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As ecommerce is growing in Southeast Asia and the latest Digital in 2017 report shows more respondents in each country have made a product or service purchase online compared to a year ago, the window is opening also for cross-border online shopping.

According to the Consumer Barometer by Google, 19% of people on average in 2014/15 have made a purchase online in Southeast Asia. But how many of them have bought something online from a foreign country? Let’s find out.

Singaporeans are the most active users purchasing products online from overseas – two out of three people do it more than once a year. The absence of Goods and Services Tax on imported goods of S$400 or less is highly attractive to Singaporeans.

They are followed by Thais and Malaysians of which nearly every second person buys something online from foreign countries. It is not a coincidence as Singapore, Malaysia and Thailand are the richest of the six Southeast Asian nations.

Source: The Consumer Barometer Survey 2014/15. Base: internet users who have purchased online, n=14174.

In all countries, the product categories that reap the most cross-border orders are clothing & accessories or footwear. People are also buying cosmetics, beauty or health products and books, CDs, DVDs or Video games from other countries.

Source: The Consumer Barometer Survey 2014/15. Countries included: Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. Base: internet users who have ever purchased a product or service online from abroad, n=8750.

Better availability and quality of products are among the top reasons why people are looking to buy things online from abroad, followed by better conditions and broader range of products.

Source: The Consumer Barometer Survey 2014/15. Base: internet users who have ever purchased a product or service online from abroad, n=8750.

Despite the perks of cross-border online shopping, there are also several hassles. Shoppers in Southeast Asia have experienced deliveries that take too long and lack of international shipping options. Their trust has also been diminished as they see online shopping websites as “insecure”.

Source: The Consumer Barometer Survey 2014/15. Countries included Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. Base: internet users who have ever purchased a product or service online from abroad, n=8750.

On the other hand, for those who have never bought products online from abroad, Indonesians (90%) and Vietnamese (51%) stand out. In comparison – only 13% of Singapore has not ever ordered online something across the border.

People do not order products online from abroad as they believe it is more expensive, delivery takes longer and returns will be difficult or costly.

Source: The Consumer Barometer Survey 2014/15. Countries included: Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. Base: internet users who have never purchase a product from abroad, n=4827.

There are several takeaways for ecommerce businesses, both targeting consumers locally and also those willing to sell their produce outside their country’s borders.

Local online stores and marketplaces would benefit from studying the motivation of those who dabble in cross-border ecommerce to offer what consumers are lacking. For example, consumers in Indonesia and Vietnam are stocking up on quality clothing, accessories and footwear. In Singapore, consumers are ordering from abroad because of appealing offers so providing attractive deals on the website might be a good way to catch their attention.

For those looking to expand their customer reach and tap into the Southeast Asia’s population, offering more attractive delivery options might be key. While the level of infrastructure development (or lack of it) varies across Southeast Asian countries, there are number of established players such as DHL Ecommerce and Lazada Express as well as startups like LalaMove and NinjaVan that are looking to address the logistics challenges. Improving the security of the website and offering convenient payment methods would also help transition more people to try ecommerce.

By enhancing the shopping experience and tackling the above mentioned issues, hopefully the myths that surround the online shopping in the region will be dissolved but there is still much to do.

By: Aija Krutaine
Food Panda's Profitability

Food Panda’s riders. Source: Skyscrapercity.com

Rocket Internet’s food delivery startup, Foodpanda, is projected to make profit in most of its Southeast Asian markets reports Digital News Asia.

The company has presence in Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand. It states Singapore as the key market in the region, but also states that other countries are catching up.

The startup also says that it grew 400% in terms of orders and revenue in 2015, but declined to provide any figures. Jakob Angele, Senior Vice President & CEO, Foodpanda Singapore

In 2016, Foodpanda is continuing to grow 25% month-on-month in orders and revenue, which is considered rapid growth for emerging markets.

Despite the positive outlook on Foodpanda’s growth potential and profitability, the startup is not without its hurdles.

The food delivery scene growth challenge

One of the biggest challenges is maintaining restaurant quality as new restaurants that join the platform are often overwhelmed by their Foodpanda orders in addition to their everyday customers in the establishments.

The Foodpanda team has taken initiative to screen the quality in order to maintain customer satisfaction.

Currently, Foodpanda fulfills 90% of all deliveries from the restaurants on its platform, this is a significant increase from 2015’s 60%. In Singapore, the startup has approximately 2,500 riders, but increased competition and labor shortage has made it tough on further recruitment.

The landscape food delivery startups in Southeast Asia is getting crowded, recent entries such as UK based Deliveroo have become key competitors for local players in the region. However, in Singapore, Foodpanda still claims its market leader position.

The main priority for Foodpanda is to maintain its path to profitability and concentrate on turning markets such as Thailand and Malaysia profitable as well.

This is good news for Rocket Internet as media speculation has been brewing regarding its companies’ profitability, following various news of possible M&A’s.

A version of this article appeared in Digital News Asia on July 5. Read the full version here.