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Malaysia and Thailand better positioned to develop e-commerce

Countries with more developed infrastructure, such as Malaysia and Thailand, are better positioned to develop e-commerce. Thailand could be set to experience a surge in e-commerce activities over the coming years

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Online shopping is increasingly popular in key ASEAN cities, thanks to improved infrastructure and the variety of payment options, including cash-on-delivery, bank transfer or paying at the 7-Eleven store.

Moreover, online marketplaces provide a wide array of imported items, attractive promotions and discounts. E-commerce is also an attractive alternative for people in rural areas where shopping malls may not exist; and those who live in the city, where traffic congestion is a huge issue, as in Jakarta.

This is especially true when it comes to consumer electronics and IT gadgets – a category among the most researched online, alongside apparel and cosmetics.

E-commerce in ASEAN is Reaching an Inflection Point

The recent entry of Chinese tech heavyweights into ASEAN may help the region reach its vast potential for e-commerce, as investments by Chinese companies, such as Alibaba, JD.com and Tencent have surged in recent years. These Chinese investors have not only injected capital into e-commerce companies, they have also brought in digital payment and logistics expertise, which will help ease the two major pain points that have been holding back the business-to-consumer (B2C) segment of e-commerce, especially cross-border, in ASEAN.

Thailand better positioned to develop e-commerce

Countries with more developed infrastructure, such as Malaysia and Thailand, are better positioned to develop e-commerce. Thailand could be set to experience a surge in e-commerce activities over the coming years.

First, alliances have been formed between Chinese e-commerce giants and large Thai retailers with extensive distribution networks, such as the joint venture between JD.com and Thai retailer, Central Group.

Second, Thailand already has decent infrastructure connectivity, and there has been significant rise in the number of e-commerce logistics enablers.

Third, the government is proactively pushing for e-payment adoption via the Promptpay scheme[1] and use of QR codes.

Fourth, Thailand has one of the highest smartphone penetration rates in ASEAN.

Indonesia has a high long-term e-commerce potential given its large and growing middle class, as well as its young consumer market. Moreover, living in gridlocked Jakarta traffic sometimes makes consumers hesitate to commute for shopping. The two Alibaba-invested online marketplaces, Lazada and Tokopedia, have occupied about half of the national web traffic, while Shopee tops the mobile apps ranking.[2] While e-commerce players focusing on integrating infrastructure within the ecosystem, such as payments and logistics, they also emphasise building trust with consumers and improving consumer experiences.

Technology Leapfrogs and Fragmented E-commerce Market

More than 60% of ASEAN’s population is under 35 years old, creating a large future consumer market. At the same time, the region’s youth are tech-savvy, and e-commerce is poised to grow exponentially in Southeast Asia in the coming years.

It is important to recognise that consumers here are technology ‘leapfrogs’. Outside of first-tier cities, many have bypassed desktops, accessing digital platforms primarily through mobile devices. Mobile-first consumer-to-consumer (C2C) marketplace, Shopee, is gaining market share in Thailand and Indonesia.

In Southeast Asia, the B2C e-commerce market is quite fragmented, as no single platform is preferred by more than 20% of consumers in any Southeast Asian country.[3] Today’s ASEAN market includes classifieds (e.g. Mudah and OLX), C2C (e.g. Tarad, Tokopedia, Bukalapak), B2C (e.g. Lazada, All IT Online Store, Blibli), B2B and retailers’ own sites (e.g. BEST DENKI, Fresh Gadgets, Urbanlife, IT City, Banana, Power Buy).

In ASEAN, most electronic brands and retailers sell via B2C marketplaces as well as their own websites, in addition to distributing through e-tailers, like Central Online and MAP.

Major Online Platforms in ASEAN

Online MarketplacesMajor ASEAN Markets
LazadaIndonesia, Malaysia, The Philippines, Singapore, Thailand and Vietnam
ShopeeIndonesia, Malaysia, The Philippines, Singapore, Thailand and Vietnam
11 StreetMalaysia, Thailand
All IT Online StoreMalaysia
ipmart.com.myMalaysia
Lelong.myMalaysia
JIBThailand
OricoThailand
Munkong GadgetThailand
InvadeITThailand
BlibliThailand
JD.idIndonesia
EleveniaIndonesia
BhinnekaIndonesia
TokopediaIndonesia
BukalapakIndonesia

Major Online Marketplaces in ASEAN

There are a huge number of online shopping portals selling consumer electronics, electronic accessories, and IT gadgets in ASEAN. The list below is not exhaustive, but it gives a general picture of the online platforms in the region.

