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SingPost ecommerce delivered positive sales growth in the last quarter by 30.9% to $248 million (S333.4 million), but saw a decrease in net profit by 23%.

The increase reflects expansion in cross border ecommerce activities, as well as the integration of new US subsidiaries TradeGlobal and Jagged Peak. Both of these companies run ecommerce fulfillment and logistics operations, acquired in November 2015 and March 2016, respectively. The company recently won Japanese fashion brand UNIQLO’s ecommerce business in Thailand.

Ecommerce related revenues more than doubled from $54.3 million to $122 million. They now make up 49.3 % of Group revenue, up from 28.7% last year. 

Ecommerce related revenues now make up 49.3% of the total Group revenue, up from 28.7% last year. 

Logistics revenue rose 11.9% to $116.7 million, with steady organic growth at Quantium Solutions and CouriersPlease, as well as the inclusion of a new subsidiary under Famous Holdings. Increased cross border ecommerce related activities led postal revenues to a 1.5% rise, indicating an increased demand of cross border services. 

Increased cross border ecommerce related activities led postal revenues to a 1.5% rise, indicating an increased demand of cross border services. 

Total expenses increased 33.6%, driven largely by growth in international mail traffic and ecommerce logistics volumes that reflect the change in the Group’s business mix.

Net profit attributable to equity holders declined 23.0% to S$35.9 million, due largely to one-off gains from the divestments of Novation Solutions and DataPost HK in the corresponding period last year.

From the SingPost Press Release:

Underlying net profit, which excludes one-off items, was down 11.2%, due to investments in business transformation. Rental income declined as the Singapore Post Centre (“SPC”) retail mall is being redeveloped, while depreciation charges were incurred for the Regional ecommerce Logistics Hub, which obtained a Temporary Occupation Permit in April 2016.

SingPost also continued to invest in ecommerce IT and operational capabilities. Mr Mervyn Lim, Covering Group Chief Executive Officer, said, “We are investing in our business transformation and that will take time to contribute materially to earnings. We are focused on executing our strategy to create value from our acquisitions and build an integrated global ecommerce logistics ecosystem. SingPost’s strategy to protect the postal core and grow its ecommerce logistics network remains on track.”

The good news will be welcomed by SingPost, following the company’s spell of negative headlines regarding internal investigation over board members, and the stepping down of Director Keith Tay in May.

Access the press release here

By Anutra Chatikavanij & Felicia Moursalien

 

Cross border vs local ecommerce fulfillment strategies in Southeast Asia

The pros and cons of localized ecommerce versus cross-border ecommerce approaches to logistics in Southeast Asia. Source: aCommerce Data 2016

A major global sports brand recently decided to switch its ecommerce logistics strategy in Southeast Asia from a regional cross-border one to a localized one. The brand had been fulfilling its Indonesian orders via a cross-border hub in Singapore since the early 2010s.

How did that scenario work out? Well, the absence of a website in a local language, painful payment experience and sluggish delivery ended up undermining the company’s highly anticipated growth potential. They realized that in order to become succesful in Southeast Asia’s largest market, they would need to fully commit to a localized strategy. Bain & Company’s Southeast Asia Digital Consumer Survey supports the difficulty of a non-localized strategy – the figure below shows that global players consistently scored lower in customer satisfaction than regional and local players on the Net Promoter Score.

Local and regional players seem to have a customer experience advantage over global players. Source: Bain & Company 2016

It may seem the moral of this brand story is that a localized strategy trumps a cross-border one from a business perspective but you’re mistaken. It ultimately depends on a set of factors unique to each business and the eIQ team has taken a moment to depict some of the scenarios for when one ecommerce fulfillment strategy is more appropriate over the other.

“Sometimes it makes sense to adopt a regional ecommerce strategy but every company needs to decide whether and if it is time to go local.”
– Mitch Bittermann, Group Chief Logistics Officer at aCommerce

As global brands increasingly wake up to the Southeast Asian opportunity for ecommerce, what is too often overlooked is the market’s immature state and more specifically, the logistical challenges businesses must overcome such as lack of regional payment systems and a reliance on Cash on Delivery due to a highly unbanked population. 

