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Over the last few weeks, we have looked at the ecommerce landscapes in Indonesia, Thailand, Malaysia, Singapore and the Philippines to see how the five largest markets in the region are faring. The region itself is a diverse and fragmented landscape having disparate infrastructure and fickle government regulations, making it hard for global brands to find a one-size-fits-all solution to conquer $238 billion in market potential.

However, despite the diversity of each country, there is a common theme apparent for ecommerce in the region. Here’s what we have discovered from the Southeast Asian ecommerce landscape in 2016.

1. The domination of Lazada – or soon, Alibaba

One player that has succeeded in making a name for itself in every country across the region is Lazada Group. The company, introduced by Samwer Brother’s Rocket Internet in 2012, has dominated monthly web traffic by millions in almost every country. Their recent acquisition by Alibaba has only cemented their position of power and plays a key role in Jack Ma’s big plan for Southeast Asia.

The only market with local players that puts up a decent fight with the giant is Indonesia. The country has several big players in the B2B2C sector – MatahariMall and Blibli to name a few – backed by big enterprises or conglomerates. But deep pockets is not the only thing that gives these players an upper hand, local knowledge of the market is also a big advantage.

southeast asia ecommerce landscape

With the looming news of Amazon’s expansion into Southeast Asia with Singapore next year, Lazada doesn’t seem to be worried as they have the advantage of years of consumer data and its latest acquisition of Redmart is seen as the latest effort to thwart Amazon at its own game.

2. M&A as a strategy to survive

Ecommerce is a long term game. Even with a good business model, companies need to be able to sustain themselves for the marathon before they even have a chance to make profit, let alone reap the other additional benefits of going online.

This year, the region has seen a lot of acquisitions as players attempt to expand market share or make an entrance. This includes the old news of ‘Alizada’, a $1 billion acquisition that left players in the industry trembling with excitement or the acquisition of Caarly by Carousell to accommodate the growing interest of people looking for cars on the mobile platform.

Some of the acquisitions were done by non-ecommerce players hoping to expand their reach. There is the latest move by K-Fit, a subscription fitness startup, acquiring Groupon in Indonesia and Malaysia; and the exit of Zalora in Thailand and Vietnam to Thailand’s conglomerate, Central Group, earlier this year.

With hundreds of players clamoring for a chunk of market share, it’s only time before natural selection leaves only the strongest and most committed players in the arena.

3. Payments sector is saturated, but no true problem-solver

Payments is still one of the largest hurdles for ecommerce in the region despite the financing boom for Southeast Asian fintech startups in 2016. Numerous startups are attempting to create a payments product for the sake of ‘doing fintech’ but aren’t addressing fundamental payment issues like a high unbanked population.

All across the region we see players in every market trying to address local financial challenges with little success. In Thailand, the government’s effort to create a cashless society with PromptPay has been halted indefinitely when Government Saving Banks (GSB) ATMs fell victim to the cyber criminal.  

Coins.ph in the Philippines is using bitcoin to increase financial inclusion in the country but is still at a nascent stage. In Indonesia, Telcos and even ride-sharing apps are fueling the high-profile race of mobile wallets – no doubt inspired by Alipay’s and WeChat early days strategy in China – but not a single e-payment option has become widespread.

southeast asia ecommerce landscape

Bank transfers and cash-on-delivery (COD) still remain the top two most preferred payment methods and continues to cripple ecommerce.

4. The key to C2C is through mobile

Consumer-to-consumer is estimated to make up at least 30% of ecommerce market share in the region but is tricky to measure because it happens on social channels like Facebook and Instagram and payment typically happens offline.

In Thailand, around 50% of online shoppers make purchases through a social network – making it the biggest social commerce market in the world. Consequently, it has attracted Facebook to make the country its first test base for social commerce payments and Facebook Shop.

This habit of preferring social commerce pushes players to focus on mobile to be able to capture the customer in an already familiar environment. In Singapore, 38% of online shoppers are making purchases through mobile, higher than the global average of 28%, and inspires home-grown companies like Imsold, Shopee and Duriana to focus on mobile platforms to appeal to more customers.

singapore ecommerce landscape

C2C players are also seen dominating Google Play Store in the Shopping category for every market, with Shopee being the most favored in almost all the countries. In the Philippines, the platform has become the answer to the high demand for popular international brands that only recently available in the country through official offline channels

5. Delivering ecommerce packages gets easier

The rise of ecommerce in the region has also boosted logistics infrastructure. The sector has reached an all time high of funding at $28.16 million in 2015 – led by aCommerce, the tech-logistics ecommerce solutions provider, with $20.2 million before its bridge series of $10 million earlier this July.