Lazada Lazada is a horizontal marketplace where consumers can find a wide selection of product categories. The company, introduced by Rocket Internet in 2012, has a presence in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. Lazada hosts more than 155,000 local and international sellers, as well as 3,000 brands. Its recent acquisition by Alibaba has cemented its position, playing a key role in Alibaba’s development in Southeast Asia.

ShopeeShopee is a peer-to-peer online marketplace that allows individuals to easily upload products for sale using mobile phones. For now, Shopee does not charge listing fees or commission from transactions. In ‘mobile-first’ countries, Shopee is a primarily mobile platform, with a presence in Singapore, the Philippines, Malaysia, Thailand, Indonesia, Vietnam, as well as in Taiwan.

11 Street11 Street is an open marketplace operated by Celcom Planet Sdn. Bhd. – a joint venture between Celcom Axiata Bhd. and SK Planet Ltd. 11 Street is a horizontal e-marketplace with product assortments spanning fashion, to health and beauty, to baby and toys, to mobile, IT and camera, to home electronics and accessories. The platform allows three types of sellers: individual, business and global. By filling in a business registration form and providing bank account and supporting documents, such as business registration certificates, buyers can start selling on 11 Street.

All IT Online – This online platform is part of ALL IT Hypermarket, offering portable hard drives, USB mice, power banks, power sockets, Bluetooth headsets, mini mobile dual-stick controllers, DVD writers, wireless speakers, activity trackers, and flash drives, among others. It currently only provides shipping within Malaysia, with delivery to Peninsular Malaysia taking three to five working days and East Malaysia taking five to seven working days. Alternatively, buyers can choose to collect their purchases at its physical stores at Low Yat Plaza, Digital Mall and IOI City Mall.

ipmart.com.my – Product categories include phone and tablet accessories, notebooks and PC accessories, projectors, printers, cameras, and gaming. The online portal is managed and operated by MY Social Network Sdn Bhd. With offices in Shenzhen, Guangzhou, Zhuhai, Hong Kong, Malaysia and the US, the portal source products from suppliers, including manufacturers and authorised distributors in the region.

Lelong.my – The online marketplace hosts about 7,000 sellers, including both local and international offline retailers and online merchants.

JIBJIB computer group is a specialised computer and IT products department store in Thailand. It operates an online shopping site for electronic gadgets, carrying brands like Samsung, ViewSonic, Acer, Asus and others.

OricoOrico is an online electronics store in Thailand, selling a wide range of accessories like portable hard drives, USB power banks and cables.

Munkong Gadget – With its own e-commerce platform, Munkong Gadget is a specialised audio gadgets and accessories chain store in Thailand. Products include earphones, loudspeakers, custom headphones, earphone cables, and other gadgets.

InvadeIT InvadeIT is an electronics marketplace offering attractive prices, good customer service and quick delivery. Its product categories range from laptops, tablets and smartphones to computer hardware, peripherals, printers and scanners, as well as general electronic items and accessories.

Blibli – Established in 2011, Blibli.com was one of the leading e-commerce companies in Indonesia, offering diversified products categories, including a wide variety of electronics and gadgets.

JD.id – A diversified online portal, JD.id provides a wide variety of IT gadgets. Launched in 2015, it is a subsidiary of the Chinese e-commerce company, JD.com.

Elevenia – An online marketplace hosting more than 30,000 sellers with diverse products, including home appliances, computers and gadgets. Brands include Sony, SanDisk, Oppo, Lenovo and others.

BhinnekaBhinneka is a store chain specialised in home appliances, electronic gadgets and accessories. It also has an online shopping platform.

Tokopedia – Launched in 2009, Tokopedia is one of the biggest online marketplaces in Indonesia. It allows individual sellers to open and maintain an online store for free.

Bukalapak – Founded in 2010, Bukalapak is another leading marketplace in Indonesia, with about 3 million online merchants selling on the platform. The company also works with kiosk store owners as agents who earn commission by helping customers to place orders on Bukalapak.

Selling on Online Marketplaces

Lazada

Lazada is the key B2C e-commerce market player in the region. A seller who wishes to list on the marketplace must submit valid documentary proof of authorised distributorship. Lazada’s online merchants do not have to pay listing fees, instead they pay a commission (with the rate based on the product category) only when the product sells. All sellers get paid on a bi-weekly basis. The marketplace monitors product information provided by the sellers to ensure that all items comply with laws and regulations, and to combat counterfeit merchandise.

Lazada gives sellers the wide range of backend selling platform, business management, and distribution tools. It also runs a cross-border logistic programme for all sellers. Sellers only need to stick the label on the parcel and deliver to one of Lazada’s sorting centres in Asia (Hong Kong, Shenzhen, and Korea), then the company’s cross-border logistic team will take care of the rest, which includes export and import documentation, custom clearance and last-mile delivery.

