One year after entering Singapore, Shopify remains bullish toward Southeast Asia’s ecommerce industry

Southeast Asia’s ecommerce industry remains nascent compared that of other parts of the world. A recent study by research firm UBS found that only 0.2 percent of total retail sales in Southeast Asia took place online, while China clocked in at eight percent.

The relative newness of ecommerce in the region leaves a wide open space for ambitious startups and corporations. Rocket Internet has built a ecommerce mini-empire in Southeast Asia with its flagship Zalora and Lazada marketplaces. Elsewhere, lo-fi consumer-to-consumer marketplaces like OLX in the Philippines and Indonesia thrive.

Yet as one observes the ecommerce industry in the US and sees the growth of trendy sites like Etsy and Fab, it’s tempting to wonder – will ecommerce in Southeast Asia leapfrog the messy marketplaces and go straight to the shiny stuff?

Shopify, along with the aforementioned companies, represents the new wave of ecommerce that’s growing popular in North America. It originated in 2006 as a template builder for small businesses that wanted their own online real estate – away from the clutter and noise of Amazon and eBay. But it has since evolved to become an “operating system for ecommerce.” Using Shopify, merchants can manage their own standalone ecommerce site not unlike how a writer uses WordPress to manage a blog.

Shopify officially entered Southeast Asia in Summer 2013 through a partnership with Singapore telco SingTel. The company believes it’s not too early to for the region’s vendors to embrace standalone online stores. One year after it formed the partnership, Shopify tells Tech in Asia it has accumulated 1,000 paying Singaporean vendors as customers, along with more than 250 paying vendors in Malaysia. Its vendor-customers in Southeast Asia are on track to generate a total of US$14 million in gross merchandise volume (GMV).

Shopify CEO Harley Finkelstein tells Tech in Asia he’s “incredibly bullish” toward’s the company’s future in the region, attributing its local traction to SingTel’s knowhow.

“The partnership is 14 months old now, and we’re really happy with it,” says Finkelstein. “SingTel is helping us on the ground with marketing and support. We would have been able to do this ourselves, it just would have taken more time.”

See: Ahead of Rocket Internet’s IPO, here are the numbers on its Southeast Asian stores

Shopify has no actual office in Singapore, but Finkelstein says that SingTel has allotted a small team of employees to work on marketing and business development. Local vendors who open up a store on Shopify can use local logistics provider Rocket Uncle and the SEA-facing Aramax to ship goods. Options for order fulfillment include Singapore’s Trade Gecko and Hong Kong’s AfterShip. As for payments, it’s PayPal or bust, though this might not be an issue for orders made through businesses that also have brick-and-mortar storefronts.

Shopify tells Tech in Asia that it has no immediate plans to expand into other parts of Southeast Asia. Instead, it intends to focus on Singapore and Malaysia. This differs from the trans-regional focus of Rocket Internet’s ecommerce groups, along with those under the Ardent Capital umbrella. Both of those companies operate as pseudo-holding companies that build and launch ecommerce related startups, with Rocket specializing in online marketplaces while Ardent zeroes in on back-end fulfillment. Ardent co-founder Paul Srivokal tells Tech in Asia that a regional preference for the marketplace model could pose obstacles for companies like Shopify in other parts of Southeast Asia.

“Brands and SMEs do not have market budgets to invest into driving traffic to single-brand sites like those on Shopify,” he says. “Most companies will use Shopify to test and trial ecommerce, but will soon realize its hard to drive traffic and conversions.”

But Finkelstein believes that Shopify will attract vendors due to what he considers fundamental flaws in the marketplace model. “Marketplaces are a really good place when you’re just getting started. But those marketplaces aren’t a great place to build a real business. The reason they chose to sell on those marketplaces was because they had distribution. But now they want to own the customer experience themselves, and they want to own the profit margin themselves.”

“Consumers will go on Amazon or eBay or a marketplace if they want to buy toilet paper. But if they want to buy a cool guitar or a cool bracelet, they want to buy from the person that actually makes that guitar or bracelet,” he adds.