There are two main approaches to entering Southeast Asia:

  1. Cross-border logistics: employing third parties and local partners to do the entire fulfillment process from abroad of one or two centralized hubs (often in Singapore for Southeast Asia) and/or
  2. Localized fulfillment: investing in the country’s local infrastructure, such as warehouses, staff and a delivery fleet and do the fulfillment nationally. Another option is outsourcing to a third-party service provider to do the localization for you, as Sales Stock, an ecommerce startup, did with aCommerce in Cawang

It’s important to consider all elements of both strategies because the cost of choosing the wrong strategy may negatively impact a brand’s reputation, decrease margins and ultimately put commerce operations to a halt. To leapfrog the learning curve, here is a snapshot of the main steps taken when choosing an ecommerce logistics strategy in Southeast Asia.

Step 1: Test the Local Markets Via Cross-Border Fulfillment

When a business is unsure of the demand for its product, a phased approach is an efficient way to test the waters without full commitment. It allows time for calculation of the business’s scalability. Starting with a cross-border approach means that the business wouldn’t need to invest heavily in inventory and a local team to run the operations. Because the product is shipped from overseas, the company will usually outsource the entire fulfillment process in the local country. Amazon’s current strategy in Southeast Asia is to adopt a cross-border model by connecting sellers overseas to buyers in local Southeast Asian countries, there is no need to engage in costly investment regarding fulfillment such as warehousing, handover and last mile logistics. 

Singapore is a good hub for cross-border due to its escape of typical regional challenges

Infrastructure in Singapore makes it very convenient for businesses to do cross-border ecommerce fulfillment resulting in many companies using the country as a jumping board to enter the ASEAN market. For example, Singapore’s ratio cross-border over total ecommerce is the highest in the region, reaching 55% according to a report by Payvision. It also depicts the island-city-state as particularly cross-border friendly – low customs tax close to 0%, mature infrastructure, with the busiest seaport by cargo tonnage behind Shanghai. It is important to note that Singapore is an exception and not representative of the development of the rest of the region. 

Cross-Border or Localized Ecommerce Fulfillment in Southeast Asia

Singapore has the lowest customs tax in ASEAN. Source: AT Kearney

In addition to Singapore, cross-border ecommerce is also big in Malaysia, which makes up 40% of the total ecommerce market in the country. This fact is why, according to Bain’s comparative analysis, global players scored best in these two countries.

quick guide to ecommerce logistics in Southeast Asia

Easy cross-border regulations in Singapore and Malaysia saw global players performing well in these countries compared to their neighbours.

Considerations & Limitations of Cross-Border

Doing cross-border requires at least four different parties:

  1. Linehaul carrier
  2. Airline
  3. Customs clearance agent
  4. Local delivery partner.

This means whenever a delivery is late, it will be difficult to attribute responsibility and fix the problem.

The same reasoning is applied to reverse logistics. Returning international orders is such a hassle that most people just forego it and absorb the cost of inconvenience. It is important to keep in mind that 92% of customers are very likely to shop again with an online or catalog retailer if the returns process is convenient. Conversely, 82% will not shop from a store that has a complex returns policy.

Before deciding on the best strategy for your business, here are some key facts to consider derived from the global sports brand case study:

  • Cash On Delivery (COD): is still the preferred payment method in Indonesia where credit card penetration is less than 15%. In some countries, COD can be anywhere from 50-70% total orders shipped. By not offering it, brands would lose out 50-70% of the total sales opportunity.
  • Complications for cross-border COD: Cross-border COD adds extra steps to cash flow from reconciliation to the bank and to the company HQ, which prolongs the entire process.
  • Transportation Lead Time: Being able to deliver within a short time frame improves customer satisfaction. Indonesia is made up of over 18,000 islands with poor road links in certain areas. For a large global brand, partnering up with a local logistics provider will help cut down transport and delivery times.
  • Duties and Taxes: Businesses should consider that an online shopper would pay an additional one-third of an item price in duties and taxes if ordering online to another ASEAN country  (see fig.18 above).