Cross-border delivery takes three days, but if the product is already in the local warehouse, it will only take one day. A shipment pre-alert is often sent to customs several days prior to the expected arrival date. This notice allows customs officials time to prepare for the arrival. Lazada offers multiple payment methods: cash on delivery, credit/debit card, Lazada Wallet, PayPal/AMEX, as well as an instalment payment plan.[4]

At the time of writing this report, Lazada’s sign-up for new cross-border sellers is suspended temporarily, while local sellers can still sign up. If a Hong Kong seller with local operations in any of those ASEAN nations and all the required legal documents can sign up as a local seller.

Shopee

Shopee is a fast-growing online shopping platform in the region. It is simple to register on the platform – just open the Shopee app, take a picture of the product for sale, write a short description, set a price, and then upload the picture and the product will be listed on Shopee. The simple steps to upload and sell products is one of the reasons Shopee became popular quickly after its launch in 2005.

The platform focuses on small businesses and budding retail entrepreneurs. It also accepts cross-border sellers from Mainland China and Hong Kong. Sellers can organise their inventory and measure their online store’s performance with Shopee’s Seller Assistant feature which is accessible on a mobile phone. The platform provides an in-app chat function that allows potential customers to communicate with the sellers about the product and make transactions directly. This is a very popular feature, as many consumers prefer contacting the sellers directly so that they can negotiate the price and learn more about the product.

Anyone can sign up on Shopee, while all the listed products will be vetted through its content team to ensure that the merchandise are not illegal. Since almost anyone can start selling on Shopee, sellers are bound to face a large number of competitors who may be selling the same product. For the same reason, customers are bound to be more careful about the sellers on Shopee. Shoppers can look at reviews, ratings and whether they are from Shopee Mall (managed sellers) or Preferred sellers (who meet certain criteria).

According to Shopee, successful sellers are those who proactively study the local market trends and select the right products with competitive pricing. Good customer service when handling in-app chats with buyers is also crucial. Customer reviews and ratings are effective ways for customers to know if a seller is trustworthy.

Social Commerce

In addition to a frictionless checkout experience, search-engine optimisation and marketing, sales opportunities arising from social networking platforms have become more apparent in key ASEAN countries. Nowadays, people spend much of their time on social networks built around their interests and relationships. As a result, the shopping process is shifting from one driven largely by the goal of finding an item, to one that is more based on discovering things within consumers’ social lives and circle of friends.

The high mobile phone penetration in ASEAN, the fact that the ASEAN consumer are reluctant to provide their financial and personal information online, and less than 30% of the population (except Malaysia and Singapore) using either debit or credit cards to make payments[5], are success factors for selling via social networks in the region. In Thailand, a clear majority of online shoppers make purchases through social media.

In social commerce, an order is usually made online while the payment is done offline. Merchants set up ‘shops’ on Facebook or Instagram and post images and details of goods for sale. Shoppers browse and inquire about product availability and arrange a method of payment, sometimes through a popular chat app such as LINE in Thailand.

Social media is an ideal selling platform for electronic accessories and IT gadgets, as buyers can share their user experiences. User comments are of paramount importance on purchase decisions as nowadays people trust such opinions more than advertising.

Among all social media, Facebook and Instagram reign supreme as the most effective platforms, with links to shoppable content to allow users to smoothly transition from browsing to buying. Social commerce presents a great opportunity for small suppliers or non-brands to test the consumer markets in ASEAN without too much financial commitment.


[1] PromptPay is an interbank mobile payments system launched in Thailand in January 2017. PromptPay is one of the initiatives under the Thai government’s National E-payment initiative.

[2] www.ecommerceiq.asia

[3] Bain Report “Can Southeast Asia Live Up to Its E-commerce Potential?” 2016 Bain & Company

[4] For more details on each payment method, please refer to Lazada – Payments

[5] World Bank, The Little Data Book on Financial Inclusion 2018

Please click here to download the full research report.

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Asean

Assessing the economic impacts of COVID-19 on ASEAN countries

All ASEAN countries are dependent on tourism flows but Thailand is probably the most dependent.

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Author: Jayant Menon, ISEAS–Yusof Ishak Institute

The COVID-19 pandemic is first and foremost a human tragedy. Measures introduced to deal with the pandemic could save lives but are having wide-ranging economic effects and inducing economic contagion.

There are already studies estimating the economic impact of the virus. But greater focus is needed on the transmission mechanisms of the economic contagion and in critiquing how assessments of the economic impacts are made, concentrating on the ASEAN region.

