Compared to the other Southeast Asian countries, not much is known about Myanmar’s market potential.

Despite being late in joining the world wide web, the country’s internet penetration grew 97% in one year, reaching 26% of the population, roughly 14 million users.

eIQ speaks with Win Nander Thyke, founder and CEO of rgo47 — one of the leading online retail companies in the country — to shed light on the country’s retail potential, evolving Burmese shopping behavior, and why she believes strongly in the market’s future.

Realizing Myanmar’s new consumer

Rgo47, initially Royal Golden Owls (RGO), was introduced in 2013 during Myanmar’s inaugural hosting of the biennial Southeast Asian Games (SEA Games).

By leveraging her family’s fashion business, RGO was responsible for producing the official merchandise for the SEA Games such as t-shirts and fashion accessories to be displayed and sold at the two-week event.

Myanmar ecommerce market

Official SEA GAmes Myanmar banner with RGO as a sponsor.

It was the right opportunity to send a positive image of Myanmar and reach a large audience with her new apparel brand as one of the official event sponsors and operators.

And it was during this time the company first observed a shift in consumer behavior that signaled the beginning of online retail potential in the country.

“People would email us or contact our Facebook page to ask if we were able to deliver the SEA Games souvenirs to their homes,” said Win. “At the time, we didn’t have the resources to do so and didn’t think that our Myanmar people would be interested to shop this way that early.”

Fair to say so considering only 1% of its population was connected to the internet only a few years back.

RGO, now rebranded to rgo47, decided to launch its online channel in April 2014 — the year that marked the country’s “Mobile Revolution” when mobile penetration jumped to 83% in only five short years.

Through its ecommerce channels to this day, the company continues to sell its most popular category: fashion apparel that includes everyday apparel, sportswear, shoes, and bags as well as its most recent category additions: cosmetics, kitchen appliances, and electronic and home office goods.

A uniquely Facebook-first market  

Given Myanmar’s reputation for being a Facebook-first country, the company set up a Facebook page and website as its first online channels.

“Facebook is very integral to the Burmese daily life that it’s almost useless for us to have a website,” said Win “I’d say 80% of our transactions come from Facebook.”

Myanmar ecommerce market

rgo47’s main Facebook page

According to Win, a native Burmese herself, a majority of consumers in the country require a personal touch, which usually means human interaction while placing their orders.

To cater to this need, the company employs 42 telesales personnel – out of 122 employees – to communicate with customers through phones and chat applications including Facebook Messenger, and the country’s favorite, Viber.

Win is trying to lessen its reliance on a labour intensive transaction process and anticipates a change in consumer behavior. The company released its mobile application earlier this May, already generating 11,000 (iOS) and 72,000 (Android) downloads.

However, even with this initiative, Win admits that shoppers still prefer the company’s Facebook page, pretty evident as the rgo47 page holds the largest audience in the country.

Myanmar ecommerce market

The company has the largest Facebook audience in Myanmar, leaving behind even earlier player Rocket Internet’s Shop.com.mm and Kaymu

Evolving Burmese online shopping behavior

A preference for Facebook is not to say that the Burmese are resistant to change.

While cash-on-delivery (COD) was the most preferred payment method based on rgo47 records last year, the company saw a shift to more than 50% of its orders now being processed via other channels such as bank transfer and Wave Money – Myanmar’s top mobile financial service providers.

Although a step in the right direction, Win believes the country’s lack of ATMs can cause customers to travel long distances in order to complete a payment and has unfortunately resulted in many canceled orders.

Aside from low payments infrastructure, the country’s addressing system also presents the last mile challenge. While most of its customers reside in big cities such as Yangon and Mandalay, the company has seen an increase of orders coming from rural areas where the drop off locations are difficult to find.

“Outside of Yangon, it is really hard to find the address for customers. That’s why most ecommerce companies in Myanmar still need to give every customer a call to confirm their orders and exact location,” explained Win.

While Myanmar’s ecommerce challenges are not uncommon, Win says customers are loyal, especially after companies have proven their reliability.

More than 30% of rgo47’s monthly transactions come from returning customers.

Win believes that the reason they have such a high retention rate is because her company constantly seeks ways to cater to customer needs.

