3 tips for reaching consumers in Southeast Asia

It’s mind-boggling that the already massive Southeast Asian ecommerce industry is still growing at an exponential rate. Google and Temasek analysts forecast that the region’s business-to-consumer market will hit US$88 billion by 2025.

According to Nguyen Quang Thuat, senior logistics director of Vietnamese consumer-to-consumer ecommerce platform Sendo and director of SenMall, the company’s B2C marketplace, the prime movers of the region’s ecommerce potential are the shifting power dynamics between corporations and consumers in the region.

Nguyen Quang Thuat, senior logistics director Sendo and director of SenMall / Photo credit: Sendo

Southeast Asian consumers are young and increasingly affluent, living in a region where big-box retail is scarce. Most importantly, they’re more online than any other generation that came before: Nguyen cites Google research that estimates around 3.8 million new users coming online each month, making Southeast Asia the “world’s hottest online battleground,” he says.

Southeast Asian businesses can’t afford to sleep on these potential huge wins, and they have to make serious pivots and major bets to reach the region’s diverse, future-first consumers. Here’s how they can do it.

1. Recognize that mobile is king

If there’s one thing that unites the disparate markets of Malaysia, Thailand, and Vietnam, it’s that consumers in these countries are young, increasingly urban, and connected – and they’re spending 10% more time on the mobile internet than shoppers anywhere else.

Many of these shoppers in their “prime spending years” are “leapfrogging desktop PCs altogether.” Nguyen diagnoses their mobile-first attitudes as responses to poor access to brick-and-mortar stores, especially for those in second- and third-tier cities where choices are limited.

This is why it’s important that ecommerce businesses actively ensure their mobile shopping experiences are both “simple and delightful.” A 2016 Google white paper suggests that focusing on customer usability is more useful than eye-catching marketing gloss.

Businesses like Thai fashion e-retailer Hamburger Studio that are seeing significant success in Southeast Asia build powerful and user-friendly apps, which record immense annual growth through a massive push of their mobile commerce platforms. FrieslandCampina, a European dairy cooperative, zooms in on Vietnamese consumers’ love for mobile videos through an effective mobile-first marketing campaign to boost its share of the milk formula market by 1.5%.

2. Master the complexities of logistics

Online retailers looking to connect with ecommerce shoppers in the region would also do well to address the problem of last-mile delivery.

The region is plagued by long delivery delays due to dense traffic, poor motorways, and inefficient city planning, which is why managing last-mile logistics requires expert collaboration, according to Kiattichai Pitpreecha, managing director of DHL eCommerce Solutions in Southeast Asia.

“It is no longer just about transportation,” he adds. “In order to remain competitive, companies need to optimize their inventory and work with the right logistics partners to ensure their customers get the right items delivered to the right places in the shortest amount of time.”

It’s a problem that cuts across countries. Urbanization and the growth of city centers are creating new opportunities for ecommerce, but they’re also leaving logistics fundamentals unsolved, even as the demand for the fast delivery of goods is rising everywhere.

Photo credit: DHL eCommerce Solutions

According to a survey by Sendo, the cost, timing, and quality of delivery services are make-or-break, with as many as 66% of ecommerce shoppers saying it was of high importance and could strongly differentiate a business from its competitors, especially as online retailers look to expand their market share.

A DHL and Euromonitor whitepaper found that in increasingly urban countries – such as those in Malaysia, Thailand, and Vietnam – infrastructure growth is failing to keep pace with digital tech and logistics strategies, so local and flexible strategies are helping ecommerce companies adapt to changing markets and players.

In September 2018, Sendo partnered with DHL to bridge that last-mile delivery gap. The idea was to help some 300,000 small and medium-sized enterprises introduce same-day or next-day delivery services for Vietnamese consumers in and around major urban areas, as well as create flexible pick-up and drop-off options for small businesses to overcome the complexities of rural logistics.

3. Introduce flexible payment options

Another limitation that ecommerce businesses grapple with is the relatively poor access to financial services among shoppers in Southeast Asia, where cash still rules the day. According to Nguyen, despite the rapid growth of the middle class in the region (due to reach 400 million in 2020), most consumers struggle to access credit facilities and banking services, especially in rural areas, where ecommerce can arguably make the most inroads.

He cites the lack of banking infrastructure as a contributing factor, as poor access to ATMs, credit cards, and debit cards has boosted the dominance of “mobile commerce” options such as digital wallets and bank transfer apps.

Such deficiencies, however, don’t mean that ecommerce can’t offer any solutions. In fact, ecommerce businesses are well-positioned to leverage multichannel payment solutions to capture otherwise hard-to-reach consumers. Flexible and easy payment options are becoming more widely available as more fintech companies further unbundle financial services, such as ecommerce platform Qoo10’s mobile wallet.

For primarily cash-based consumers and vendors, many cash-on-delivery options are available. For instance, DHL’s partnership with Sendo includes a cash-based option for small and medium-sized enterprises to reach their predominantly cash-based consumers and receive next-day remittance.

What unifies these three tips is a focus on the creation of options and seamless experiences for not just consumers but vendors as well. Digital technologies today can evolve quickly and present various options to solve the challenges posed by Southeast Asia’s unique consumer bases.

“Go big to seize the opportunities,” says Nguyen. “It’s no longer a game of ‘wait and see,’ no longer a time for experimentation, no longer a market for small bets. It is critical to think through the dimensions of the digital ecosystem to seize opportunities and not be left behind.”

DHL eCommerce Solutions connects sellers and buyers around the globe by providing end-to-end ecommerce logistics solutions for cross-border delivery, fulfillment, and domestic delivery.

Learn more about DHL eCommerce Solutions at its website.