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Prospects bright for e-commerce in SE Asia

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Tahir Rahman examined the camera lens, took testshots and even opened his laptop to check the images, unmindful of the rush-hour crowd at Kuala Lumpur's central transport hub.

"This is the first time I bought something online so I have to be extra careful," the 25-year-old commercial photographer said as he took out a wad of cash to pay the seller he only met from an online photography shop.

"I heard warnings about con artists on the Internet. I just want to make sure I get what I paid for," he added. "It was a good deal."

Like Rahman, millions of Southeast Asian Internet users are gingerlydipping their hands into e-commerce for the convenience, wide choices and competitive prices, despite security and fraud worries.

Bangkok-based UBS Securities (Thailand) said e-business is thriving in the 10-country Association of South-East Asian Nations "despite low credit card penetration, inefficient supply chains, inhibitive customs and tax regulation and embryonic Internet penetration."

UBS predicts Internet users in Asean will rise to 294 million in the next three years, from the current estimate of 199 million. The majority of traffic would come from mobile devices with the rollout of 3G and more affordable models.

Asean groups Brunei, Cambodia, Laos, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

"We estimate B2C [business-to-consumer] e-commerce currently grosses only US$0.5-1.1 billion [0.2 per cent of retail sales], but could increase at least fivefold by 2020, with opportunity set as high as $35 billion [Bt1.1 trillion]," a UBS study released in August said.

"Inclusion of all e-commerce channels could multiply the overall market size."

Thailand and the Philippines have the highest growth in the region, while we think Indonesia has the most potential," it added.

UBS said the upcoming implementation of the Asean Economic Community (AEC) next year could provide impetus for the rise of e-commerce.

"The AEC initiative could be an additional boon for online retailing: while trade tariffs are essentially zero within Asean, additional legislation aims to create a national single window to support efficient and electronic customs clearance, policies to support cross-border transportation, and liberalisation to encourage a more competitive logistics industry," it said.

Frost and Sullivan, a global consulting firm, said Southeast Asia will be one of the world's fastest-growing markets for e-commerce revenues in 2014.

"Per capita income is rising in Southeast Asia and more consumers are using the Internet through PCs, smartphones and tablets," information technology executive Marc Einstein said.

"There is no dominant player in the regional market but foreign companies such as Amazon, Rakuten and Alibaba are all expanding in the region and there are several strong domestic companies, hence the region is very competitive despite its infancy," he said.

But Einstein noted several factors holding back growth of e-commercein the region, such as low credit card ownership and lack of bank accounts.

"Internet fraud is also very high in some countries such as Indonesia, which further discourages e-commerce use," he said.

Sift Science, an online fraud-fighting service provider, listed Malaysia, the Philippines, Indonesia and Singapore as among the countries in the region with the highest incidences of online fraud.

But Pia Regencia, a call centre agent in Manila’s suburban Quezon City who also sells homemade pastries and bric-a-brac via Facebook, said her number of customers has grown through referrals and word of mouth despite apprehensions of fraud.

"Most of my customers still pay me in cash when I deliver the goods,"she said. "Others pay through money transfers so there is no need for them to give me their credit card details."

Regencia, a mother of three, said online selling has fewer overhead expenses and provides flexibility for her home-based business.

"It was actually my sister who gave me the idea of online selling," she said. "She was buying toys, electronic gadgets and other things online and got really good deals. The most expensive item she bought was a laptop for $2,500, and she didn't encounter any troubles."

CyberSecurity Malaysia, the government agency that studies and promotes ways to make cyberspace secure, said doing business online is safe as long as users take the necessary precautions.

"Before providing any personal or financial information, make sure that you are interacting with a reputable merchant," chief executive officer Amirudin Abdul Wahab said.

Customers should not use public computers or public wireless when conducting online shopping and other business transactions, such as paying bills, according to Wahab.

His agency has launched a programme to audit and validate websites to promote confidence.

"We assess and certify e-commerce entities and provide Internet users a way of identifying e-commerce that is legitimate and will deliver as promised," he said.

About Editorial Team

Editorial Team

The SupplyChains Magazine editorial team takes great pride in bringing you the best information to help you succeed in your supply chain, logistics or procurement functions. Together, our editors and contributors have more than 50 years of supply chain industry knowledge to share with you.

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