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Here’s what you should know today:

1. Facebook will open an office in Indonesia

Indonesia’s favorite social network site Facebook will open an office in Jakarta later this month as part of the requirements for its operation in the country.

Samuel Abrijani Pangerapan, Communications and Information Ministry director general of information applications, said the office will be opened as a permanent business entity in South Jakarta.

Facebook will also establish specific business activities (KBLI) as required by the existing regulations for the type of business run by Facebook. The company also expressed its commitment to deal with prohibited content on radicalism, terrorism and pornography.

Read the full story here

2. honestbee celebrates second anniversary with regional expansion

Singapore’s online grocer honestbee celebrates its second anniversary this month by cementing its position as the largest and fastest fresh grocery ecommerce service in the region.

In addition to its groceries service, honestbee also expand to other business verticals like food and laundry. honestbee plans to become the most convenient on-demand services marketplace.

Within two years, honestbee has presence in eighth city, including Singapore, Hong Kong, Jakarta, Kuala Lumpur, Manila, Taipei, Tokyo and Bangkok.

Read the full story here

3. Recommended reading: Where are the Southeast Asian brands?

The latest BrandZ Top 100 Most Valuable Global Brands report revealed that tech companies are thriving, but it’s also exposed the absence of Southeast Asian brands in the global rankings.

However, the arrival of a brand in the global Top 100 from Southeast Asia should not be far as economies in the region grow, populations swell and mass mobile adoption levels the playing field (and reduces the cost) of delivering widespread reach.

Read the full story here

 

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.

The hype surrounding ecommerce in Southeast Asia is high and everyone from small retailers, globally acknowledged brands to established giants like Alibaba and Amazon are looking to tap into the market.

Similar to other markets, Southeast Asia experiences seasonality in sales – some months are quiet while others experience a rush of eager shoppers. National holidays across the six biggest nations in the region differ, so which are the best performing sales months?

Regional ecommerce enabler aCommerce has shared data that sheds light on online shopping seasonality for various categories in the region.

Best time for sales?

The year end holidays unsurprisingly provide great opportunities for retailers as shoppers flock to the stores looking for gifts, decorations, and Southeast Asia is no exception.

Nearly 40% of online sales are generated in the last three months of the year – October, November and December.

While 2016 saw a number of brands and retailers in Southeast Asia follow in Alibaba’s Singles Day, the world’s biggest online shopping festival held on November 11, sales leading up to the massive campaign were actually higher in October and December.

eIQ seasonality of ecommerce sales in SEA in 2016

Source: aCommerce data includes Indonesia, Thailand, the Philippines and Singapore.

There were slight differences across countries but the last quarter was the peak of online sales in the four markets. Retailers usually begin preparing for the holiday season in August/September to accommodate the sometimes 300% increase in sales volume. This means marketing campaign collateral, raising awareness of future sales, hiring extra staff in warehouses, etc. 

Best performing category?

When looking at trends in category sales, similar patterns emerge showing higher month-on-month (MoM)  growth at the end of the year.

Beauty products and consumer electronics show higher fluctuations in MoM sales growth, while fashion & apparel sales growth is steady.

In 2016, electronics sales increased 2.5 times in October compared to September – most likely due to the release of the new iPhone 7 from Apple in Malaysia, Thailand and Singapore. Sales of beauty products tripled in November most likely boosted by holiday season campaigns advertising cosmetics as gifts for upcoming celebrations.

Kiehl’s Indonesia campaign for 2016 holiday season.

“The Asia Pacific region generates the highest sales via digital retailing for the beauty and personal care market. Its 2010-2015 CAGR at 25% outpaces global internet retailing CAGR at 15%. Therefore, targeting Asian consumers requires a strong online strategy,” said Joanna Chan, Beauty and Fashion Research Analyst at Euromonitor International.

However, a winning online strategy will differ across countries as consumers in markets like Singapore are tech savvy, use credit cards and buy online frequently and in other markets like Indonesia or the Philippines, the poor infrastructure and internet speed need to be taken into account.

As retail around the globe shifts towards a model where online serves as an additional branding, marketing and sales channel for traditional brick-and-mortar stores, stepping into ecommerce will reap first-mover advantage.


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Credit cards. Not a thing in emerging Southeast Asia.

Fintech is quickly becoming the next big thing in Southeast Asia. According to recent data from Tech in Asia, the number of venture capital deals in fintech has outpaced ecommerce for the last two quarters – something that hasn’t gone unnoticed by the big players.

Alibaba is on a mission to bring in Alipay and Ant Financial into Southeast Asia through its $1 billion Lazada acquisition. Indonesia’s Go-Jek recently launched Go-Pay and Grab is said to be raising a massive $1.5 billion round to fuel its nascent payment platform.

Despite an increasing influx of money into the payments ecosystem in Southeast Asia, cash-on-delivery (COD) remains the most popular payment method in emerging Southeast Asian markets. Aggregated data shared by aCommerce indicates that the share of COD orders has increased over the last 12 months.

Of course, the data is limited to the orders processed by the regional ecommerce enabler and skewed by individual client preferences, but given their size and reach, offers a good representation of the market.

What then could explain the increase in COD share in markets like Indonesia, Thailand and the Philippines? One hypothesis could be that as ecommerce continues to gain widespread adoption, new users are the late majority and laggards. These groups are less likely to have access to credit cards and some won’t even have bank accounts. This means COD will still be essential for continued ecommerce growth in emerging Southeast Asia.

