The e-commerce landscape in Southeast Asia is heating up. With a vast population primed and ready to access digital commerce services, this movement has been supercharged by the pandemic.
Sellers are no longer constricted by geography. Instead, the globalisation effect we’ve seen over the past 18 months has opened up an opportunity to operate in a truly regionalised and globalised economy.
The time is ripe for local e-commerce sellers to look beyond their borders and expand into the Southeast Asian market, which is supercharged by a new wave of buyers and recent cultural and technological changes.
But how should they go about it?
A market of opportunity for e-commerce
Since the pandemic’s start, the potential for opportunities within e-commerce has skyrocketed– initially due to region-wide lockdowns and safe distancing measures.
Now, this shift in purchasing behaviour is likely to become a permanent fixture as the market recognises the value and convenience of online purchases and the infinite range of goods that are no longer locked to a single economy.
Buyers understand the value of moving beyond local goods and services, and sellers need to be there to fill that need.
A massive change in purchasing behaviour has been driven by the battle of the super apps in SEA. Players such as Grab and GoTo now command market share across a broad set of e-commerce industry verticals. The latter, a merger between Gojek and Tokopedia, which combines Gojek’s customer experience, geographic reach and payment choice with Tokopedia’s pricing, product selection and logistical support, is a perfect example of the many potential extensions of the traditional e-commerce model.
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Super apps such as this can compete in more markets, offer robust logistics infrastructure and a loyal customer base that can be quickly tapped into by savvy e-commerce sellers looking to piggyback on this regionalised approach.
Southeast Asia’s saturated mobile penetration rate (more than 100 per cent) is also a key driver for the continued growth of e-commerce in the region.
The rise of mobile availability and increased usage is opening doors to e-commerce and mobile commerce in Southeast Asia, with businesses able to serve consumers digitally, even in the most remote areas.
This high mobile phone penetration has also allowed fintech companies to serve underbanked businesses and micro businesses by delivering solutions, such as e-wallets, to the region. Such solutions are closing the technology gap between Southeast Asia’s underserviced sellers and those with more advanced solutions.
Battling the barriers
Reaching out into regional (and often crowded) marketplaces across Southeast Asia is not without its challenges.
Firstly, with no centralised currency, operating across borders becomes pricey. In Europe, the Euro reigns supreme – in Southeast Asia, there is no single or dominant currency, meaning that e-commerce sellers operating in the region must accommodate local currencies.
In doing so, they are losing hefty sums in transfer and conversion fees while exposing themselves to currency risk. Bridging the gap between the consumer and the international marketplace seller becomes key.
Logistics are also inevitably more complex when you’re dealing with multiple territories. Sellers must navigate between local postal systems and commercial carriers while juggling different handoffs, learning about the diverse shipping regulations in other countries as they go.
To deal with these new challenges, it’s essential to build a robust infrastructure so you can set up a standardised approach to deliveries that have been stress tested to withstand peak sales periods.
There is also a risk for online purchasing behaviours to regress to some degree. We saw an unprecedented pace of change in purchasing behaviours over the past 18 months, and in some cases, the shift was equivalent to changes that previously took a decade.
Although purchasing behaviours will likely never go back to what they once were, there is a chance that consumer preferences can pivot back toward physical commerce for specific products as part of the physical retail opening.
With many consumers making large purchases in early 2020 (such as investing in gym equipment, home renovations), some sellers have also noticed a decrease in this purchasing behaviour as the pandemic wears on.
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Prudent sellers will evolve, focussing on products that will remain resilient even as the region slowly reopens. Meeting a broader set of consumer demands will ultimately mean they are better suited to a post-COVID world.
Capture the opportunity
Localisation is a significant factor in regional expansion to effectively capitalise on this market of opportunity, regardless of your target market.
The key to capturing the opportunity in Southeast Asia is adopting and recognising local customs and practices: marketing and promoting during the proper peak seasons, accepting local currencies and ensuring your product offering is aligned with local demand.
It is also important to partner with the right payment provider. For those looking to break down borders and tap the vast pool of Southeast Asian buyers, employing a powerful cross-border payments solution with a robust infrastructure to allow for multiple payment methods is crucial.
Finding a payment solution with an established network will also minimise dependence on a single provider to secure a continued flow of payments – even in times of turmoil or unrest.
Aligning your strategy and outreach with the new, borderless world of e-commerce will open you up to a unique set of challenges, but the benefits are unmistakable. Achieving success will mean understanding the markets you’re selling to and leveraging recent shifts in consumer behaviour, technology and payments infrastructure.
Those who can reconcile the challenges of expanding into the Southeast Asian market will tap into an opportunity that transcends the traditional notions of localised commerce, giving sellers access to a more prominent buyers’ market than ever before.
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