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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.

Here’s what you should know for today.

1. Rocket Internet’s home services marketplace Helpling raises $11m

This latest funding round is led by APACIG, a joint venture between the German startup investor and Qatari telco Ooredoo. It’s a downround, however, which means that its valuation decreased as compared to the previous funding round.

 Helpling has also announced it’ll bring window cleaning, furniture assembling, and paint work to all its markets.

Helpling’s business model is asset-light. However, this type of model is easy to replicate. How can it beat out local and regional competition to become a dominant player?

What are people saying about it? “I think it’s a tough model because clients don’t have loyalty to the middleman platform,” says Poh Chen Wei, founder of Pegaxis, a B2B platform that connects service providers to properties.

 

2. World Bank’s IFC investment firm invests $2M in Southeast Asian fund SeedPlus

IFC confirmed today that it has invested $2 million in the SeedPlus fund, the size of which has not been disclosed.

Its portfolio includes B2B repairs platform Moglix, Mimetic.ai, which manages an AI assistant platform, and mobile security firm AppKnox.

“Ultimately we want to curate and carefully select our investor base, that goes back to our focus to support our startups beyond Singapore and Southeast Asia,” said Tiang Lim Foo, operating partner at SeedPlus.

Read the rest of the story here.

 

3. Recommended Reading: Fast fashion fading as H&M, Zara show strain

Retailers’ recent results illustrate the difficulties facing the fashion industry as consumers divert spending to leisure activities and buy more of their apparel from a rising number of online suppliers.

Richard Chamberlain, analyst at RBC Capital estimates that H&M’s same-store sales fell 3% in the month, weighed down by the tough industry conditions and as initiatives to expand online options for customers and improve methods of supply take time to feed through to sales.

Read the rest of the story here.

 

4. Community Chatter: Malaysians are savers

Source: Nielsen’s Twitter account

Malaysia now has one of the lowest consumer confidence ratings in Southeast Asia, which does not bode well for local demand in the country for 2017, according to Nielsen’s findings.

Read the rest of the story here.

Here’s what you need to know before the weekend starts.

1. Zalora Indonesia reportedly getting acquired by MAP Group

Yesterday, it was announced that Zalora has sold 49% of its Philippines business to real estate firm Ayala. Now, it is apparently in talks to sell the Indonesian branch to Indonesia’s retail group MAP.

What is MAP? Listed on the Indonesian stock market, MAP operates close to 2,000 retail outlets in Indonesia, including departure stores and fashion outlets. By acquiring Zalora, the retail group will be making a foray into ecommerce.

Zalora currently operates in eight countries across Asia Pacific.

Read the rest of the story here

 

2. Ho Chi Minh City is looking to tax sales on Facebook

Ho Chi Minh city’s ecommerce landscape is growing with more than 80,000 websites, but tax collection from the segment is low, said Pham Thanh Kien, head of the city’s trade department. This is especially the case for Facebook-social commerce is popular in Southeast Asia.

No word on whether this will actually go through.

Read the rest of the story here

 

3. How much is Alibaba’s brand value?

Alibaba Group climbed into the top 10 of the world’s most-valuable technology brands, garnering the No. 8 slot in London based Brand Finance’s 2017 survey.

Source: Alizila

“Its success stems from the opportunities to both open up and simplify commerce for Chinese communities, particularly rural ones.” The Brand Finance report said.

Read the rest of the story here.

Here’s what you should know this morning.

1. After Rocket’s biggest outside shareholder Kinnevik sells 10.9 million shares, what does it mean for the German company?

Kinnevik sold 10.9 million shares overnight for 19.25 euros each, a 10% discount to the closing price, raising 207 million euros ($218 million). That’s just under half the Rocket share price of 42.50 euros at its 2014 IPO.

Has it been profitable for Kinnevik? Despite its poor performance since IPO, Rocket has been lucrative for Kinnevik. It has generated an annualized internal rate of return of 91 percent since the initial investment of 155 million euros in 2010

Growing bad blood: Kinnevik’s presence at Rocket has been a godsend fblessing or other investors since it gave more regular and realistic valuations of Rocket’s assets, than what was coming from the Rocket founders themselves. The Samwers and Kinnevik eventually clashed over strategy and the Swedish investor didn’t take part in a 1 billion euro fund Rocket raised last year.

The tensions built until the Kinnevik CEO and another executive stepped down from Rocket’s board in June.

