E-commerce Industry in South East Asia

This assignment analyzes the state of e-commerce in South East Asia, a region with diverse payment options and unique trends compared to Western markets. The report examines the use of cash on delivery, bank transfers, and installment payments, as well as peak hours and days. It emphasizes the importance for merchants to be aware of these trends and develop strategies to compete with local competitors.

Running head : E-COMMERCE
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Name of the Student
Name of the University
Author Note

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1. Table of Contents
2. Executive Summary.................................................................................................................2
3. Introduction..................................................................................................................................3
3.1 E-commerce...........................................................................................................................3
3.2 The South East Asian Economy............................................................................................3
3.3 Purpose statement..................................................................................................................3
4. Findings.......................................................................................................................................4
4.1 The state of E-commerce in South East Asia........................................................................4
4.2 Major Players.........................................................................................................................4
4.3 Analysis of the findings.........................................................................................................5
The mobile revolution..............................................................................................................6
Conversion Rate.......................................................................................................................7
Basket Size...............................................................................................................................9
The time of Purchase...............................................................................................................9
Cash on Delivery and bank transfer.......................................................................................11
5. Conclusion.................................................................................................................................13
6. References..................................................................................................................................14

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2. Executive Summary
The given report throws light on the concept of e-commerce and the state of the e-commerce
industry in the South East Asian countries. E-commerce is a relatively new concept especially in
the developing countries of South East Asian countries which was developed in the 1990s in the
Dot Com. The e-commerce industry of South East Asia is determined by a large number of
metrics such as the Conversion Rate, Basket Size and Cash on Delivery system among other
metrics. Various statistical charts and graphs have been used to represent the findings better. A
conclusion summarizes the report and states that the condition of the e-commerce industry in the
given industry is at a relatively better position than in the rest of the world and those greater
efforts can be made to improve the operations.

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3. Introduction
3.1 E-commerce
Ecommerce can be defined as the act of purchasing and selling goods as well as services
online on the internet medium available. The electronic medium commerce is based on
technologies which range from electronic funds transfer, mobile commerce, and supply chain
management, marketing on the internet, online transactions, and electronic exchange of data.
Management of inventory and the data collection systems (Laudon & Traver, 2013). The
primary medium used by the ecommerce data is the World Wide Web and other mediums like
the email. E-commerce industry has formed a hub for the sellers and the buyers where they can
meet through the electronic medium in any part of the globe and exchange the goods through
shipping. E-commerce business has also boosted the logistics business to a great extent.
3.2 The South East Asian Economy
South East Asia is often considered to be a developing country but has one of the largest
markets in the globe with countries like Indonesia, China, Singapore and India under its
umbrella. The e-commerce trade in the South –East Asian countries emerged in the year 1990
with the Dot Com era and has reached soaring heights since then (Huang & Benyoucef, 2013).
Earlier only international brands provided e-commerce services in this region, but now almost
every country in this region has a specialized business offering all ecommerce services.
3.3 Purpose statement
The main objective of the report is as follows:

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To throw light on the state of ecommerce industry in South-east Asian countries through
the application of theoretical concepts and practical examples using various statistics and data
sourced from secondary sources.
4. Findings
4.1 The state of E-commerce in South East Asia
The year 2017, has been one of the most critical years for South East Asia as the Gross
Merchandise Value of the goods that were transferred were more than $10 million dollars with a
spectacular growth rate of 41% over the last few years (Andam, 2014). Various events took place
during the year and some of them are listed as follows:
 Amazon`s entrance into all the countries in South east Asian countries.
 The rise in the Shoppe-First Mobile Platform, which was commendable
 The record sales earned by Lazada`s Campaign which raised around $250 million
 From the motive to win the market share, Alibaba and Tencent made large scale
investments in the market
 On top of that, various local players have emerged who have successfully find
acclamation in the place of operation.
4.2 Major Players

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Figure 1: The market share of giant companies. (Source: Li, Wu & Lai, 2013).
 Ali Express
 Lazada
 Zalora
 Amazon
 EBay
4.3 Analysis of the findings
The given section will shed some light onto the most critical E-commerce metrics
gathered from various websites thereby stating the similarities as well as differences between

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different markets (Barnes & Hunt, 2013). The section concentrates on the performance of six
major countries like that of Malaysia, Indonesia, Thailand, Philippines, Singapore and Vietnam
The mobile revolution
The South East Asian region countries are mobile oriented e-commerce economy and it
has been able to surpass all other economies with reference to this aspect. The use of the mobile
phones in the given countries has lead to a revolution like never before and therefore, the mobile
phone traffic has increased considerably by 12% since the last year, out of which 75% accounts
for the use of e-commerce websites.
This has urged the various companies to form online applications which are mobile
friendly to reach out to the consumers. This is because the present age is the age of millennials
and for this purpose, the use of mobile phones have considerably increased which has lead to an
increase in online shopping and exchange of services through mobiles.

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Figure 2: The given chart shows the rise in electronic traffic in the chosen countries during
the year 2016-2017. (Source: The Startup, 2018)
The leading country in terms of mobile traffic is Indonesia where around 87% of the
traffic is towards ecommerce websites and in each of the countries the desktop use is less than
30%.
Conversion Rate
The conversion rate is considered to be one of the most important metrics for any e-
commerce business (Sila, 2013). The conversion rate of a company is a reflection of both the

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effectiveness of the website to satisfy the customers and the quality of products and services
which are being offered in the given website.
Conversion rate can be described as the percentage of those customers who visit the
website and the visit actually instigates a purchase in the given organization. Many businesses
aim to improve this conversion rate to achieve more success. In terms of conversion rate, if an
average is taken to be x. Vietnam has been leading with respect to the conversion rate, the rate
being 30% higher than the average. . Singapore and Indonesia also have a considerable
conversion rate in terms of purchase.
Figure 3: The given table shows the low level of correlation between the conversion rate and
the maturity level of each market in the given region (Da Costa, 2016).

