Many of our readers are probably not strangers to our musings on ezbuy, at one time one of the biggest cross-border ecommerce company in Singapore and Malaysia. Perhaps it is not too distant in memory that even for a major cross-border player, they still experience major hiccups in operations due to huge order volume and customs’ regulations.

While governments across Southeast Asia have begun to sign deals with Alibaba and appear to be opening up their doors for trade, the truth is, it will not be an overnight feat. Opportunities are huge, however most companies (unless well connected) have no choice but to play the wait and see game. Our view is that it could take years for laws to change in favour of cross-border players.

Changing shopping habits

Customers’ needs and wants have been evolving in Southeast Asia in the past years. Higher earning power is now affording them the luxury to not only travel, but enjoy finer things in life. As they clamour for the latest gadgets, handbags, and even snacks, entrepreneurs who saw potential in this trend began to capitalize on it. Enter Airfrov and Jetspree – both companies operate a platform that allows for people to request or sell items which are typically not available in local markets. The items are then hand-carried into the buyer’s market.

(To the left) Alexander Lê – an early Rocket Internet founder in SEA, he established himself as an expert in ecommerce and transportation. Jetspree is the latest venture he’s been involved in. (To the right) Cai Li – the CEO and cofounder of AirFrov.

Airfrov is founded in Singapore, funded to the tune of US$500,000 by East Ventures and angel investors. Malaysian-born Jetspree is funded but at an unknown amount, by angel backers who according to rumours are billionaires in Malaysia. So who’s your money on? 

Ripe market ready for the picking

We have identified some important factors that we believe led to the huge the window of opportunity for the current players in the market to capitalize on and grow their business. However, as the saying goes “You can lead a horse to water but you can’t make it drink”. While opportunities are there for the taking, it is finally up to the players to figure it out.

I) Insane amount of travellers coming in and out of Malaysia, Singapore and Southeast Asia

The introduction and continued success of budget carriers such as AirAsia has helped to fuel the surge of travellers out of and into Malaysia and Singapore. Infact in 2017 alone, a staggering 59 million travellers arrived in Kuala Lumpur airports, while the tiny nation-state of Singapore saw 62.2 million travellers.

Thailand, which also saw insane amount of travellers, thanks mostly to tourism have already helped make the founder of King Power Duty Free stores, Mr. Vichai Srivaddhanaprabha a billionaire in Thailand. There is no better “call-to-action” for shoppers other than having it cheaper than what you can get in the stores.

II) Traditional import and distribute model not able to keep up with consumer trends

Traditional players are slowly but surely dying. It has always worked like this: an enterprising person will import some goods in bulk to try and sell in the local market. Due to the fact that these items are imported in bigger volumes, the shipping price is usually negligible. It all works out to be a profitable venture if the enterprising person successfully sells everything.

Unfortunately, the market hardly works in a predictable manner these days. As consumer demand more variety, they also demand speed. Same day or same week delivery is expected. As Iphone X launches in Singapore, Malaysians over the other side are expecting to get it the very next day (even the same day if possible!).

Such is the demanding nature of shoppers these days, which traditional player simply cannot keep up with; when one take into account the time needed to bring products through the proper distribution and importation channels, and the cost of shipping through conventional means (i.e. air or sea freight which also demand huge quantities to be shipped to get better pricing).

III) Generous import allowance in Malaysia and Singapore

Singapore currently allows up approximately US$300 worth of items to be brought into the country duty-free, and Malaysia currently allows the same. By comparison, Thailand only allows up to approximately US$25. Such generous import allowance has created a boon for cross-border businesses or daigou who import on behalf of customers, and ezbuy is not the only player.

Policies such as this, and the availability of platforms such as Jetspree and Airfrov, has helped turn every passenger into a potential personal shopper or a mini-ezbuy.

Conclusion

We at Momentum Works contend that this is the space to watch, as the gig economy is picking up in Southeast Asia. It is no longer an unusual career to be driving for a ride-sharing company and selling insurance or real estate by the side. As travelling becomes ubiquitous for Southeast Asians, there will be those who just want to cover the cost of their holiday, or make some extra cash through such platforms.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.