Meanwhile, JNE, the largest logistics company in Indonesia, stated that 70-80% of its revenue came from the retail sector dominated by ecommerce and hopes to maintain its annual growth of 30-40%. German-based DHL is also reportedly raising the stakes to grab market share, including the opening of a hub in Singapore.

The on-demand delivery service, led by ride-hailing apps like Gojek and Grab, is also thriving in markets where traffic congestion is distressing like in Indonesia and Thailand. Their motorbike fleets allow them to achieve same day delivery.

Where in the Philippines, cross-border package forwarding services like ShippingCart and POBox.ph are targeting the unique high volume of cross-border transactions in the country to fuel their businesses.

The many facets of Southeast Asia’s ecommerce landscape

Despite the warnings about the region’s diversity, the core ecommerce bottlenecks in Southeast Asia boil down to one – poor infrastructure. Lazada’s strong footprint in the region did not happen overnight, its early-adopter status enabled collection of customer data and the ability to build its own infrastructure – logistics (LEX) and payments solution (Hellopay) – in almost every market. But it almost cost them its business before getting swept off its feet by Alibaba.

southeast asia ecommerce landscape

It comes to show that regional players need to be able to adapt their strategies by keeping tabs on the dynamic trends and consumer behaviors. They need to prepare for a long-term investment before hoping to make their mark in the region and if not – better stick to just one market.

Find the ECOMScape series here: Indonesia, Thailand, Malaysia, Singapore, and the Philippines.

singapore ecommerce landscape

With 83% of its population connected to the internet, Singapore holds the title as the most mature ecommerce market in Southeast Asia. Despite its small population, Singapore accounted for 25% of Southeast Asia’s 2013 online retail value, larger than the region’s largest market, Indonesia that contributed 20%.

Singapore’s ecommerce market is valued to reach $5 billion in 2025, making up 6.7% of retail sales in the country. What else can we see from the Lion City’s ecommerce scene? ECOMScape: Singapore will provide a quick overview.

1. Cross-border ecommerce is (still) preferred by the population

Around 55% of ecommerce in Singapore consists of cross-border transactions. Their developed infrastructure, liberal regulations on customs and tax, and large population of expats in the country opens the gate for foreign companies to flourish without having to establish local ecommerce operations in the country.

Singapore ecommerce landscape

The US and China are the top two destinations for shoppers from Singapore, putting Amazon and Alibaba’s Taobao on the top five most visited ecommerce websites in the country.singapore ecommerce landscape
As a result, there aren’t many home-grown players opting for a marketplace business model. Lazada and Qoo10 are the only mainstream B2C marketplaces in Singapore, unlike in Indonesia and Thailand where the space is a battlefield for deep-pocketed companies.

Its strategic location also attracts global companies to use Singapore as an ecommerce hub for their Brand.com presence to serve online customers in nearby markets such as Indonesia and Malaysia. Adidas used to fulfill regional orders from Singapore before opening an online store in Indonesia this October while Charles & Keith, a brand native to Singapore, offers free shipping to most countries with minimum purchase conditions.

2. Grocery shopping becomes more convenient

As the popularity of online shopping in Singapore increases, more Singaporean are turning online to fulfill their basic needs, including groceries. According to Ipsos and Paypal, online grocery shopping in Singapore is predicted to increase 21% in 2016.

This space seems to be very attractive for investors as seen by funding news of pure-play online grocers like Redmart and honestbee and transition of Singapore’s traditional grocers like Giants and Fairprice jumping on the online bandwagon. In fact, the majority of the etailer in Singapore are traditional grocers.

singapore ecommerce landscape

Food delivery services like Foodpanda and Deliveroo are also thriving in Singapore, the latter boasting 25% week on week growth, while Foodpanda claims Singapore to be one of its key markets in Southeast Asia after closing down operations in Indonesia and Vietnam.

singapore ecommerce landscape

3. Daily deals sites are still popular among Singaporeans

As news of daily deals companies shutting down across Southeast Asia grows, the business model may have overstayed its visit in the region but seems to be stable in Singapore. Groupon, which closed operations in Philippines and Thailand last year and sold its Indonesia operations, remains in Singapore’s top 5 most downloaded shopping apps and top 15 most visited website in Similar Web’s ‘shopping category’. Although Ensogo shut down earlier this year, many more deals sites still continue to operate.

singapore ecommerce landscape

4. Payments opportunity in Singapore attracting global players

Singapore’s established infrastructure and internet maturity makes an appealing testing ground for global players wanting to expand their reach in Asia, especially online payments players. The country’s credit card penetration is 38%, while most of the Southeast Asian countries are still below 5%, and the amount of cards circulating in the country averages 3.9 cards per person.

