Media these days are continuously touting the intrusion of Alibaba and Tencent into Southeast Asia. No doubt these guys are the biggest players in the region, having invested billions of dollars into numerous companies to expand their influence.
However, unlike China, cash payments and offline transactions still play a huge role in most Southeast Asian countries with probably the exception of Singapore. There are still big players classified as the untouchables – big mall groups such as Central Group (in Thailand) and SM (in Philippines) who are also trying to grow their online ventures. It is still quite early to decide the winners, as traditional players go head-to-head with these global internet behemoths and duke it out.
More products and uniformity do not (always) mean better
The argument for having millions of products, while making sense from a marketing standpoint, hardly improves the lives of the shoppers. What has been touted as the main attraction of shopping online for “variety”, has also plagued sellers and shoppers with the issue of “discoverability”. After all, a website’s homepage (or an app’s screen) can only fit a certain number of products, and the customer’s attention span does not go beyond browsing a few pages. As a result, adding more products to the website does not automatically result in increasing orders or customers.
Another sin which is clearly perpetuated by big malls these days would be the uniformity in offerings. Big mall operators expected users to conform to their offerings, without wanting to seek out unique offerings based on individuality. As it is becoming more and more evident, shoppers no longer do their shopping at the malls but rather, they visit the mall to catch a movie or a meal. Branded retailers are seeing less foot-traffic than a local designer boutique that sells a one-in-a-kind fashion top.
Boutique commerce rising
Noting the fact that the big boys cannot capture the free-spirited crowd, creators of niche product categories are beginning to cash in. They sell in flea markets, various online platforms, and increasingly on Facebook and Instagram. In Thailand, Facebook has launched a marketplace for sellers. Elsewhere in Southeast Asia, we see the rise of smaller purveyors such as Fashion Valet in Malaysia, or IUIGA in Singapore selling niche, high quality products.
No doubt, the market is still comparatively small but we believe this will eventually lead to more dynamic e-commerce scene where products which are not getting traction on the big players’ sites will see traction on a boutique store front only serving one or handful of niches. If you cannot imagine having your meal only in one restaurant every single day, then the same logic should apply to shopping. Unless of course, if you get discounts to go and eat at the restaurant.
Facebook and e-commerce
As mentioned above, Facebook recently launched marketplace for Thailand. No doubt, this will happen for many more countries sooner than we think, as they focus their resources to grow this lucrative segment. One may ask, how is it different than Shopee or Lazada’s marketplaces, or, Carousell if you think the latter is still relevant? For one, it still allows users to manage their own store front. In Thailand for example, it is not unusual to see a business completely run using Facebook, from ordering to customer service. While it may be seen as disorganized, users love to flock to certain pages to buy specific things that they love. Perhaps seeing this opportunity has led Facebook to launch Thailand ahead of many Southeast Asian countries.
Many startups (i.e. Rocket-invested Lyke in Indonesia) have tried meshing social and commerce, but not very successfully. No doubt that Facebook at least has the social part right. Commerce has always been something on the side, where users would grow their fan page and sell items by the side. It would be interesting to see what happens next as Facebook tries to decentralize shopping from major sites to more niche purveyors, using its platform. Just a reminder that in China, Alibaba made numerous attempts to create a social network around its shopping platforms, and these attempts have been less successful than Google Plus. On the other hand, Tencent’s Weidian, a WeChat based buying and selling platform, is cautiously but steadily gaining traction.
Maybe there are some lessons there?
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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 [email protected].
