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Here’s what you need to know today.

1. Lazada Indonesia to on board SMEs

The Indonesian unit of Lazada said it plans to focus on adding small merchants to its online marketplace, emulating the strategy of Alibaba Group Holding. According to Florian Holm, co-CEO at Lazada Indonesia, Lazada also plans to enable some merchants to sell products to shoppers in China through Alibaba’s Taobao ecommerce platform.

Read the rest of the story here.

 

2. Alibaba’s robot maker raises funding

Geek+’s automated pods look like those from Kiva, the American startup snapped up by Amazon for US$775 million in 2012. The larger Geek+ bot can transport 1,000kg, while the smaller one scoots up to 100kg. They’re designed for any warehouse or factory where bits and pieces need to be moved to be accessed by human workers.

The startup says it has over 300 robots already in commercial use across China.

Its $14 million round was led by Vertex Ventures, a spin-off from Singapore’s state-owned sovereign wealth fund, Temasek.

Read the rest of the story here.

 

3. Amazon will now tell Prime members what to wear via “Outfit Compare” 

In the latest version of the Amazon shopping app, Prime members will find “Outfit Compare” in the sidebar navigation under the “Programs and Features” section.

 Outfit Compare prompts shoppers to share two photos of themselves wearing two different outfits they’re deciding between. A minute later, the user will get a response from an Amazon stylist who will tell them which outfit looks better. This determination will be made based on a number of factors, including how the clothes fit, what colors look best, how they’re styled, and what’s on trend.
Read the rest of the story here.

 

4.  Community Chatter: Adidas focuses on online operations

Source: aCommerce Group CEO, Paul Srivorakul’s Linkedin account

Indonesia’s ecommerce growth for the coming years will open up more opportunities for online players and service providers. Increasing ecommerce adoption and a maturing population will mean that there’s more demand to make online shopping easier.

According to Statista, the country currently counts approximately 28.2 million shoppers, and is projected to experience a 3-4% increase every year. In 2018, the figure is expected to jump to 31.7 million, then to 42.1 million by 2021.

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The majority of users are in the 25-34 age bracket and account for 12.8 million users who are shopping online in Indonesia. This number is expected to grow to 18.2 million by 2021.

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Indonesia could see online retail makeup 7-8% of total retail sales by 2020, a big jump from the current figure of 1% (2016).

What can we learn from this?

Indonesia does not have a national offline footprint that enables residents outside of big cities to purchase goods from large department stores. As internet adoption increases, more Indonesians are expected to order online to access products they would otherwise struggle to get.

However, online companies still struggle with finding affordable, reliable and speedy delivery to reach remote areas such as Tanjung Selor in North Kalimantan, where the package has to first be sent via plane, followed by a speed boat.

Companies like aCommerce have set up logistics hubs closer to remote places places such as Papua to cut down delivery times and cash reconciliation as cash on delivery is still a major method of payment. Service providers that can tackle and offer solutions to these infrastructural challenges will increasingly be in demand as more Indonesians go online.

Looking at ASEAN’s current $15 billion online retail sales and 19% YOY growth, the region’s ecommerce potential will continue to rise for the years to come.

Source: aCommerce Data & Research

Aside from the ecommerce opportunity in ASEAN, there are some market characteristics that professionals should be aware of before setting up own ecommerce operations. Understanding these characteristics and obstacles will define the success of future business endeavors.

So how can companies get started and set up a successful ecommerce business? What are the areas to look into before entering ecommerce?

Following this checklist will hopefully help ask the right questions and trigger appropriate initiatives: Read more

Thailand’s startup media outlet Techsauce published two detailed reports this month; Investor Guide Q1 2017: Thailand Tech Startup Report and its annual Southeast Asia’s Top 75 Fintech Startups Report. What were the key takeaways to know about Thailand’s startup ecosystem and Southeast Asia’s tech investment landscape? We take a look at both reports:

How did Thailand startups do in terms of funding?

An introduction to Thailand

Total funding figure in Thailand is getting bigger – no less than $85.2 million as seen in the chart below. The exact number can’t be pinpointed as there were several undisclosed Series B investments.