“Customer satisfaction is the only metric that really counts for us,” said Win.

Customer-obsession seems to be working as the company is currently experiencing two-folds growth in its annual number of transactions and expects volumes to increase as more Burmese pick up online shopping habits.

Possibilities for the future

Despite the hardships that come with nascent markets like Myanmar, Win feels optimistic about the possibilities yet to be explored in ecommerce and its potential impact on communities.

A big determinant of ecommerce success in the country rgo47 believes is working together with experienced ecommerce firms from other markets to learn and apply their best practices.

Win also encourages foreign players to get their hands dirty and enter the market while it’s still early to reap the most benefits.

“The Myanmar people are smart and very curious about new tech experiences,” says Win.

“Many companies hesitate to enter Myanmar because they think the people or the market is not ready but if you’re waiting until they’re ready, it means you’re already too late.”

Financial Technology, or “fintech”, has been at the forefront of Southeast Asia’s growing digital adoption. In 2015 and the first half of 2016, a total of $345 million was invested in fintech startups in the region alone because market maturation and ecommerce adoption have been stagnated by payments.

In recent years, there has been an array of mobile wallets and government initiatives in the region, like PromptPay in Thailand, or Wave Money in Myanmar. Not many initiatives have involved a less explored and more popular technology in the West – blockchain and bitcoin.

eIQ speaks with Philip Lim, the founder of SKYBIT, a bitcoin startup that encourages cross border payments to a frontier market – Myanmar.

He explains the concept behind blockchain, how SKYBIT could possibly change the lives of the Burmese and why he decided to launch his startup in one of Southeast Asia’s less developed countries.

What is blockchain technology and bitcoin?

“A blockchain is a ledger of transactions which are grouped into blocks and tied together one after the other by encryption,” explains Philip.

The bitcoin blockchain is the largest and most active one, it is the token of monetary value that flows in the network.

“A blockchain is immutable, which means you can’t change its history, as the system would reject it,” says Philip. “Immutability also means that the record is seen as permanent. A good non-payments application would be for transfer of assets like land.”

“The number of bitcoin transactions per day around the world has continued to increase and has recently almost reached 370,000. Such increase in transactions could be attributed to media attention, especially of bitcoin’s steep rise in price recently but the technology has actually been around since 2009,” says Philip.

How does SKYBIT utilize blockchain technology?

Philip developed SKYBIT to create significant social impact in Myanmar by solving difficulties in transferring money to Myanmar as it was one of the factors impeding the country’s and the peoples’  development.

The SKYBIT payment processor helps Burmese businesses and aid organizations receive payments from abroad. A number of charity organizations have already signed up to accept donations from anywhere in the world.

Merchant Accounts dashboard on the SKYBIT platform

Example Ad Item on the SKYBIT advertising platform

A customer who wishes to make a payment clicks on the “Pay with bitcoin” button on the sales page, enters details such as email address and bitcoin address (used in case of refund), and is taken to an invoice page, where they can simply scan the uniquely generated QR code using any bitcoin app such as Copay, Coinbase and Bitcoin Wallet.

Invoice page and QR code generated by SKYBIT.

Payment is detected instantly and the entire process is done in a matter of minutes.

Invoice page and QR code generated by SKYBIT.

Behind the scenes, the bitcoin is received by SKYBIT, and SKYBIT deposits Myanmar Kyat into the organization’s SKYBIT account. The organization doesn’t need to handle or even understand bitcoin at all.

In case of a refund, SKYBIT can send bitcoin back to the bitcoin address provided by the customer and there is a limited amount of time to report a problem related to an invoice or request a refund, during which the merchant cannot withdraw the amount earned from the sale from their SKYBIT account.

“Signing up to use SKYBIT is far easier than applying for a merchant account to accept credit cards, as banks only want to deal with large businesses. This may encourage small merchants and even individuals to use SKYBIT and access a global market,” comments Philip.

“Credit cards also still have many problems, especially fraud and chargebacks, which can cause losses to merchants. With bitcoin, which was designed especially for the internet, transactions are detected immediately and irreversibly settled within minutes, and cryptographic checks prevent fraud,” says Philip.

