of technological support in improving last mile delivery not only in Yangon and Mandalay but also in the Tier-2 cities of Myanmar” he said.

Educating the consumers about e-commerce

In the meantime, the companies that are connected to the internet economy can also educate consumers to make more purchases online through shopping and digital payments. Even if today more items are ordered online, the payments are still made upon delivery via cash. Roggema says, “While access to data has grown rapidly, digital literacy has yet to follow. [In Myanmar], it is hard to get people to use digital products outside of Facebook. It is now up to the digital start-ups to give people a reason to use the internet outside of Facebook, for example, to do online shopping, taxi-hailing, music and movie downloads”.

Jasoria is of the same opinion, “As the market matures and if banking shapes up well, we will see a lot of global e-commerce companies entering this market. With mobile wallets also coming up and an increasing middle-class, Myanmar is poised to take off in the internet space”.

Article published in  E-commerce :

 

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