“Understanding and overcoming local country regulations are the keys to enabling ecommerce which can be difficult to manage from abroad.” – Mitch Bittermann

“ASEAN is one community, nonetheless, each country has its own flavors in terms of customer expectations, payment methods, transportation network, taxes, and regulations,” said Mitch Bittermann. “Understanding and overcoming local country regulations is the key to enabling ecommerce because it’s difficult to manage from abroad.”

Step 2: Tackle Logistics Challenges Locally to Get More Order Volume

Having a localized ecommerce fulfillment strategy in Southeast Asia means more control over the logistics process. Local investment in the fulfillment process includes better supervision of inventory management, handover, last mile delivery and reverse logistics.

For example, going local reduces the number of parties involved meaning easier identification of problem areas to enforce fast acting solutions. The less distance traveled to reach end customer will also lower costs.

Consider going local when you have major order volume or trying to get more order volume. Fulfilling major volume orders abroad might become more expensive in the long run.

Doing things locally could also increase your ability to attract more demand from the previous consumers who are not willing to pay for that extra mile delivery or wait more than a week to get their orders. In the case of the aforementioned global sports brand, they’re foreseeing the increase of orders to 1000 per month after a year of going local, 10 times from what they are currently doing right now regionally.

It saves time for the customer and improves payment experience

Saving time for customers means higher conversion rates and more sales. In the case of Indonesia, a brand can reduce shipping time from 5-8 business days to 1-2 days by going local. This has a significant impact knowing that 6% of cart abandonment rate is due to slow shipping. 

Cash on delivery remains the preferred payment option for online customers in Southeast Asia. Cash handling process is easier when the operation is located in a single country. For the sellers, it means faster cash reconciliation and greater transparency.

Considerations of a localized strategy

As the brand’s positioning becomes stronger in one country and the order volume rises, managing customer expectations from afar gets harder and could hinder businesses growth, as was the case with the anonymous global sport brand mentioned above. In the long run, the cost of operating with third parties might be more costly than to invest in local infrastructure.

But markets in Southeast Asia are very fragmented and can be complicated for outsiders to steer the way in. Each country has its own set of regulations of doing business for foreign brands and challenges that might be completely different from another country in the region. And this complication is what usually deters the businesses to take the initial jump and operate locally.

Choosing the right local partner is key in doing business in new unknown markets, especially Southeast Asia. Businesses can leverage their local expertise to find the best strategy to ease their way into the Southeast Asian market.

No “One Size Fits All” Approach

“Ultimately, the right approach would depend on the business model and scalability potential, there is no ‘one size fits all‘ approach to choosing the right logistics strategy.” –  Mitch Bittermann

BY ALEXANDRE HENRY & ANUTRA CHATIKAVANIJ 

Disagree or have recommendations? Tweet your feedback to @ecomIQ

Sainbury’s China is increasing its product range online following the success of its trial with Tmall Global according to Insider Retail.

The British based supermarket is the second largest chain in the UK and is poised to release 100 more items, such as tea bags, coffee and pasta, due to increasing demand in the Chinese market.

Many customers also want to replicate tastes and occasions they have enjoyed or heard about through international travel.

Sainsbury’s started with Tmall last September, joining British retailers such as Asos, Burberry and fellow grocer Waitrose, which sell products on Alibaba’s Royal Mail online outlet. From this, the retail company is able to learn more about Chinese consumers, herby rolling out effective strategy which aims to fully utilize Chinese shoppers’ fondness of the British culture.

According to The Guardian, Sainbury’s will be the only international retailer highlighted during Tmall’s “Super Brand Day”, happening on August 8.

China is the biggest international consumer of British products online, accounting for 25% of overseas online shoppers purchasing goods from the UK, according to Royal Mail.