Notable funding mentions: 

  • E-book platform Ookbee raised $19 million from Chinese giant Tencent to create a digital content ecosystem in Thailand
  • Fintech startup Omise raised $17.5 million led by Japanese firm SBI Investment
  • Ecommerce marketplace Orami (now Moxy) raised $15 million from Facebook’s Eduardo Saverin B Capital
  • 3 food tech deals were made in 2016. At the beginning of 2017, B2B food supplier platform Freshket has raised an undisclosed six digit funding round
  • Corporate Venture Capital was a trend in 2016 that saw numerous corporations shift focus to technology and innovation as both direct investors and limited partners. This trend is expected to continue well into 2017 with the emergence of property tech in Thailand, pioneered by real estate giant Sansiri

In the graph below, you can see that the number of funded startups has shot from 3 to 75 in only four years. The number of active angel investors and the number of VCs have also grown in tandem.

Data from the report also shows that ecommerce still remains the top category for investors and increased steadily on a year-to-year basis. The second category is logistics with funding raised by aCommerce, Giztix and more.

 

Only two months into 2017, and already eight startups have already raised funding this year.

The diversity of Thai startups attracting investors show that there is more room for verticals such as education tech (edtech) and travel tech.

The report also predicts that by Q2 2017, there should be more funding given to a variety of startups in different sectors and investment opportunities in Thailand’s ecommerce landscape.

Southeast Asia’s top fintech trends

  • While core technologies such as blockchain and AI have gotten a lot of publicity, startups that can realistically develop it or utilize it are still limited but extremely attractive to investors
  • Each country in this report is making moves to launch regulatory fintech sandboxes to test out financial technology framework – Indonesia, Malaysia, Myanmar, the Philippines, Thailand, Singapore and Vietnam.
  • Many fintech firms in the region have mandates to work with banks and regulators, which means expanding beyond their domestic market may be a challenge
  • The entry of Alibaba’s financial arm, Ant Financial, into the region has caused startups that offer similar services to quickly adapt or risk getting squeezed out

Fintech players by country

The image above shows that Singapore is well ahead of other countries in terms of number of fintech companies with 31 players, followed by Thailand with 14 players. More doesn’t necessarily mean better, it will be time until one emerges.

With each country taking initiative to become less cash dependent, for example, Thailand government’s PromptPay initiative, this will be a continued trend into Q2 of 2017.

Insurance technology is still a minority but with Thailand’s Asia Insurance introducing online insurance packages and companies such as AXA and FWD offering online insurance in Singapore, the space is growing.

Financial technology in Southeast Asia is still growing and must in a region where only 27% of the population has a bank account. That leaves around 438 million people unbanked and endless opportunities for fintech firms to bridge the gap that traditional financial institutions are struggling to fill.

2017 is already shaping up to be another year of startup growth in Thailand but investors will be more strategic with their money. As fintech matures, it can only nurture the growth of online transactions.

The original reports from Techsauce can be found here and here.

Mitch Bittermann, Regional Chief Logistics Officer at aCommerce recently sat down with The Postal Hub podcast to discuss a successful B2C ecommerce strategy, logistics in Southeast Asia, and what he thinks brands should prioritize when attempting cross-border. 

The Postal Hub: From a retailer perspective, what are the challenges to get into ecommerce

Mitch: I would look into tech, customer service, warehousing and transportation. Retailers today are mainly working from a B2B perspective. This means bulky shipping and heavy-duty racking in the warehouses, which is only suitable when operating B2B. To do B2C, the requirements are completely different, because the consignments are smaller. From a transaction perspective, businesses would also need to think differently.

With transportation, it would either be light or FTL (full truck load), the size of packages are smaller with B2C, which means you have to work with parcel couriers to get the items shipped to your end customer. The biggest difference is also with customer service. If a company is running their own customer service, it usually requires them to talk to businesses, but with B2C, customer service means the end customer is contacting you through various channels, from calling to live chat, things that B2B businesses may not have.

The Postal Hub: If you are a retailer entering ecommerce, what are the key delivery considerations?

Mitch: I would go one step before that. I would think about what the location strategy is. Where is your supplier, brand, manufacturer and customer sitting? If it comes from a transportation perspective, today, you’re shipping a lot on freight. You’re shipping pallets, costs is definitely a consideration but from a cost perspective it is a lot smaller than if you have to send everything in small consignments. Someone has to pick up the bill.

Customers in Southeast Asia are more cost sensitive about shipping price so retailers will eventually need to consider setting up a hub somewhere to cut costs on shipping.

Postal Hub: Cash on delivery is popular in Southeast Asia. What are the other ways people are paying?

Mitch: Cash-on-delivery (COD) is the biggest enabler in ASEAN. This is the choice for most people, especially in tier 2-3 cities that are unbanked. If you look at Indonesia, in a place like Papua New Guinea, 90% is COD. Do we have another method? Yes, but one of the challenges is that we do not have Alipay. Banks offer platform but they are not default.