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Sitting comfy where I fit.

A few days back, TechCrunch broke news that sources claimed Amazon would be delaying its highly anticipated Q1 entry into the fast-growing Southeast Asian ecommerce market. Unclear who these ‘sources’ may be, the lack of any substantial evidence that the ecommerce giant is entering Singapore points to the case that it probably will never happen.

Plans of entry into Singapore have never made sense if you take a look at Amazon’s past and present market strategy, as I do here.

Conventional versus Guerilla Warfare

Like the giant in David and Goliath, Amazon performs best in wide-open “terrains” where the juggernaut can accumulate and leverage its scale advantages. Look at the markets where Amazon is currently dominating the competition: US, Japan, UK, Germany, France and increasingly India.

Amazon SingaporeAmazon entering Southeast Asia is comparable to the Americans fighting the Vietnam war. They’ll be battling an enemy that’s scattered across countries, often divided by water and much better equipped at playing the local game. Drop a few Amazon executives from Seattle into the jungle called Jakarta to navigate “Prime” logistics in the city’s legendary traffic and they might beg to go home.

Just look at Europe, which, despite the European Union, is still a loose collection of individual countries. Amazon’s tour-de-force in Europe has whittled down to three major markets — UK, Germany and France.

China seems like the exception — an enormous single market similar to the US — yet Amazon’s market share tanked from 15% in 2008 to less than 2% today. Decision-making was centralized in the US, which slowed down its operations in China and couldn’t outcompete the hungrier competition.

In the end, Amazon China was no match for Alibaba’s Jack Ma and JD’s Liu Qiangdong, leaving them no choice but to throw in the towel and set up shop on Tmall instead in 2015.

In the Middle East, Amazon is currently entangled in a bidding war with UAE magnate Mohamed Alabbar to acquire Souq.com. Souq operates across the Gulf Cooperation Council (GCC) countries, all connected by land and no custom duties between them. This provides Amazon access to 50 million people sharing the same language and culture and fits with its strategy of going after large single markets.

Singapore is not operation D-Day for Amazon

Amazon’s rumored entrance into Southeast Asia has specifically focused around setting up in Singapore first, arguably the most mature, albeit smallest, ecommerce market in the region.

Prior to Lazada snapping up Redmart for $30-40 million, there were talks of Amazon trying to buy Redmart as a way to jumpstart its Singapore operations.

But Amazon setting up local retail operations in Singapore doesn’t make any sense. Singaporeans, due to their country’s GST relief and efficient global logistics, are already ordering from Amazon en masse.

Amazon and Singpost are driving improvements in global cross-border logistics, to enable delivery of packages from US to Singapore within 3 days with priority shipping. That’s the average time for local domestic deliveries inside Indonesia. Expect even faster deliveries in the future when Amazon successfully expand its own fleet of planes.

Custom dutiesPerhaps Singapore could serve as a distribution hub to expand into the rest of Southeast Asia? Also, probably not the case. There are good reasons why Jack Ma decided to set up his new Southeast Asia hub in Malaysia’s new ‘Digital Free Trade Zone’ and not in Singapore:

  • Malaysia is connected to Thailand via land that gives it access to Cambodia, Myanmar, Vietnam, etc.
  • Malaysia is as close to Indonesia, Alibaba/Lazada’s biggest market in Southeast Asia, as Singapore is.
  • Malaysia itself is a much bigger ecommerce market than Singapore – 30M vs 5.5M population.
  • Malaysia has a much bigger overseas Chinese community than Singapore who are regular users of Tmall, Alibaba and AliExpress.
  • Malaysia is a close political ally of China. (Not everything is purely business; read between the lines).
  • Malaysia has more physical space than Singapore to fit in a massive logistics operation.

Join the eIQ Network for exclusive content & insights here.


But Amazon is recruiting people…right?

You may know someone who works in the ecommerce space in Southeast Asia who has received a phone call from an Amazon recruiter. Yes, Amazon is recruiting but not for the reasons you think.

Most of the jobs sourced are for its cross-border business based in Singapore long ago to get Southeast Asian merchants to sell on the Amazon global marketplace.

ecommerceIQ, Amazon jobs, Singapore

Amazon is hiring in Thailand for Amazon Global Selling (merchant acquisition) and AWS, not for local retail.

Indonesia would be the place to start

In line with Amazon’s strategy of going into large, singular markets, the most recent being Australia, a Singapore landing would be ruled out. If Amazon is really set on conquering Southeast Asia, a more likely entrance would target Indonesia. With a young population of 250 million and growing, Indonesia is the ‘new China’ — an economic and ecommerce powerhouse in a region of 600 million people.

Having said that, the window of opportunity for Amazon in Indonesia is closing fast. With Alibaba’s backing, Lazada is doubling down on its biggest market in Southeast Asia, and local giants like Lippo Group have pumped over $500 million into its ecommerce venture, MatahariMall. Then there’s JD that sneaked into Indonesia in 2015 and seen steady year-on-year growth and ecommerce veterans such as blibli.

To accelerate a move into Southeast Asia, a plausible option for Amazon is to buy its way into the market even though it didn’t work so well with China.

Even its bid to acquire Souq.com in the Middle East is still up for debate.

Fortunately for Amazon, Indonesia’s ecommerce space is still developing with plenty of players that could want a powerful ally like Amazon. Lets wait and see.

By Sheji Ho, aCommerce Group CMO

What do you think? Will Amazon ever enter Southeast Asia?

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