Operating online offers a way for brands keen to benefit from demand from China’s growing middle class without having to invest heavily. In 2010, Sainsbury’s considered opening stores in China, following Tesco, which developed a small chain but has since sold all but a 20% stake in its business there.

Sainsbury’s cross border online push highlights how Tmall is being used as a global platform for international brands to test their online strategy without having to risk investment in offline operations. The Alibaba owned marketplace is therefore paving ways for companies to do ecommerce, whilst supplying them with the logistics assistance and localized know-how.

Versions of this appeared in Retail News Asia and The Guardian on August 2 and July 31. Read the full versions here and here.

A new study from Payoneer shows which marketplaces Chinese e-retailers sell on—and what strategies they’re employing on those platforms to expand internationally. Online marketplaces are gateways for Chinese retailers and brands to reach international customers.

According to Payoneer Inc., 62% of e-retailers in China sell goods on marketplaces operated by Amazon.com Inc., the most popular among other international shopping portals, such as eBay Inc. and Etsy Inc.

Of the 62% of respondents selling on Amazon, 91% sell on Amazon.com in the United States. Among the Chinese merchants who don’t currently sell through Amazon, many plan to join. 26% say they want to sell on Amazon.com, the site for US consumers; 23% wish to join Amazon’s European sites and 12% want to sell through Amazon.co.uk, Amazon’s UK site.

Sellers who until a few years ago could barely reach buyers across their own country, can now utilize marketplaces to reach buyers across continents.

Why do Chinese sellers prefer Amazon?

Sellers also cite high traffic volume, local customer support and access to multiple markets for choosing Amazon, No. 1 in the Internet Retailer 2016 Top 500 Guide.

Selling on marketplaces comes with its challenges, too, the biggest being stiff competition. Nearly half (45%) of respondents cited increasing numbers of Chinese sellers as the biggest challenge to selling on online marketplaces. Other common challenges marketplace sellers in China face: high fees and low marginal revenue (27%), following strict rules (16%), tax and trading policies of different countries (11%) and unstable payment methods (2%).

A version of this appeared in Internet Retailer on August 1. Read the full story here

Following in the footsteps of China and the U.S., Southeast Asia is on the cusp of an ecommerce golden age. With online shopping accounting for only 1 percent of retail today, the region is slated to reach double-digit China-esque numbers within the next 4-5 years.

With a population of 600 million — twice that of the U.S. — Southeast Asia is poised to eventually become the third-largest ecommerce market in the world, second only to China and India (and ultimately surpassing the U.S.).

But enough of the macro overview. How did 2015 turn out? And what will 2016 bring to ecommerce?

Local, regional and global players stepped up their games. In particular, we saw Indonesia rise this year: MatahariMall launched with big fanfare as the nationalist answer to Rocket Internet’s Lazada; Lazada, in turn, doubled-down on Indonesia with the return of previous CEO Magnus Ekbom; for the first time, aCommerce Indonesia surpassed Thailand in order volume; and, recently, China’s Alibaba competitor JD snuck into Indonesia and surprised everyone with the launch of JD.id. This has served to add to an immense amount of pressure and competitiveness in the pure B2C space.

2015 also was the year of M&As, as other players allied together or were absorbed in order to arm themselves against the behemoths mentioned above. First, Ardent Capital-backed WhatsNew acquired lifestyle vertical site Moxy in Thailand in January.

More recently, we witnessed an encouraging ecommerce exit as beauty site Luxola was acquired by French luxury superstar LVMH. And in December, aCommerce gave a 20 percent stake to a 150-year-old Swiss retail distributor, giving it access to more than a hundred of its Western brands and physical infrastructure in the region.

Unfortunately, the year did not pass without its share of casualties due to the hyper-competition in B2C ecommerce in Southeast Asia. Fashion retailer Paraplou Group shut down in October after two years (and having raised $1.5 million) due to lack of focus and deep pockets.

