To build or not to build?

This is the question many retailers around the world are struggling to answer. In the US, the answer is pretty evident.

A 31% increase in 2017 retail bankruptcies from 2016 and an estimate from Credit Suisse claiming that as many as 25% of America’s malls will shut down by 2022 all point to no.

Source: Credit Suisse

It’s the “Amazon Effect”, analysts say, the shift of spending from offline channels to online ones as young people become more accustomed to ‘online-only’ retail. No money in means brick & mortar stores are bleeding out trying to operate labor intensive businesses.


Source: FT

Meanwhile, news overseas is quite disparate.

The country’s largest retailers and department stores like Tesco Lotus, Robinsons, and HomePro are all planning to open new stores in the next five months. Big C SuperCenter has allocated roughly $351.5 million for store expansion locally and abroad this year.

Online or offline: what’s the right way to go?

Although the rise of ecommerce has been a major contributing factor to the demise of traditional retail; the brick and mortar store is not dead as most claim.

Ecommerce only accounts for a single digit percentage in overall retail sales in Southeast Asia and ‘mall culture’ is not seen as a chore but as a weekend excursion, especially with malls adding new exhibitions such as Central Embassy’s recent interactive art display, “The Beach”, in Bangkok.


Credit: adaymagazine

“Considering rapidly changing consumer behaviour, we may create shopping mall concepts that fit such changes. We want our complexes to become a third home for customers,” says Pakorn Parthanapat, COO of Central Pattana (CPN), a development arm of Central Group.

As well, there will always exist a large population that requires to see, feel and touch a product before making any purchase decision – a problem that many pure players retailers can only ‘solve’ by burning up cash.

Retailers understand these concepts, which is why the smarts ones with existing offline and online footprints are using it to their advantage.

The answer isn’t to label brick & mortar as a dying breed but instead businesses must become more deliberate with how many stores, what to offer in each and their locations.

Uniqlo is closing down stores in the US to only build others in premium locations.

In Thailand, HomePro’s new stores are testing its “HomePro S” concept, a shop that occupies only a sixth of its original store and in locations where young people frequent.


Source: Marketeer

As well, Makro is opening one medium and three small sized cash and carry stores.

[cash and carry]: “Cash-and-carry” refers to a business model that virtually excludes all credit transactions, requiring up-front payment for all goods and services. Companies with a cash-and-carry business model eliminate accounts receivable from their books and are able to match all sales with actual cash receipts. Inc., China’s second largest ecommerce company is also expanding into both urban and rural China with over 1 million JD convenience stores in the next five years.

Jason Yu, GM of consumer research firm Kantar Worldpanel comments, “it is more challenging to grow purely in ecommerce, so both Alibaba and JD move into offline business.”

Ecommerce is not the ‘end all’ solution to today’s retail evolution, but the trend appears to be that pure play companies – Pomelo, Xiaomi – are the ones that have a say in whether to open more offline locations or not, whereas traditional retailers are scrambling to go online in order to save their businesses.

Multi-channel is the inevitable future.

It is well known that Southeast Asia’s more developed countries like Singapore and Malaysia have moved away quickly from cash payments. Over 68% of Malaysians prefer contactless payment, 34% more than compared to last year but how are developing markets such as Thailand faring? Well, apparently, the market is witnessing a rise in e-payment adoption.

Visa country manager for Thailand, Suripong Tantiyanon, comments,

“As new innovation emerges, consumers are more willing to try new payment technologies. The case in point is how seven in ten Thais (67%) prefer to automate payment, eliminating the entire physical process of paying.”

“Trendy” methods of payments are also attractive for Thais;

75% of respondents stated they felt comfortable using biometrics technology such as fingerprint and facial recognition – the highest percentage in Southeast Asia.

Whether a small business is setting up online or expanding global operations, the payments platform is one of the most important components in building a functional ecommerce strategy.

Afterall, if a customer isn’t comfortable with the payment options, why would they buy?

Although Southeast Asia’s dominant payment method still remains cash-on-delivery, the increased popularity of cashless payments means that ecommerce sites looking to establish a foothold in the region should begin preparing their systems to accommodate different payment types and understand what each can offer.

There are two main types of payment gateways:

  1. Connect ecommerce platform with banks
  2. Connect ecommerce platform with third party platforms
    • Ex. Paypal, Adyen, that allows variation for

To connect your platform to a bank will cost money, in Thailand, owners of the platforms are required to pay approximately $5,884 for integration.

This is why many merchants and smaller brands opt for third party platforms instead – many, like PayPal, will also provide more flexibility for customers.

From global, household names to small online shops, here are a few of the most effective payment gateways to integrate.

Adyen is often a go-to platform for established, global companies looking to expand into new or multiple markets. The payment solution is designed to detect fraud through its risk management systems and provides reports at both the company and merchant account level.

Adyen accommodates international expansions, which means that it accepts all types of credit cards and payment methods. The platform also focuses heavily on providing local solutions to effectively reach more shoppers by looking at which payments provider is widely adopted.