The effects of COVID-19 are hitting ASEAN economies at a time when other risk factors, such as a global growth slowdown, were already rising.

COVID-19 is disrupting tourism and travel, supply chains and labour supply

Uncertainty is driving negative sentiment. This all affects trade, investment and output, which in turn affects growth. Tourism and business travel, as well as related industries, especially airlines and hotels, were the first to be affected. And the conditions are worsening as more countries go into shutdown.

The supply disruptions emanating mostly from China will reverberate throughout the value chain and disrupt production. Since China is the regional hub and accounts for 12 per cent of global trade in parts and components, the cost of the disruption in the short run will be high.

The negative effects of quarantine arrangements on labour supply could also be high depending on duration and sector. Manufacturing has been hit harder than service industries, where telecommuting and other technological aids limit the fall in productivity.

All these disruptions will lead to sharp declines in domestic demand. And their impact on economic growth will further propagate these disruptions. This compounding effect can magnify and extend short-run effects into the long run.

The highest economic cost could come from the intangibles

The effects of negative sentiment about growth and general uncertainty — which is already affecting financial markets — will feed into reduced investment, consumption and growth in the long run.

Rolling recessions around the world now appear inevitable, despite the stimulus measures being contemplated. If so, there will be sharp increases in unemployment and poverty. Some degree of decoupling from China, or de-globalisation in general, may also be a permanent reminder of this pandemic.

Among ASEAN countries, Singapore, Malaysia and Thailand are heavily integrated in regional supply chains and will be the most affected by a reduction in demand for the goods produced within them. Indonesia and the Philippines have been increasing supply chain engagement and will also not be immune.

Vietnam is the only new ASEAN member integrated into supply chains with China and is already suffering severe supply disruptions.

Given time, supply-side adjustments will alter trade and investment patterns. The main adjustment will involve relocating certain activities along the supply chain from China to ASEAN countries. Although the pandemic will disrupt the relocation phase, ASEAN countries can benefit from the new investments, mitigating overall negative impacts.

Thailand is probably the most tourism dependent Asean country

All ASEAN countries are dependent on tourism flows but Thailand is probably the most dependent. Cambodia and Laos receive most of their investment and aid from China, and a marked growth slowdown in China will affect them the most.

The Philippines and Mekong countries have large overseas foreign worker populations and restrictions on their movement or employment prospects as COVID-19 spreads will affect sending and receiving countries. Brunei and Malaysia are net oil exporters and the price war indirectly induced by the pandemic will hit them hard. Others will benefit from lower oil prices, as will the struggling transport sector.

In measuring the impacts of COVID-19, it is important to separate its marginal impact from observed outcomes. This is important because the remedy may vary depending on the cause of the disruption. This requires an analytical framework that can measure deviations from a baseline scenario that incorporates pre-existing trends. A model-based analysis, rather than casual empiricism, is required to reduce the problem.

Even before the outbreak, risks of a global growth slowdown were rising

The restructuring of regional supply chains had started, driven initially by rising wages in China and accelerated by the US–China trade war. While COVID-19 may further hasten the pace and extent of the restructuring, it is only partly responsible for what may happen. It would be misleading to attribute all of the current disruption to COVID-19. Had the trade war not preceded it, COVID-19 may have resulted in greater disruption to supply chains.

Any assessment of impacts must recognise that the spread of COVID-19 is unpredictable, and so too the response by governments. It is difficult to estimate the impacts of a shock that is uncertain in itself. This reiterates the need for rigorous modelling and scenario analyses. The current trend points to risks rising, often accelerating, as with previous epidemics. This uncertainty underscores the need for caution in assessing, and regular recalibration in producing assessments.

Jayant Menon is a Visiting Senior Fellow in the Regional Economic Studies Programme at the ISEAS–Yusof Ishak Institute, Singapore.

A version of this article first appeared in ISEAS Commentary.

This article is part of an EAF special feature series on the novel coronavirus crisis and its impact.

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Asean

Coronavirus’ economic impact in East and Southeast Asia

The ASEAN+3 Macroeconomic Research Office (AMRO) estimates that the COVID-19 epidemic could deduct as much as half a percentage point from the economic growth of some regional economies in 2020.

East Asia Forum

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As the number of coronavirus cases continues to rise around the world, there are deep concerns over the potential economic impact of the virus.

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Asean

Trade War Incentive Schemes flourishing in ASEAN

Countries such as Thailand, the Philippines, Malaysia, and Indonesia have unveiled an array of incentive packages to entice businesses affected by the US-China trade war.

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Governments across ASEAN have been unveiling an array of incentive packages to entice businesses affected by the US-China trade war.

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