Ecommerce a huge opportunity for ASEAN nations but PH may top them all

MANILA, Philippines – Electronic commerce (Ecommerce) could transform ASEAN economies and bring about more equitable growth, with the Philippines potentially serving as its biggest beneficiary.

“Ecommerce is the biggest opportunity for Southeast Asia this decade,”said Inanc Balci, CEO of the country’s largest such platform Lazada at the 2017 Prosperity For All Summit held on April 28.

Besides the Philippines, the Lazada online marketplace also operates across the region in Singapore, Indonesia, Malaysia, Thailand, and Vietnam.

A lot of the focus of this various meetings this week held as part of the ASEAN Summit 2017 focused on harnessing the potential of innovation to help spread the wealth more evenly.

Some of the discussion topics took on ecommerce as a platform, which allows small-scale entrepreneurs to sell their goods across the country and also globally without the need for much capital.

The platform is also arguably the most established of the digital ‘disruptors’ which have caught on tremendously in developed countries, as seen by Chinese ecommerce giant Alibaba edging traditional retailer Walmart to become the world’s largest retailer by merchandise volume last year.

BLUE OCEAN. Results from a 2016 report by Google and Singapore investment firm Temasek.

BLUE OCEAN. Results from a 2016 report by Google and Singapore investment firm Temasek.

 

Ingredients in place

While well-established in the mature economies, ecommerce is also rapidly catching on in the developing world. Balci sees the potential of ecommerce in the Philippines as eclipsing other countries' development through ecommerce.

“My goal is to make the Philippines number one in the world in terms of ecommerce penetration. I think this is achievable because the country used to have the largest SMS penetration in the world before smartphones and it is now number one in terms of Facebook penetration with 57 million accounts,” Balci pointed out.

Filipinos also lead the world globally in terms of amount of time spent on social media, spending an average of 4 hours and 17 minutes a day on social platforms, according to a 2017 report by social media management platform Hootsuite and social media consultants We Are Social Ltd.

What’s more, smartphone penetration is on a steep rise in the country at a rate of 117%, with total mobile subscriptions at 119 million last year. The rise has been so steep that market research firm IDC deemed the country the world’s fastest growing smartphone market in Q1 2016.

The rise of smartphones bodes well for the future of ecommerce in a country where not everyone can afford laptops. Ecommerce can be done using affordable Android smartphones, Balci pointed out.

So integrated has this been to Lazada Philippines' expansion that Balci now refers to the company as an Mcommerce site with the ‘M’ standing for mobile. He estimated about 60% of sales on its platform are done through mobile.

By Balci's own estimates, however, the percentage of online retail sales in the country hovers at around 1 -2% of the total retail market presently.

Much of this, he explained, is down to the twin challenges of reliable logistics suited for ecommerce and the low penetration rate of credit cards in the country.

That may change, however, as the country’s two largest retailers are beginning to make investments into the field.

The SM group, the country’s largest conglomerate which already explored ecommerce in the past, has formally entered logistics through a 34.5% stake in the country’s largest logistics firm: the 2GO group.

Its retail rival the Ayala group, on the other hand, made an even more direct play by taking a 49% stake in online fashion platform Zalora Philippines.

Ayala has also entered into a joint venture with Ant Financial, the world’s largest digital payments firm, in a move seen to spur the growth of digital payments in the country.

Even the global big-hitters it seems are taking notice of the potential in the region with the Alibaba Group taking control of all the ASEAN Lazadas in a deal worth $1 billion last year. – Rappler.com