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Basket Size
The basket size can be described as the total amount of purchases made by each customer
on every order with respect to a given period of time. This metric is one of the key metrics of e-
commerce operator and tends to have a huge impact on the profitability of the business enterprise
(Laudon & Traver, 2013).
The basket size can be quite different among the market positioning of each merchant and
the verticals.
Figure 4: The given chart reflects the Basket size of each economy as compared to the GDP of
the given country. (Source: The Startup Up 2018).
The time of Purchase.

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The time of purchase is an important aspect of any business. It helps the e-commerce
business owners to understand at what time do shoppers make the maximum purchases and
hence, for that period of time they can make the maximum profits and sales by unit by putting up
attractive offers.
According to Hannak et al., (2015), the highest number of orders from the South-east
Asian countries is received between 9am to 5pm when people are either attending school or are
at their office. However, in the particular metrics, Singapore has a different outlook and it makes
the maximum purchases after at 10pm. The trend suggests that there exists a drop in terms of the
number of purchases between 5pm to 7pm as most people are travelling at this time and
returning to the comfort of their homes. The peak then starts picking up at around 11 pm.

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Figure 5: The given chart represents the observations made throughout the day and reflecting
the highest peak hour of the day. (Source: Cavusgil et al., 2014).
If a business wants to figure out the best day of the week from the point of view of the
customers then it can be stated that the best day for the shopping websites is on Wednesday
where the activity is comparatively higher than the other days of the week (Cavusgil et al.,
2014). This percentage ranges from 4% to 15% more than the average days.
Figure 6: The given chart reflects peak day of the week which is Wednesday, instead of the
normal presumed Weekends. (Source: Ahmed & Ridzuan, 2013).
Cash on Delivery and bank transfer

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The mode of payment also plays a key role in determining the amount of sales that is
made by the e-commerce websites. Hence, this metric determines the mode of payments offered
by the different companies to its customers and which is the most preferred mode.
The trend observed in the South East Asian countries reflected that there exists a low
credit card penetration in the countries except that in Singapore (Ahmed & Ridzuan, 2013). This
trend is quite different from the trends observed in the Western markets. Hence, due to this fact,
diverse payment options have emerged. It could be analyzed that the merchants are facing a huge
amount of problem, with respect to the varied trends in terms of payment options in different
countries.

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Figure 7: The given chart reflects the Payment option generally used in the different
countries. (Source: Laudon & Traver, 2013).
From the given trend it can be observed that cash on delivery is the most used payment
mode and accounts for more than 80% of cases in Vietnam and Philippines as well. The second
most popular method is the Bank transfer method and more than 80% of the merchants offer this
in Thailand and Vietnam.
The payment through installment is also a popular method both in Vietnam and Indonesia
with around 40% of the population opting for these methods.
5. Conclusion
Therefore from the given analysis it can be stated that the future of e-commerce industry
in South East Asia is much brought and the markets generate a huge amount of sales for the
companies and merchants. It could be observed that the trend of the given market is quite
different from that of the Western markets with respect to the payment methods adopted by the
majority of the population and the peak hours and days in a weak. Hence, the merchants need to
be observant of these trends and make considerable strategies to penetrate deep into the market
and to combat the competition with the local competitors. The given report highlighted a brief
scenario of the state of e-commerce in South East Asia and highlighted the information available
though different data and charts for better understanding.

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6. References
Ahmed, E. M., & Ridzuan, R. (2013). The impact of ICT on East Asian economic growth: panel
estimation approach. Journal of the knowledge economy, 4(4), 540-555.
Andam, Z. R. (2014). e-Commerce and e-Business.
Barnes, S., & Hunt, B. (Eds.). (2013). E-commerce and v-business. Routledge.
Cavusgil, S. T., Knight, G., Riesenberger, J. R., Rammal, H. G., & Rose, E. L.
(2014). International business. Pearson Australia.
Da Costa, E. (2016). Global e-commerce strategies for small businesses. Mit Press.
Hannak, A., Soeller, G., Lazer, D., Mislove, A., & Wilson, C. (2014, November). Measuring
price discrimination and steering on e-commerce web sites. In Proceedings of the 2014
conference on internet measurement conference (pp. 305-318). ACM.
Huang, Z., & Benyoucef, M. (2013). From e-commerce to social commerce: A close look at
design features. Electronic Commerce Research and Applications, 12(4), 246-259.
Laudon, K. C., & Traver, C. G. (2013). E-commerce 2012: Business. Technology, Society, 12.
Laudon, K. C., & Traver, C. G. (2013). E-commerce. Pearson.
Li, Y. M., Wu, C. T., & Lai, C. Y. (2013). A social recommender mechanism for e-commerce:
Combining similarity, trust, and relationship. Decision Support Systems, 55(3), 740-752.
Sila, I. (2013). Factors affecting the adoption of B2B e-commerce technologies. Electronic
commerce research, 13(2), 199-236.

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The Startup(2018). The State of eCommerce in Southeast Asia in 2017 – The Startup –
Medium. Medium. Retrieved 17 March 2018, from https://medium.com/swlh/the-state-of-
ecommerce-in-southeast-asia-in-2017-5a779f962623