As a result, the Cards and Payments market in Singapore has become one of the most attractive and competitive markets in Asia Pacific. Adyen, a payment platform unicorn from Europe, recently opened its office in Singapore following the company’s plan to focus in Asia Pacific.

singapore-ecommerce-landscape-mobile-wallet

Singapore’s cashless habit has also made Singapore the perfect place for NFC payments solutions like Apple Pay, Android Pay and Samsung Pay to launch in Asia and the heavy traffic to Alibaba’s ecommerce platforms ensure the adoption of Alipay is well on its way.

5. C2C is driven through mobile apps

singapore ecommerce landscape

According to PwC, 38% of online shoppers in Singapore are making purchases on their smartphone, this number is higher than the global average of 28%. 57% of the shoppers in the republic also turn to social media to read product reviews. As an early adopter of internet culture in the region, Singaporeans are apt at using their mobile to access the internet.

Home-grown C2C platforms like ImSold, Shopee and Duriana have focused on their mobile platforms in order to appeal to customers who want the convenience of buying and selling their things on the go. More mobile-only players are expected to emerge.

Click here to download the full, high resolution version of ECOMScape: Singapore version and join the ecommerceIQ network for the first look at the next ECOMScape in our series.

You can also find ECOMScape: Indonesia and ECOMScape: Thailand.

A Singapore-based startup, Funding Society raised $7.5 million of Series A round, reported Tech Crunch. The company allows SMEs to access loans from individual or institutional lenders. The fund will be used to expand the operations in Malaysia, in addition to Singapore and Indonesia under the name ‘Modalku‘. Sequoia India led this investment round, along with several angel investors. 

The company claimed it has paid out $8.7 million across 96 loans to date and has 94% repayment rate. Fund Societies CEO, Kelvin Teo said the data shows the company’s reliability.

Funding Societies is primarily focused on working capital loans, to finance the day-to-day operations in a company. In Singapore, the average loan size is $67,000 ($90,000 SGD) while the number falls lower to $18,500 (SG$25,000) in Indonesia. It charges an origination fee to the borrower (3-4% in Singapore, 5-6% in Indonesia) and 1% monthly fee to the lender. It claims to have an approval rate of between 15-25% for loan applicants.

The fund will be used to expand its SME loans operations in Malaysia, in addition to Singapore and Indonesia under the name ‘Modalku‘. Sequoia India led this investment round, along with several angel investors. 

In addition to the expansion, the fund will also be used to comply with myriad of regulatory variations in the three countries where it currently operates. It prided itself on being compliant with regulations and ensuring the safety of investors money.

“Industry regulation has been announced in Singapore, but it will still take some investment to reach that level of compliance,” Teo added. Likewise, in Indonesia, he said the company is working with regulators to introduce a framework to regulate peer-based lending.

Outside of compliance and expansion — including expansion beyond capital city Jakarta in Indonesia — Funding Societies is planning to invest in its product to streamline its services for borrowers and lenders, add more services to make the investment options more tailored to the investor needs. The company target to reach breakeven in two-to-three-years.

A version of this appeared in Techcrunch on August 9.  Read the full article here

Kickstarter, the world’s most famous crowdfunding platform is making its first entry in Asia through Singapore and Hong Kong, reports Tech In Asia.

“There’s already a large, supportive community of Kickstarter backers in Singapore and Hong Kong — people who have been supporting the creative ideas of others for years,” says Julie Wood, director of global communications for Kickstarter.

It’s true that Singaporeans are already passionate about the platform.

The campaign for the Pebble 2 smartwatch set, which netted a massive $12.8 million, had almost 2,300 backers from Singapore.

