E-commerce opportunities in South East Asia

E-commerce opportunities in South East Asia

26 September 2018

Craig Armstrong / Customer Director, Auckland More articles from Craig Armstrong

E-commerce can help New Zealand overcome its two greatest barriers: distance from markets and scaling for export.  E-tailers can trade in international markets without necessarily needing to establish a bricks-and-mortar presence.

The e-commerce market in South East Asia (Viet Nam, Thailand, Singapore, Philippines, Myanmar, Malaysia, Lao, Indonesia, Cambodia, Brunei) is thriving, driven by a large population, rapid economic growth, and world-leading e-commerce practices. In 2017, in the online grocery category alone, e-commerce sales grew by 69 percent in Viet Nam, 88 percent in Malaysia, and 104 percent in Thailand.

This creates exciting opportunities if you are looking to start or grow online sales, however, as ever, there are important factors to consider before jumping in.

A new report published by Kantar TNS, in partnership with New Zealand Trade and Enterprise, provides a snapshot of the e-commerce landscape in South East Asia, differences between markets, distributor relationships, and opportunities and challenges for New Zealand. Kantar TNS used interviews with several New Zealand businesses and NZTE Business Development Managers working in the region, together with a range of research it has done in the region, to inform its findings.

Some key themes:

Build your brand. Brand is key. Unknown products are likely to be ignored. They are also less likely to be trusted. Feedback from distributors in East Asia is that New Zealand companies don’t do enough brand-building. As one distributor quoted in the report says: “New Zealand companies need to better understand that marketing and PR here are huge, and to have a space you need to invest to establish a connection. New Zealand companies seem to expect the distributor to do that investment and work…but it’s not our brand it’s yours, so you have to work together”. Social media and other digital channels are a great tool for building awareness and loyalty among potential customers, for example by offering free trials.

Get social. Westerners tend to trust institutions and mistrust social media, but in South East Asia it can be the opposite. For example, 61 per cent of Indonesian consumers trust the information they consume on social media. These attitudes are driving social commerce (a form of e-commerce that uses social media to sell products). Social media is not just a tool for capturing recommendations and generating PR, it’s also a way to supply goods, exchange ideas with consumers, and talk to investors, service teams and employees. Being on one platform is not enough; Facebook, Twitter, Pinterest, YouTube, blogs, chat communities, Email, Google, Amazon and Alibaba all need to be considered. Social media users are highly mobile-centric, so a ‘mobile first’ strategy will help to reach these people.

Use recognised and trusted payment systems. Trust in sellers tends to be low.  In some markets, cash on delivery is big, as many people aren’t in the banking system or don’t trust credit.  For example, in Viet Nam, ATM network outages and high-profile embezzlement's have tarnished the banking system’s reputation. In Thailand, there have been well publicised cases where money was wired then the website disappeared.

Tailor your approach to each market. East Asia is not a monocultural society. Consumers and their lifestyles vary between and within markets, driven by family structure, access to technology, spending power, education, transport options, media exposure and other factors. There are also valuable underserved niches, such as Halal-approved products and the grey dollar. Each market has advantages and disadvantages. For example, in developing markets, out-of-stocks can be common, and keeping products frozen can be a real challenge alongside leakage and transit damage. Traffic congestion in mega-cities can make a huge difference to last-mile delivery. In developed markets, complaints about non-envirofriendly packaging are increasing.

Get ready for New Retail. Smart mirrors with AI shopping assistants that provide info and recommendations, smart shelves with interactive wall screens, and smart lockers that shoppers install outside their doors for package and food deliveries are all part of the future vision of retail, where offline merges with online.

Download Succeeding online in South East Asian markets below or the full report from the Kantar TNS website here.

Succeeding online in South East Asia presentation