In March, SingPost and Indonesia’s mobile phone retailer Trikomsel announced a mysterious ecommerce partnership — only to have reports pop-up of the telco’s dire financial situation three months later, in addition to the sudden removal of Wolfgang Baier as Group CEO of SingPost in December.

If 2014 was the year of unprecedented capital injections to build Southeast Asian ecommerce businesses, 2015 was the year we saw the early rise, fall and transmogrification of players in the fragmented landscape as they vied for a piece of the rapidly growing ecommerce pie.

We expect to see serious movement in the region from offline players moving online.

In line with our annual tradition, we are giving you a sneak peek at what will be on the menu for next year. The conclusions were determined through extensive investor and executive interviews, as well as internal data and secondary sources from January 2015 to December 2015.

Because we work for a major Southeast Asian service provider, with the biggest ecommerce names in the region (such as Lazada, MatahariMall, L’Oreal and more), we are privileged to sit at the intersection of tech, logistics, retail, marketing and VC. We see where our partners are putting their money and where the investors are willing to follow.

As such, we are able to see with acuity where the growth will be. There’s no crystal ball or trusting a gut feeling here; we simply have the privilege of a bird’s-eye view that most players don’t have, and we’re providing projections here in the form of predictions.

1. Brand.com Is Poised To Be The New Black

The evolution of ecommerce commonly follows the trajectory of P2P and C2C to B2C to eventually Brand.com. The U.S. went from Craigslist and eBay to Amazon to brand sites like Nike, J.Crew and Gap. China went from Taobao to Tmall and JD to the many standalone and marketplace brand sites, like Estee Lauder, Burberry and Coach.

Today’s Southeast Asia is following a similar pattern, yet at a much faster pace due to “1 to n,” horizontal progress and the resulting leapfrogging behavior. In our region, we have P2P (OLX), C2C (Rakuten, Tokopedia, Shopee), B2C (Lazada, Zalora, MatahariMall) and Brand.com (L’Oreal, Estee Lauder) all happening at once within a very short time frame.

Even Unilever in Thailand has created an ecommerce division with revenue targets they expect to start hitting in 2016. We are seeing brands going online much earlier than one would normally expect.

It was no big surprise, then, when aCommerce recently landed a strategic investment from Asia’s biggest retail distributor, DKSH. Swiss-based DKSH owns distribution rights for some of the biggest brands in the region, such as P&G, Unilever and Johnson & Johnson.

This partnership validates the growing demand for brand ecommerce in the region, and will further expedite the process at which brands go online, whether on their own brand sites or on the many marketplaces in Southeast Asia.

10 Trends That Will Shape Southeast Asian Ecommerce in 2016

2. Omni-Channel Awakens: “There Will Be No More Ecommerce, Only Commerce”

This is what aCommerce Group CEO Paul Srivorakul said when ecommerce logistics player SingPost announced it would create a futuristic mall that combined online and offline shopping, in pursuit of the omni-channel retail dream — a dream that is quickly becoming a reality in the U.S. and China.

Referring to a seamless shopping experience across stores and the online channel, omni-channel retail is considered the elusive Holy Grail in retailing due to the politics and logistical challenges of integrating often independent online channels with their brick-and-mortar counterparts. But so far, Southeast Asia has been late to the game, with its focus (reasonably so) on building up pure-play ecommerce first.

In 2016, we expect to see serious movement in the region from offline players moving online, and vice versa. 2016 will be the year in which offline brands will go online due to the plethora of online marketplaces available, as well as the presence of full-service ecommerce enablers.

Southeast Asia is on the cusp of an ecommerce golden age.

For B2C players, the appeal of adding offline operations to the mix includes enabling faster last-mile fulfillment and delivery. In Southeast Asia, Vietnamese electronics retailer Nguyen Kim (acquired by Central Group) is able to pull off same-day, 4-hour deliveries because of the massive offline retail footprint it has.

Ecommerce players with a traditional offline arm, such as MatahariMall, Cdiscount and Central, will be in an advantageous position to execute on this. However, 2016 will also have B2C pure players looking into this, as logistics and last-mile in Southeast Asia increasingly struggles with industry-wide capacity bottlenecks.