Every Singaporean project to date has had to clear some serious hurdles to make it onto the platform. Kickstarter is currently available to project creators in 18 markets, including the US and the UK, Australia, and scattered European countries.

This means that companies from Singapore previously needed at least a legal presence, bank account, and credit card in one of those countries and raise funds in those specific currencies.

Challenges for Kickstarter in Asia

It is difficult to get on the platform. For a company outside of the Kickstarter countries, one would have to set up an entity in the UK, for example, deal with tax regulations and find a local representative. Not having to deal with these additional burdens could be good for local companies, as is the opportunity to raise funds in their own currency.

An important fact about Kickstarter is the fact that most people are concerned with joining it. But there should be more information regarding community building and education, rather than just access.

Many global companies have used Singapore as an eventual gateway into other Asian countries. However, no official statement has been announced regarding Kickstarter’s expansion plans. A regional expansion would mean that more projects would be funded locally, without having to deal with regulations from the other side of the world.

A version of this appeared in Tech In Asia on July 28. Read the full version here. 

Touché enabling cashless payment with fingerprints

Source: fintechnews.sg

Singapore-based company Touché raises $2 million from private investors in Singapore to allow cashless payment with your fingerprint. The investors participating in this round are including co-founder Benedict Soh of creative agency, Kingsmen, and BTI director Terence Khoo.

A new way to pay

The startup makes a device that allows merchants receive payments and gather information about their customers through their fingerprints. The device scans your fore and middle fingers and connects them to your profile. The next time you visit that store, you can make a purchase by touching your fingers to the machine to authorize payment. It can also record information like your purchase history at that particular outlet and loyalty memberships.

To make sure of its security, the fingerprints are hashed and encrypted when stored and not shared with anyone. Merchants only have access to their customers’ membership and purchase information. Touché technology also requires two fingers to record prints, making it tougher to duplicate. The company uses live detection to make sure that only your actual fingers can trigger the machine, not an image of them.

A new way to market

The main draw for stores is the ability to handle payment and loyalty information through a single system. They will also be able to know about a customer’s previous purchases and spending habits at their business.

For customers, they get to stop worrying about carrying credit and loyalty cards, or about their phones running out of battery. They also have access to an “e-journal”, which contains things like their purchases, expenditures, and real-time offers from businesses they frequent or are members in.

Touché will target markets outside Singapore and is currently exploring Latin America, Japan, Macau, and Indonesia. At the moment, it has offices in Singapore and Barcelona.

The use of fingerprints as currency is set to be deployed in Japan for the 2020 Olympic Games.

“Biometrics is becoming the way we do things,” says Touché CEO Sahba Saint-Claire.

A version of this appeared in TechinAsia on July 16. Read the full article here.

IBM launches its first blockchain innovation center

Source: Freemalaysiatoday.com

IBM plans to open a blockchain innovation center in Singapore in collaboration with the Singaporean government to digitalize the trade and finance sectors, reports ZDNet. The centre will develop applications and solutions based on blockchain, cybersecurity, and cognitive computing technologies and also engage with small to medium enterprises to create new applications and grow new markets in finance and trade.

The blockchain can translate to strong benefits throughout our entire finance ecosystem including the boosting of local tech capabilities.

As Singapore aims to become Asia’s main financial technology hub, IBM’s initiative perfectly aligns with the government’s goal. The tech company will be working with the main economic planning agency, the Singapore Economic Development Board (EDB) and the Monetary Authority of Singapore (MAS) to accelerate blockchain adoption for finance and trade.

One project, together with PSA International—one of the world’s largest container transshipment ports owned by state investor Temasek Holdings—aims to connect fintech with global trade and logistics.

Singapore is rushing to reinvent itself as Asia’s fintech hub to fend off a regulatory threat to its wealth management industry and revive a sluggish economy.

Singapore is now ahead of its long time rival, Hong Kong, but measures to cut the number of foreign workers and regulations have created a risk averse culture which is at odds with the trial and error approach of fintech startups. This remains a key obstacle in developing this sector in Singapore.

The opening of the new blockchain center will build on IBM’s work with the Linux Foundation Hyperledger Platform. At the end of 2015, IBM was among one of the tech companies to partner with the Linux Foundation to develop an enterprise grade, open-source distributed framework. This aligns with the foundation’s belief that this standard of innovation can transform the way business transactions are conducted across the world.

A version of this appeared in ZDNet on July 12. Read the full version here.