In Indonesia, a lot of banks are talking about an e-platform but nothing concrete is happening just yet. 

For now, we cannot live without COD in Southeast Asia. Potentially, a retailer could lose out 60-70% of revenue if they don’t offer COD as a payment method.

Postal Hub: What about buy vs. build? What should be outsourced?

Mitch: It really depends on retailer maturity. If a retailer is just starting, I would say do as much as possible by yourself. Pack and send off shipment by yourself, if your business scales, then look to outsource. When it reaches the stage of 100,000 orders a month, do you want to run it by yourself or outsource to a third party service provider?

With transportation, it is best to outsource. This is because Southeast Asia still has fairly weak infrastructure. There are a lot of options to choose from; DHL and Kerry are the big ones. Then we have smaller disruptors such as Ninja Van and Sendit. All the movements in the transportation industry also mean prices will be soon drop and the industry will become more commoditized.

Some of my clients run their own warehouses and some outsource. When I was working in B2B, companies were running their own warehouses and then the outsourcing trend happened. The trend is coming for B2C, but I don’t think it will take 5-10 years to take off, it will go faster.

Soon, the trend will go towards out-sourcing supply chain so that businesses can focus on growing and selling their products. 

Postal Hub: What about cross-border delivery?

Mitch: With delivery, some people request next day or same day. It’s more difficult to ship cross-border with these requirements. Companies need to consider regulations that are related to ecommerce shipment and study revenue transfer, especially if you don’t have your own entity in that country. Figure out how to get money back from country A to country B while also thinking about tax implications.

Businesses will also need to think about FDA licenses and certain regulations. For certain products, you would need a license to legally bring it into a country, including distribution and logistics licenses.

A client came to me, they wanted to ship stuff from Singapore to Indonesia, but it was taking 7-9 days and costing customers $7 per shipping order. Depending on the product, that is quite a high price point. Customers are also not happy to wait that long for a delivery.

The client wanted a local set-up and do COD shipment because they want to build up scale. The company never shipped more than 100 orders a month. When they signed on with aCommerce, we closed 1400 orders after 3 months. The only thing that changed is the country we did the shipping from.  

For businesses that are starting out in Asia, I would say for them to start their operations from either Hong Kong or Singapore. If it scales, then is the time to go local i.e. Jakarta, or hyper-local, such as tier 2 and tier 3 cities like Bandung or Surabaya for better reach. 

Postal Hub: What about parcel lockers? What are end consumers in Southeast Asia interested in?

Mitch: The interest is there, but it’s all about reach and coverage. In Singapore, the country is not that big and essentially a metropolitan location, which makes it easier to offer things like same day delivery. In Bangkok, we power SKYBOX, a pick-up station on sky-train stations that allows consumers to pick-up their parcels on the way to and from work.

In Jakarta, MatahariMall offers lockers but it is limited in terms of coverage. I would recommend looking at pick-up and return from convenient stores such as 7-Eleven, Family Mart and Alpha Mart. There is already a lot of offline coverage in Southeast Asian cities and retailers can collaborate with these stores to begin a wider distribution network. 

Listen to the full interview on eIQ’s podcast channel here.

Here are the headlines you should know for today.

1. Digital currencies are here to stay

Financial institutions in Indonesia should brace themselves as cryptocurrency is gaining popularity in the largest economy in Southeast Asia with no intention of slowing down.

Bitcoin Indonesia currently has 250,000 members, up from 80,000 at the end of 2015, with a daily transaction value of Rp 20 billion ($1.48 million).

The presence of cryptocurrencies, like Bitcoin or EDinar Coin, could help support the Indonesian government’s plan to create a cashless society.

Read the rest of the story here.

 

2. Recommended Reading: What every entrepreneur should know about doing business in Bangkok

This is a fairly universal concept, but takes on new meaning in the developing world and Thailand in particular. “Right now there are more investors than there are builders in Southeast Asia, that’s crazy!” Says Paul Srivorakul, founder and CEO at aCommerce.

‘You need to build local and defensible.’

Read the rest of his interview here

 

3. Social media boosts success of e-tailer Asos

Asos is continually future-proofing the business, ensuring it can cope with increased demand as it expands globally. The strong growth in international sales, particularly in the US as a result of the weak pound, means Asos will have to keep up with order fulfillment as the retailer expands.

Part of the reason behind the consistent Asos success is the way it successfully targets customers with creative email and social media marketing on platforms such as Twitter and Instagram. The retailer also offers attractive delivery options such as Asos Premier.

Read the rest of the story here.