10 Trends That Will Shape Southeast Asian Ecommerce in 2016

3. Niche-Commerce Models Will Evolve To Avoid The B2C Bloodbath

In our 2015 predictions, we discussed how B2C ecommerce is a long-term, cash-intensive, winner-takes-all game. Companies trying to battle it out in this space better have deep pockets (see Lazada, MatahariMall, and JD) — or face extinction (see Paraplou Group).

In his seminal essay “Ecommerce is a Bear,” Andy Dunn, founder and chairman of Bonobos.com, elaborates on why B2C ecommerce is a winner-takes-all game, and what options remain for other players who don’t have the luxury of deep pockets or a sugar daddy.

Much of this comes down to a “David versus Goliath,” Peter Thiel-esque contrarian approach to ecommerce. The U.S. ecommerce scene has been dominated long enough by Amazon to witness some of these models coming to fruition over the last several years: 1) Proprietary Pricing (think flash sale, Gilt Groupe), 2) Proprietary Selection (ModCloth, NastyGal), 3) Proprietary Experience (Rent the Runway, Birchbox), and 4) Proprietary Merchandise (Warby Parker, Bonobos).

This will be the year where more creative ecommerce models emerge. Companies like Pomelo and Sale Stock Indonesia have already adopted the proprietary merchandise approach toward achieving a competitive advantage. They do this by designing their own fashion and gradually moving upstream to include manufacturing.

Moxy has staked their flag as the “Everything Store,” but focused on women. We also may see the return of subscription-commerce business models with retailers like Central, impacted by a dip in foreign shoppers, seriously considering a Gilt-style flash sales model to get rid of excess inventory.

10 Trends That Will Shape Southeast Asian Ecommerce in 2016

4. Cross-Border Ecommerce Will Be Driven By Silk Road 2.0, Not AEC

Despite all the media hype and lofty expectations (even our own predictions last year), the ASEAN Economic Community (AEC) will not have a significant impact on ecommerce in 2016.

Governments are too fragmented on policy; coupled with the immediate growth opportunity within the domestic markets, it doesn’t make sense to focus on cross-border within ASEAN, as evidenced by companies such as Lazada and MatahariMall doubling-down on Indonesia’s ecommerce opportunity.

Cross-border ecommerce in 2016 will be driven mainly by what we call “Silk Road 2.0.” These are Greater China-based companies that will bring their products into Southeast Asia, laying the foundation for our generation’s version of the Silk Road and attempting to expand China’s soft power and hegemony through commerce and digital.

Southeast Asia is poised to eventually become the third-largest ecommerce market in the world.

China’s JD is a classic example. The No. 2 online retailer in China just recently set up shop in Indonesia and will be expected to leverage their 40+ million SKU product assortment and China-Southeast Asia supply chain to compete with the likes of MatahariMall and Lazada. Alibaba investing almost half a billion into SingPost clears the way for Alibaba, Tmall and Taobao packages to smoothly enter Southeast Asia.

5. Payments: COD Will Continue Its Reign While Third-Party Payments Struggle

The next double-digit billion dollar opportunity in Southeast Asia ecommerce is the third-party online payment space. U.S. has PayPal and China has AliPay; what does Southeast Asia have?

Contrary to what many people believe, building a successful payment product isn’t about technology, it’s about distribution. Payment technology is a commodity; everyone’s building the same thing, including banks (SCB UP2ME), telcos (TrueMoney, PAYSBUY), media (Line Pay, AirPay by Garena), retailers (helloPay by Lazada) and payment-focused startups (2C2P, Omise).

The hard part is distribution. How do you reach critical mass in order to cruise off network effects? Until this happens, COD will remain the dominant payment method in Southeast Asia. Based on aCommerce’s latest aggregated numbers, COD made up 74 percent of transactions in Southeast Asia, up from 53 percent the year prior. This validates the importance of COD to ecommerce in our region, and already exceeds the COD penetration rate at the height of its popularity in China back in 2008.