For example, in Indonesia, Adyen offers integration with Visa and Mastercard, but also local e-payment wallets and carrier billings such as DOKU and Alfamart counters. In the Philippines, it adopts a mobile first strategy and offers integration with cash based payments and online banking through mobile phones.

Adyen can handle 250 payment methods, 187 currencies and a single platform for mobile, desktop and physical transactions.

“Instead of building direct integrations to each payment method, we have Adyen,” says Kapil Mokhat, head of payments at Airbnb.

Adyen’s fees include a chargeback fee and commission per transaction, with different commision rates depending on the payment method.

Indonesian based Kredivo is operated by FinAccel, a Jakarta based fintech firm, that focuses on online payment and online credit scoring services. The platform was launched upon noticing a lack of payment methods for ecommerce shoppers without credit cards.

In Indonesia, only one in 15 people own a credit card.

Kredivo allows customers to make payments on ecommerce websites and convert the purchase in installments without a credit card or bank account. The second option is done through the calculation of customers’ credit scores from data points of their online histories, and Kredivo submits loan applications on the customers’ behalf.

Kredivo is only available for residents of Greater Jakarta, Bandung and Surabaya, but the company is preparing to expand to the rest of Indonesia within 2017.  

2C2P is a payments solution that accommodates merchants, in both ecommerce and mobile commerce payments. The platform caters to both banked and unbanked customers in Southeast Asia.

The flexible, locally adapted aspect of 2C2P makes it a reliable choice for merchants and brands that mainly want to stay within Southeast Asia. 2C2P accepts credit cards and also installment payments, making it easier for customers to afford higher valued items.

2C2P also helps provide payment solutions to those without credit cards through its 123 payments access points such as 7-Eleven counter service in Thailand.

2C2P also has a product called Qwik, that is a peer-to-peer payments platform to allow a cashless transfer between buyers and sellers on Facebook.

Customers have the choice of paying via credit/debit cards, counter payments, online direct debit or ATM payments. This platform was designed for Facebook’s merchants who found 2C2P’s payment gateway too expensive, making it easier to use the platform’s secure and efficient service.

2C2P isn’t suitable for a global payment gateway, its better for smaller merchants or brands that are looking to reach a wide array of consumers in the region, without being restricted by credit card ownership.

Thailand based Omise is a reliable, secure payments gateway for ecommerce merchants and brands. Users of the platform have access to the Omise Dashboard that allows them to view recently transferred money, total balance, and conduct refunds.

The all encompassing platform lets users manage everything from one dashboard.

Omise works similarly to PayPal, but is slightly speedier if users want to transfer money from a third party account into their Omise account. It also supplies users with a trial API, which makes it significantly quicker than a bank to implement during a trial period.

The company also practices tokenization, which means the system does not record a customer’s credit card number, as the token swaps out sensitive data with a randomized number in the same format.

Omise charges 3.65% per credit card transaction, and signing up is extremely easy. For merchants, simply submit your ID card and the front page of your bank book. For companies, submit a company registration, director ID card, Tax ID and the front page of the company’s bank book.


As of now, 53% of the population in Southeast Asia — more than 339 million people — are online. There are more people with access to the internet than without and the number is expected to reach 480 million by 2020.

A survey conducted to 1600 people by Limelight Networks in four Southeast Asian countries (Thailand, Singapore, Malaysia, and the Philippines) found that internet users are spending 16 hours per week on the internet outside of work purposes.

With so much time spent online, users are demanding more from their web experience and it is proven to affect their shopping decisions. What else was revealed from the survey?

16 hours doing what exactly?

From 1 to 5, with 5 being the highest internet activity, social media ranked almost 4. The second most popular was browsing through video heavy content sites like Youtube and news outlets.

Gaming sites and live streaming of sports events ranked the lowest in terms of online activity.

customer web experience

Moreover, internet users in Southeast Asia are relying more on the internet for product research.

17% of them will even engage with a company’s official social media accounts to inquire about a product.

32% of social media users use their networks to check product recommendations from their friends and family.

customer web experience

What keeps them glued online?

A smartphone is the dominant device used to access the internet in this region and laptop comes in second place.

84% of internet users expect a fast load time no matter how big the screen size of their device is.

43% of online shoppers state they will actually abandon the website, and buy from a competitor if the experience on the website is too slow.

customer web experience

Despite a customer’s increasingly high standard,  77% said they would likely give the company  another try in the future given the chance.

Other important factors to consider when creating a positive web experience:

  • Fresh and updated content from a website (46%)
  • Fast performance (38%)
  • Personalised experience based on previous visits (67%) by providing relevant product recommendations

What does this mean for brands?

Word of mouth is your best friend.

91% of the customers would recommend your service/platform to a friend if they had a positive experience. Even from the stone ages, this has always been one of the most effective marketing tools.

customer web experience

Read the full report from Limelight Networks here.