Questioning the business model, is Rocket actually fit to be a public company?: For all its talk of being a builder of companies, it is best understood as a listed venture capital fund. It invests in or founds startups and nurtures them until trying to exit via a sale or an IPO.

That’s not the only reason it is ill-suited to public markets. Investors value public companies based on expected future earnings. Rocket’s companies are unprofitable, though losses are getting less. It only gets cash in the rare event that it sells or lists a company.

Read the rest of the story here

 

2. Finquest acquires investor-startup marketplace Detecq to boost tech M&A in Asia

Finquest, a Singapore-based platform that fosters global deal flows, has acquired investor-startup marketplace Detecq. No financial details were disclosed.

Both use a unique system of algorithms to curate and matchmake the best deals. Finquest currently has a database of more than 1 million users. The acquisition of Detecq will bring its entire network of corporate investors, M&A professionals and tech companies into Finquest’s umbrella. This will provide clients with a wider selection of deals to pick from.

The acquisition expand Finquest’s presence in Asia’s tech ecosystem.

Read the rest of the story here.

 

3. Recommended Reading: The Evolving Role of WeChat in a Shanghai Multi-Brand Boutique

Xinlelu.com has been a standout on multiple fronts. Much of this brand cultivation at Xinle Lu is done online rather than offline, and molded through a strong WeChat community and content.

Xinle Lu’s niche consumer is a small but growing base of a sophisticated, professional Shanghainese women who are fashion- and travel-curious.

“Strategy-wise, we are now aiming to drive traffic to WeChat as a destination. In the last five years, we saw traffic go from newsletter to website to WeChat to Weibo, but now we want to drive this back to WeChat.” Said Xinle Lu co-founder, Yilei Wu. “In 2017, we will likely focus more on website maintenance and building WeChat and Instagram. We will not be working on Weibo because the platform is not an efficient way to reach and engage with our customers.”

Read the rest of the story here.

 

Here’s what you should know for today.

1. Thai ecommerce sector expected to expand by 20% this year

The bullish forecast came as it was revealed the Southeast Asia ecommerce market in 2015 was worth $900 million (Bt31.7 billion) and is forecast to grow up to 16 times that figure , to about $11 billion by 2025.

The Electronic Transactions Development Agency has forecast that the total ecommerce market in Thailand this year will be worth Bt2.52 trillion.

 Read the rest of the story here.

2. Kuvera Capital Group leads $3m round in Thai digital consultancy D8ii

Thailand-based investment firm Kuvera Capital Group announced today to lead the investment of $3 million in D8ii Ltd, a digital consultancy, tech and innovation solutions firm in Thailand. The deal will aim to capture at least 10% of this market and becoming a brand leader; a go-to tech partner with international standing that will drive Thai enterprise to the next level.

Read the rest of the story here.

3. Rocket Internet opens its first engineering hub in Asia

Rocket Internet is increasing its focus on Asia after it opened its first engineering hub in the region.

The center is located in Bangkok, and otwill house a tech team that carries out work for Rocket Internet’s portfolio of startups. The firm currently has 20 people at the base in Thailand, and it said it plans to more than double that headcount before the end of this year.

The focus is very much on mobile, given that it dominates Asia as the primary method of internet connectivity.

Read the rest of the story here.

Here’s what you should learn for today.

1. Rocket Internet’s global venture fund is now worth a billion dollars

German startup Rocket Internet announced today that it’s secured investor commitments of US$1 billion for its Rocket Internet Capital Partners Fund. It added that the fund will invest in startups focused on marketplaces, ecommerce, fintech, software, and travel.

Read the official press statement here.

 

2. Thailand’s KBank keen to buy Indonesian banks

While Indonesia has very high potential for KBank and the takeover of local banks is an option, the requirement that foreign banks have to purchase more than one bank is something that it might not be particularly comfortable with.

Meanwhile, the establishment of a physical branch in Indonesia is likely to be more difficult than doing so in Vietnam, which is another focus country for KBank.

Read the rest of the story here.

 

3. BCBG to close stores, will restructure as online shift takes toll on business

BCBG has “too large a physical retail footprint. In order to remain viable, the company must realign its business to effectively compete in today’s shopping environment.”

BCBG is facing a cash crunch, but it doesn’t see bankruptcy as an imminent risk, said one of the people.

Read the rest of the story here.