Eventually, COD will naturally reach its shelf life and be replaced by a “modern” third-party online payment product. Even then, the most likely scenario will be one leading payment product per country in Southeast Asia due to the region being fragmented.

Until then, good luck “killing off” cash on delivery, Mr. Jon Sugihara.

6. The Fizzle Of Fast Fashion E-Tailers

We’ll see mass, fast-fashion players like Zalora struggle and either fizzle out or be rolled into cousin Lazada. People familiar with the history of ecommerce in China will see similarities between Zalora and VANCL. VANCL, a mono-brand fast-fashion retailer founded by Chen Nian (who sold his previous business, Joyo, to Amazon), rose to prominence in 2009, raised up to $570 million and even planned for an IPO, but then gradually faded away. Selling your own fashion products is less about retail economics and much more about brand building.

In addition, VANCL suffered from competition from Taobao merchants who sold similar products for higher quality at lower prices. Replace Taobao with Instagram and Facebook and you’ll understand the pain that Zalora and other mono-brand, mass-fashion retailers are going through in Southeast Asia.

Ecommerce companies need to understand that this is a long-term game.

Following the natural progression of ecommerce, fashion will start becoming a more popular category for online shoppers, especially with the rise of richer female consumers in Southeast Asia. Fashion brands currently have the choice of selling on the many marketplaces in Southeast Asia and/or selling via their own brand sites. We’ll expect them to set up shop on their own brand sites or specialized, fashion-friendly marketplaces.

However, premium fashion brands may be hesitant to set up shop on mass marketplaces like Lazada and Rakuten because of the risk of being perceived as a mass brand. After many years of courting fashion and luxury brands, Amazon is still struggling. Don’t forget, most of Amazon’s premium fashion sales today are generated via Shopbop, a fashion-only destination that the company acquired in 2006.

7. New Channels Will Emerge To Challenge Google And Facebook’s Dark Side

When you’re digging for gold in the remaining ecommerce gold rush on the planet, you better be equipped with the best picks and shovels available. Unfortunately for ecommerce players in our market, the range of weapons available is quite limited due to historical and socio-economic factors unique to Southeast Asia. The appearance of a “no-tail” landscape in terms of publishers severely hampers the effectiveness of traditional tools, such as affiliate marketing and programmatic display.

In Southeast Asia, players are already exhausting the “usual suspect” channels, such as Google Search, Facebook and Criteo, with the result being CPCs rising to all-time highs and companies tapping into offline marketing to seek better returns. This is Andrew Chen’s “Law of Shitty Clickthroughs” in full effect.

Companies and savvy entrepreneurs will start addressing this gap by designing and building new demand-generation platforms to offer an alternative to the Googles and Facebooks out there. Expect to see more ecommerce firms adding channels such as price comparison, coupon sites and cash-back sites, as well as innovative affiliate marketing solutions to balance their media mix. 2016 will give us the excavators and bulldozers to complement today’s picks and shovels.

8. The Battle For The Last Mile Continues As 3PLs Fail To Adapt

In 2016, we will see companies like Lazada (LEX), MatahariMall and aCommerce investing in building out their own delivery fleet in order to help relieve the industry-wide capacity issues and serve the anticipated record-breaking transaction volume. The pressure will only become bigger in 2016 as transaction volume is expected to hit record highs in Southeast Asia.

Challenges with last-mile delivery in Southeast Asia, if not addressed properly, will become the biggest bottleneck to ecommerce growth in the region. The industry is currently witnessing industry-wide capacity bottlenecks beyond what the JNEs, Kerry Logistics and DHLs of this world are able to handle.

Part of this is the poor infrastructure to begin with. China, the world’s largest ecommerce market, never really had this issue because of the socialist and central government mindset of prioritizing infrastructure investments. By the time ecommerce took off, the infrastructure was already there, which resulted in last-mile delivery becoming a commodity service.