“Traditional forms of payment are outdated and not entirely secure as they were designed before the internet was even invented,” says Philip.

Cryptocurrency adoption within Myanmar

Bitcoin can be purchased from SKYBIT via its exchange to effectively open up a whole new world of online shopping for the more affluent Burmese.

Myanmar banks have only recently released cards that are accepted internationally, but most locals would not qualify for one or the process takes too long.

“Traditionally, Myanmar is a very cash based society. People have stacks of money kept at home, and most understand it’s not practical,” says Philip.

To address this issue, mobile wallets like Wave Money have been introduced in Myanmar to allow locals to send local currency via smartphone, even in rural areas.

“Since Wave Money can only be used to send Myanmar Kyat, it cannot be used for international payments so Wave Money and bitcoin can actually complement each other,” says Philip.

“It makes a lot more sense to replace USD as the de-facto currency of the internet with bitcoin, as there is too much friction when dealing with traditional fiat currencies on the internet.”

“Businesses also aren’t allowed to display prices in any currency other than Myanmar Kyat. Within the past two years, many businesses in Myanmar, including Swensens and The Pizza Company, began openly quoting prices in USD. Authorities ordered them to stop because of the weakening value of the Myanmar Kyat relative to USD at the time,” says Philip. “They are afraid it will devalue the local currency.”

A social enterprise

“There have been, and still are, so many big problems that need to be solved in Southeast Asia, especially in Myanmar. Poverty is the normal mainstream thing there,” says Philip. “Most people around the world have been oblivious to Myanmar’s problems.”

“I was learning about bitcoin and could really connect with all the things that prominent bitcoin evangelist Andreas Antonopoulos was saying. For example, 5 or 6 billion people have not been cared for by traditional financial systems. He also mentioned that one of the common uses of bitcoin was for donations.”

The sky’s the limit for SKYBIT

Philip, together with a new co-founder, plan to push offline marketing in order to meet organizations face-to-face in Myanmar.

“This is not the kind of thing I can create a Facebook ad for because the technology, even just web pages and email, is so foreign to much of the Burmese,” he says.

Despite currently being one of Southeast Asia’s most underdeveloped markets, Euromonitor predicts the country will become one of the 20 ‘markets of the future’ to offer the most opportunities for consumer goods companies globally.

But opening up Myanmar to the world takes investment and finding such is currently SKYBIT’s highest priority.

“The platform is ready, and ideally will flourish once I have enough funds to open an office in Myanmar filled with a strong marketing and sales team,” says Philip. “The country is full of potential and I’d like to take the next steps in introducing Myanmar’s goods and services to global shoppers, whilst simultaneously helping the people of Myanmar at all levels of society.”

Myanmar is not the first market that comes to mind when talking about Southeast Asia’s $238 billion ecommerce potential. Subject to political turmoil for most of its recent history, the internet has been a luxury the Burmese have had access to for less than a decade — a very late start compared to its Southeast Asian neighbours and the rest of the world.

After the ‘Mobile Revolution’ in 2014, Myanmar recorded a rapid increase in mobile phone penetration to 83% in just 5 years. Right now, there is an estimated 46 million plus active mobile subscription in the country with 54 million people.

By 2018, the market is expected to reach mobile penetration of over 90%.

With such robust growth and clear demand to go digital, the country is attracting the attention of tech-entrepreneurs and VCs that don’t mind getting their hands dirty. Gmail only recently began supporting the Burmese language on its platform.

Omidyar Networkrun by eBay founder Pierre Omidyar – recently granted $2 million in funding for Phandeeyar, Myanmar’s first tech hub based in Yangon. The hub recently launched a startup accelerator program to help the growth of early-stage startups in the country.

What else should companies eyeing Myanmar understand? eIQ assesses one of Southeast Asia’s last untouched markets for its ecommerce potential.

Myanmar, a mobile-only market

The entrance of two foreign telecom giants — Telenor from Norway and Qatar-based Ooredoo — ended the monopoly of the state-owned company, MPT (Myanmar Post and Telecommunications) and brought down the price of SIM cards.

