Build up your partnerships and localise as much as possible if you’re opening up an e-commerce company in the region, says Lim
If you are an entrepreneur looking to build the next Alibaba or JD.com in Southeast Asia, you will first need to localise and make the right partnerships, said Alan Lim, Founder and CEO, E-services Group.
Lim’s business uses technology to connect customers to the products that they might want, and also runs a logistics network that serves e-commerce clients in 70 countries.
“There is nothing professional in Southeast Asia, it’s all personal,” he says. “It’s all very buddy-buddy.”
“You can’t just throw money at them (users). That will [only] get you to 50 per cent of the end-game,” he adds.
Efforts to localise can mean anything from understanding what languages to support to having options for customers to pay cash on delivery.
While Uber might not be an e-commerce company per se, it’s still a good example for this particular point. We recently reported that the taxi ride-hailing company has started experimenting with cash payments in the Philippines, even though it might be known for only accepting credit card payments across the globe.
“Southeast Asia is very fragmented,” Lim continues, given that the region has many countries that speak different languages and use different currencies.
He also talks about how big players in the e-commerce landscape are still moving slowly in the region. A lot of these companies are more interested in dominating bigger markets such as India and China.
Amazon, for instance, announced in July 2015 that it would invest another US$5 billion in its operations in India, after already committing a US$2 billion investment earlier in 2014.
Southeast Asian startups must keep moving
But e-commerce is about agility, he says. The less competitive landscape in Southeast Asia, as compared to its South Asian or Northeast Asian neighbours, can be a good thing for young startups that might not have as much funding to compete with the bigger players.
This, however, does not mean that startups in Southeast Asia tackling the e-commerce field can rest or take a breather.
A lot of these companies have raised significant rounds of funding from Japanese or Korean venture capitalists and firms, and are leveraging on overseas networks to acquire more customers and generate more revenue.
Lim notes that e-commerce companies in Southeast Asia could either aim to be profitable — which is difficult — or compete aggressively while in the red to get acquired by a bigger company.
Talking about China, he says that 80 per cent of the world’s products can be traced to China, and 50 per cent of all e-commerce sellers in the market are exporting out of that country. Many of these products cannot be found locally in Southeast Asian countries. There is a great opportunity in connecting Chinese sellers with marketplaces in the region.
Of course, there is always the inevitable question: What about counterfeits? The Guardian recently reported that more than 40 per cent of goods sold online in China last year were fake or of bad quality. So, while marketplaces might rejoice at this opportunity, it might be better to tread carefully when it comes to Chinese products.
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