Also, many existing delivery companies were never built for B2C deliveries to begin with. Their core competencies are in B2B deliveries, which typically don’t face B2C headaches, like returns management, reverse logistics, pre-calling, multiple delivery attempts and cash on delivery.

10 Trends That Will Shape Southeast Asian Ecommerce in 2016

9. Channel Management Will Be The New “Programmatic” Ad Agencies Still Stuck In 2011

Year in, year out, brand advertisers, agencies and adtech sales execs rave about programmatic display advertising and DSPs being the future of digital marketing. However, few actually have been outside their ivory tower in Singapore long enough to realize that “no-tail” has essentially killed off any promise of “programmatic” advertising in Southeast Asia outside of Singapore and Malaysia.

The real “programmatic” opportunity in Southeast Asia will be in ecommerce, not in display advertising. With the advent and fragmentation of online marketplaces, the challenge for brands will be to choose on which channels to be present and what products to push in each of these channels.

One of the biggest issues faced by all ecommerce players in Southeast Asia is the lack of talent.

2016 will see the emergence and adoption of next-generation channel management platforms, which are essentially “ecommerce DSPs.” These products will help brands enable omni-channel retailing across all major marketplaces, while also offering traditional programmatic benefits such as a dynamic optimization engine and plug-and-play integration with multiple first- and third-party data sources for better targeting, personalization and optimization.

10. The Talent War Will Inflate Salaries Faster Than Uber’s Valuation

One of the biggest issues faced by all ecommerce players in Southeast Asia is the lack of talent. In 2015, it was common to see employees being poached left and right with new salaries of 1.5-3x. Obviously, this isn’t sustainable, but it is the current foundation of the talent war in Southeast Asia.

Opportunistic professionals, often young, jump to roles where their skills, experience and leadership don’t match the package and title. “The most important thing to optimize for on your first job is growth. Growth is king, queen, and emperor combined. Optimize for growth above compensation, above location, above lifestyle, and above anything else,” says Auren Hoffman, former LiveRamp CEO who founded and sold five companies.

Ecommerce companies need to understand that despite all of us being in the midst of a Gold Rush, this is a long-term game. To attract and retain the best talent, more and more ecommerce companies will be buckling down on culture and building an appealing work environment. aCommerce in 2016 will be relocating its headquarters to the Ecommerce Valley of Bangkok — Emquartier (also home to Lazada’s regional headquarters).

11. Amazon Will Enter Southeast Asia

Not. Sorry, Jeff.

By Sheji Ho & Felicia Moursalien

Please share your feedback to @ecomIQ@sheji_acommerce and @LilFel

This article originally appeared on TechCrunch Dec 24. 

brexit impact on thailand not concerned gov, sleeping asian man

The Thai government is positive about Brexit, as officials insist that Britain’s exit from the European Union is unlikely to negatively affect any trade talks Thailand has with the EU. In fact, the Brexit will release a lot of restrictions for its trade policies with Southeast Asian countries. If Britain wanted to initiate a free bilateral trade pact with Thailand, the talks could happen instantly without waiting for a green light from EU commissioners, said Sirinart Chaimun, Director General of the Trade Negotiations Department.

Negotiations for a Thai-EU FTA were formally launched on March 6, 2013. Currently, EU commissioners were reluctant to hold any talks with Thailand until the country’s new constitution is in place. These talks were suspended following Thailand’s 2014 military coup. In June 2015, the EU said it would delay signing an agreement on closer economic and political ties, due to Thailand’s political unrest.

The Brexit will release a lot of restrictions for its trade policies with Southeast Asian countries.

In 2015, Thailand’s exports to the 28 EU countries were just under $22 billion, down 6% from 2014. Shipments to Britain were worth $4 billion. Shipments to the EU contributed to 9% of Thailand’s total export value. The numbers seem to suggest that if anything, Thailand’s own political instability has more of an impact on the country’s international trade, more than Brexit itself.

A version of this appeared in Bangkok Post on June 27. Read the full article here.