The Burmese can purchase a SIM card for as little as $1.50 today whereas it cost them $2,000 5 years ago.

With the outpour of cheap smartphones on the market and coincidentally, the rise of tech in Yangon, Burmese mobile users have leapfrogged the basic phones in favor of smartphones causing the country’s internet penetration to skyrocket.

Myanmar not only has the quickest growing number of internet adopters compared to other Southeast Asian countries, it’s also a mobile-only country – many households would rather have two or more smartphones on hand than owning a desktop or laptop.

It’s no surprise that mobile ownership in Yangon was 83% of 15–65 year olds in 2016.

“Myanmar is coming online, it’s coming online via mobile, and it’s coming online via smartphones,” comments David Madden, founder of Phandeeyar.

myanmar ecommerce potential

Source: Quartz | IDC

The impact of these factors has increased the percentage of Internet users and mobile social users drastically since January 2016 to this year as noted by WeAreSocial below.

myanmar ecommerce potential

The growth in social users has been so significant that the Burmese identify Facebook as the internet itself.

Facebook-first country

Sporadically banned in the country until only three years ago, Facebook boasts a strong 84% year-on-year growth in Myanmar, one of the highest in the world. There is an estimated 14 million active monthly Facebook users – roughly the same number as the country’s internet users.

myanmar ecommerce potential

A mobile-shop owner in Myanmar comments,

“Nine out of ten people who come into the shop want Facebook. Nobody needs a special app for their interests. Just search for your interest on Facebook. Facebook is the Internet.”

The country is also a testing ground for one of Zuckerberg’s controversial initiative, Facebook Basics and Facebook Flex, in collaboration with MPT. It allows unlimited surfing on certain sites and use of Facebook in a data-free mode.

As with others in the world, the people in Myanmar are using Facebook to get news and interact with friends and reach wider networks. But amid the country’s growing online maturity, it’s important to note that less than 20% of mobile phone users are browsing the internet.

Not even 10% are using their emails – or even know what email is.

Phones in Myanmar are still used primarily for its basic functions, calling or texting according to the latest joint report of GSMA and LIRNEAsia, Mobile phones, Internet, and Gender in Myanmar, even though most own a smartphone.

How can emerging markets get people to adopt online behavior?

Chatbots and gamification to propel digital habits

Knowing that the Burmese have a Facebook-first mindset, it makes sense for businesses to open a shop on the platform and focus online marketing efforts there. Current successful examples include Juno Myanmar Fashions and BangBang.

Shop.com.mm, the self-acclaimed number one ecommerce website in Myanmar, has more than 68,000 pageviews per month with 18% of the traffic coming from social media. The company is German venture Rocket Internet’s first ecommerce venture into the country three years ago, alongside several of its sister companies.

Shop.com.mm has spent 60% of its marketing budget on Facebook ads but strangely, not selling products through the platform. Creating a catalog page and implementing a chatbot on Facebook Messenger or Viber would bring awareness to the Burmese about online shopping as they spend most of their time there.

To leverage the popularity of mobile games, companies could gamify their campaigns to attract more users. An example would be creating a wide array of quizzes on Facebook distribute online discounts or coupons; M&M’s in the US has used this strategy successfully multiple times.

myanmar ecommerce potential

Source: M&M’s gamification of a campaign to increase levels of engagement.

Companies looking at Myanmar need to adjust their online offering to match the current internet behavior of the Burmese.

What’s in store for Myanmar?

Even if all the people of Myanmar decided to try online shopping, there is still the problem of underdeveloped infrastructure to tackle.

The country’s low banking penetration is echoed by many other Southeast Asian countries. And despite offering cash on delivery, a more sustainable and cost-efficient payment method solutions is still needed.

Various companies take part in trying to resolve this issue including WaveMoney, MyPay, 2C2P and OK Dollar but banking services are still only used by 2% of mobile owners.

Yangon Door2Door tries to solve the delivery problem in Myanmar where the operations of the motorbike in the urban area is banned by using bicycles to deliver food. The model could be adapted to deliver other types of smaller parcels.

Although the market is far from ready, the tenacity of which the Burmese adopted the available technology to get to its current state right now is very encouraging. Like how they surprised us with their smartphone maturity, it’s not impossible for them to do the same with ecommerce.

