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E-commerce

The Most Underrated Difficulty in Southeast Asian E-Commerce Market

Marketplace management software companies are in a great position to ride the e-commerce wave
The Most Underrated Difficulty in Southeast Asian E-Commerce Market
Image credit: Pixabay
Founder, PawedIn
3 min read
Opinions expressed by Entrepreneur contributors are their own.

 

Between now and 2025, e-commerce in Southeast Asia is expected to grow eightfold and hit $102 billion in sales. Despite the enormous growth potential, the region is extremely difficult for brands to tackle due to its fragmentation across the 10 ASEAN countries.

On top of regulatory differences, unique languages and geographical difficulties, the most underrated challenge for brands, who want to win online face in Southeast Asia, is marketplace management. Marketplace management is the dynamic management of inventory, prices, order processing and shipping across multiple e-commerce platforms.

Hurdles ahead

This is a real challenge in the region because of the multitude of e-commerce platforms attracting significant traffic month over month. For example, in Indonesia (according to Similar Web), five different e-commerce platforms rank in the top 50 of total online monthly traffic, including Tokopedia (37.6 million), Bukalapak (27 million), Shopee (15.3 million), Blibli (11.6 million) and Lazada (7.9 million).

Malaysia’s breakdown looks like this: Lazada (12.6 million), Shopee (11.1 million), 11street (4.4 million) and Mudah (3.6 million). In the United States, the e-commerce marketplace is much less fragmented. Here is a breakdown of the three horizontal e-commerce marketplaces in the top 50 of total traffic in the country: Amazon (1,500 million), Walmart (166.5 million) and Target (88.6 million).

Finding solutions

This articulates the relative uniqueness of this challenge to Southeast Asia; however, it does not mean that it’s not a challenge worth fighting. According to Alex Rankin, Group CRO at aCommerce, for brands in 2019, having this complexity and attempting to execute across multiple online channels and markets is no easy task. It’s just the stakes are too high to not be able to do it right.

As a result, many smart entrepreneurs are building companies to tackle this problem, including SingPost, Hashmicro, SelluSeller (product of Anchanto), CombineSell, SiteGiant, webShaper and Red Dino. The value proposition provided by these companies is a single platform for multichannel marketplace management. This saves time, money, efforts and resources.

However, Anchanto founder Vaibhav Dabhade describes the opportunity as much larger than providing a platform to handle the operational aspect of listing products across marketplaces. It’s about the data that ultimately leads to better decision-making for businesses. He believes that brands want to have real-time access to sales promotion data when operating an online multi-channel selling
model because having this data and visibility enables them to change model and partners swiftly if required.

With 78 per cent of ASEAN small-and medium-sized businesses (SMEs) planning to invest in software between now and the end of 2019, and four million Internet users coming online each month across the region, marketplace management software companies are in a great position to ride the e-commerce wave.

That is why these companies have captured the eyes and wallets of venture capitalists. Innosight Ventures, MDI Ventures and Cocoon Capital all have exposure in this segment of the e-commerce value-chain in Southeast Asia.

As e-commerce continues to grow in the region more challenges will arise because of the uniqueness of Southeast Asia. But there is no doubt innovative solutions will be brought to the table by the region’s growing base of talented entrepreneurs.

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