Based on a report by Google and Temasek Holdings, Southeast Asia’s (SEA) digital market could exceed US$200 billion before 2025. Southeast Asia’s digital economy is forecast to triple its size in the next 5 years. Read more on the challenges faced as a seller in the E-commerce marketplace, to help you decipher and be part of this immensely growing economy.
E-commerce stores are on the rise due to a numerous reasons. As far as market association is concerned, E-commerce sites already have an existing network of buyers. So, selling your products becomes relatively easy as branding and advertising is already taken care of.As Sigmund Freud's had rightly said “I carefully consider my decisions as everything comes with pros and cons!”
When it comes to South-East Asian E-commerce market, the most underestimated struggle is Fragmentation i.e. there are a number of e-commerce platforms in ASEAN countries attracting significant traffic, making it tedious for the brands to make an online presence.
In Indonesia, five different e-commerce platforms rank in the top 50 in total online monthly traffic, including Tokopedia (37.6 million), Bukalapak (27 million), Shopee (15.3 million), Blibli (11.6 million) and Lazada (7.9 million).For Malaysia, it is Lazada (12.6 million), Shopee (11.1 million), 11th street (4.4 million) and Mudah (3.6 million).
Merchant Vs Monthly web traffic
(Data per Q4 2019)
(Data per Q4 2019)
When we compare it with e-commerce marketplace in United States, here it is much less fragmented. The breakdown of the three horizontal e-commerce marketplaces in the US with maximum traffic are: Amazon (1,500 million), Wal-Mart (166.5 million) and Target (88.6 million).Hence, the number one challenge faced by the sellers here is Marketplace management.
Complicated logistic, legal & banking set up
Another major concern would be the lack of consistent legal and custom border regulations and the fluctuating tariff rates across countries. Each region has their own local set of laws and regulations. The payment methods, customer interactions and support could pose a barrier as each of these processes / laws are unique to each country.
As per Barclaycard stats, 30% of the products purchased online are returned.This is due to undependable logistics & delivery issues posed by marketplace courier companies. This ends up costing the seller return charges and the cost of product loss. The risk of damage or loss of goods across borders immensely affects buyer-seller relationships. The solution is streamlining orders throughout the process via. Order management.
With a multitude of marketplaces and countless number of products, the task of product listing (attributes and categories) poses on-going hurdles for the sellers. Along with this, we also see difference in promotions/campaigns, fulfillment methods, payment agreement & cycles and cumbersome on-boarding.
|Fig: Every Marketplace is different|
Imagine a situation with current AI advancements in e-commerce, a customer visual search for a product and identifies it online. He is about to click on “Add to cart” but unfortunately it is out-of-stock! Not only can technology bring in customers,but if you master the right inventory management techniques you can reach maximum productivity. Effective Inventory management prevents such setbacks and ensures on-time delivery.
Lost sales due to tracking and pricing
Competitors continuously change prices which pose as a huge challenge to present day sellers while they try to keep their sales curve up. It’s predicted that by 2040, close to 95% of products will be purchased online! To win buyers, you will need to quote competitive prices in the marketplace. What you will need is to devise a pricing strategy, which automatically adjusts the price whenever there is a change in the competitor’s price.