“Most countries go from traditional trade to modern retail to ecommerce. We could jump over that. Instead of opening malls, Myanmar could leapfrog directly to ecommerce.” Kiren Tanna, former CEO of APACIG, Rocket Internet’s subsidiary group in Asia Pacific told Forbes.

Rocket Internet is hiring for its four ventures in Myanmar to keep up with the country’s growth, reports Deal Street Asia.

Rocket Internet will be expanding operations and hiring more positions across all of its Myanmar based companies, they are as follows:

  1. work.com.mm – job search portal
  2. house.com.mm – real estate listings
  3. motors.com.mm – automobile listings
  4. ads.com.mm – classifieds

Rocket Ventures entered Myanmar in 2012 and was among the first foreign tech ventures in the country, even before the foreign telecom operators officially entered the market in 2014. The market is now growing rapidly, and Rocket wants to make sure they have the bandwidth to accommodate increasing demands.

The expansion of Motors.com.mm suggests that the market is heading towards a more sustainable economy with consumers looking into auto purchases, buying auto insurances and managing car loans.

The telecom market is also accelerating as Myanmar internet penetration increased with Myanma Post and Telecommunications (MPT) reaching 20 million users by the end of June 2016. The two foreign operators, Telenor and Ooredoo have also recently launched their 4G network. Telenor has 16 million customers in the country while Ooredoo has 6.9 million users.

As foreign operators have taken a large share of the telecom industry, this blocks a lot of growth for local players to take their share of the telecom pie.

Rocket Internet refused to disclose exact investments figures, but are committed to staying ahead in the ecommerce space by increasing their footprint.

Rocket Internet recognizes the significance of telecoms’ role in online retail, and have partnered up with Ooredoo for Shop.com.mm’s first mobile sale this year.

Among the four ventures of Rocket, work.com.mm and ads.com.mm have the highest number of visitors as they appeal to a broader group of people who are looking for a job or trade goods on an ongoing basis.

Data shows majority of visitors are accessing the site from their mobile phones.

Rocket Internet’s decision to expand operations may be linked to the increasingly competitive nature of the ecommerce market in Myanmar, as their business models are very simple and have low barriers to entry.

A version of this appeared in Deal Street Asia on July 18. Read the full version here.

4G launches in Burma

Burma’s increased demand for mobile data is facilitating competition among telcos. Source: globalizationinburma.weebly.com

Competition among telecom players in Burma is heating up as two foreign players launched 4G services to match the increasing data demand in the developing country, reports The Nation.

Telenor Myanmar launched a 4G service in Nay Pyi Taw two months after Ooredoo Myanmar launched their 4G service in the capital city along with Yangon and Madalay.

According to the Ericsson Mobility Report 2016, only 5% of mobile subscriptions in Southeast Asia were 4G, but the figure is set to increase to more than 40% by 2021.

There is now an increasing demand for faster networks in the country, with plans to introduce other 4G services with high voice definition in the future.

“To provide high speed 4G services all over the country, Telenor will need more spectrum. Telenor is looking forward to participating in the spectrum auctions planned by the Union Government later this year. Due to explosive growth of data and increasing data demand by the Myanmar people we believe it is urgently required to expand our services to 4G all over Myanmar.” Petter Furberg, the outgoing chief executive officer of Telenor Myanmar.

Telenor claims to be Myanmar’s largest network with more than 5,700 towers and 16 million customers. Over 60% of its customers are data users.

Its competitor, Ooredoo, states that its penetration rate is at 85%, with a goal to be the best data network in the country. It has extended its fibre optic network to 7,700 km with plans for more expansion by the end of this year. Ooredoo has already invested $1.7 billion to develop 4G in Myanmar.

The company promises to keep 4G price the same as with 3G and customers can enjoy free calls and use Facebook at the price of $0.003 (3 kyats) per megabyte.

As more civilians become tech-savvy, it becomes necessary for broadband networks to be faster in Myanmar. This makes Burma a golden opportunity for more telecom companies, local and foreign, to emerge in the market.

A version of this appeared in The Nation on July 11. Read the full version here.