e-commerce in southeast asiawko.at/aussenwirtschaft/veranstaltung/100-85652-e... · highest...

E-COMMERCE IN SOUTHEAST ASIA

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Webinar 05.05.2020

Agenda

3

Introduction Internet Economy & E-Commerce Market SEA

● Christopher Benz (CEO & Founder of Kemana.com)

● Hans-Peter Ressel (CEO & Founder of Momentum Commerce)

○ Market Overview

○ Internet Economy

○ E-Commerce Market

● Overview E-Commerce Market by Country

o Indonesia (Christopher Benz)

o Malaysia (Hans-Peter Ressel)

○ Thailand (Georg Krenn - AC Bangkok)

o Vietnam (Dietmar Schwank - AC Ho-Chi-Minh-City)

● Conclusions & Recommendations

o Christopher Benz

o Hans-Peter Ressel

o Sigmund Nemeti (AC Jakarta)

● 26% of population is younger than 15 years

● 150m SEA people will turn 15 over the next 15 years

● 10m people join the “mobile age” every year and

grow up as a digital citizen

● 570m people across 6 biggest markets in SEA (excl.

Cambodia, Laos, Myanmar)

● SEA houses some of the fastest growing markets in

the world with an average of 5% GDP growth in the

last 5 years (2% higher than rest of global economy)

● By 2030, SEA is expected to become the world’s

fourth largest economic bloc

● Very diverse region with 10 official languages and

hundreds of local dialects

4

Big, diverse and fast growing market in SEA Young demographics in SEA

Introduction Internet Economy & E-Commerce Market South Asia

Source: Google/Temasek Report E-

Commerce SEA 2019 Source: Google/Temasek Report E-

Commerce SEA 2019

● Since 2015, SEA Internet users increased from 260m

to 360m (10m in ‘19), esp. in the age group of 15-19

● Of those 360m, only 180m have started to use

services of the Internet economy

5

Fast growing Internet economy Most engaged mobile Internet region worldwide

● 10 years ago, 80% of SEA population didn’t have

internet access

● Today, TH (5:13h), ID, PH and MY are in the top 10

countries by mobile internet usage (global avg.

3:13h)

○ Social & Comms are the most engaged apps

(52% vs. 65% in ‘16)

○ Video apps / live streaming has doubled in last 3

years (20% vs. 10% in ‘16)



Commerce SEA 2019


Commerce SEA 2019

● e-Commerce already accounts for 38% of the SEA

Internet economy and has overtaken Online Travel;

further increase to 51% by 2025

● Active e-Commerce users have increased from 49m

to 150m in 2019

6

SEA Internet economy breakdown SEA e-Commerce market

● ID is the largest e-Commerce market in SEA, growing

12x in the last 4 years, driven by competition

between local and regional players

● Growth of e-Commerce is powered by fundamental

changes in consumer behavior and massive

investments of platforms in online shopping festivals,

in-app entertainment, seller development and

logistics infrastructure



Commerce SEA 2019


Commerce SEA 2019

Agenda

7

● Introduction Internet Economy & E-Commerce Market SEA



○ Market Overview



Overview E-Commerce Market by Country





● Conclusions & Recommendations

o Christopher Benz

o Hans-Peter Ressel


E-COMMERCE

IN

INDONESIA

Christopher Benz

CEO & Founder of Kemana.com

9

● Indonesia has population of 272m people and half the

population is under 30 years old.

● $40bn USD internet economy in 2019. It is expected

to reach $130bn USD by 2025.

● Ecommerce market size specifically was $21bn USD

in 2019 and is expected to hit $82bn USD by the year

2025.

● Highest Ecommerce percentage growth Globally in

2019, at a 78% increase.

Indonesia - Overview Doing Business in Indonesia

E-Commerce in Indonesia

● GoJek has raised $4.5 Billion USD

● Tokopedia has raised $2.4 Billion USD

● BliBli owned and funded by Djarum

● Payment is the underlying strategy

● Ewallets play a critical role in Ecommerce

● Restrictive entry barriers for foreign companies

specifically in retail, oil and gas, medical pharma.

● 2 types of companies - Local & Foreign Owned.

Different rules for each.

● 25% corporate tax rate

● 0.1% capital gains tax

● EUR 1015 avg. monthly salary, EUR 200-300 for fresh

graduates; limited talent pool with little exposure to

international education and standards.

Massive Investment Climate

10

● Local E-Commerce is very fragmented, yet with only

a handful of dominant players

● Fashion, Home & Living & FMCG biggest categories in

terms of volumes; Electronics in terms of revenues

● Internet penetration of 64%, with 90% having some E-

commerce shopping experience

● Only 48% of population have bank accounts; 2.4%

Credit Card penetration rate

Market Environment

E-Commerce in Indonesia

● While there are strict regulations on foreign

ownership within certain industries many Niche

market opportunities still remain largely open.

● While investment has focused heavily in

marketplaces and fintech, few players have been

able to crack more specialized offerings.

● B2B for the most part is still completely open for

niche offerings and far from saturated compared to

B2C.

Niche Market Segments

● Most retail is closed through to June 1st.

● Mudik cancelled by decree across the country.

● Limited restrictions so far, with limited enforcement

by army and policy.

● Limited testing currently, resulting in very low

infection numbers.

● E-Commerce volumes are expected to increase %120+

for both April + May 2020 compared to January 2020

with strong demand surge for food delivery, sports,

personal care / FMCG, electronics.

Current Developments during Covid-19

E-COMMERCE

IN

MALAYSIA

Hans-Peter Ressel

CEO & Founder of Momentum Commerce

12

● Malaysia has a very diverse population of 32m people

and a 11bn USD internet economy (>2x vs. 2015)

which is expected to hit 26bn USD by 2025

● B2C E-Commerce market size was 3bn USD in 2019

(3x vs. 2015) and is expected to hit 11bn USD by the

year 2025

● Metropolitan areas in Klang Valley, Penang and Johor

Bahru account for >65% of the E-commerce volumes,

East Malaysia still under-indexed

Malaysia - Overview Doing Business in Malaysia

E-Commerce in Malaysia

● In 2017, Alibaba Group set up their first DFTZ (Digital

Free Trade Zone) outside of China in Malaysia at KLIA

Aeropolis (eCom park, logistics park, etc.)

● Port Klang amongst the top 15 global container ports

● Almost 1m annual cargo tonnes and 50% increase

expected in the next 10 years

● 20 out of top 25 freight forwarders with a base in MY

● Big cross-border market with ca. 50% of the E-

Commerce volumes being sourced from China

● Low market entry barriers for foreign companies and

investors in most industry sectors

● Min. paid up capital RM 1; much higher for certain

industries and if work permits have to be given out


● 0% capital gains tax

● EUR 900 avg. monthly salary, EUR 550 for fresh

graduates; strong talent pool with high share of

international education

Regional Hub: KLIA Aeropolis, total of 8,548 acres

13

● Local E-Commerce is very fragmented, yet with only

a handful of dominant players

● Fashion, Home & Living & FMCG biggest categories in

terms of volumes; Electronics in terms of revenues

● Internet penetration of 81%, thereof 80% with E-

commerce shopping experience

● Only 3m unbanked people; still 9m underbanked

Market Environment

E-Commerce in Malaysia

● In general different duties & taxes based on HS code

● De minimis rate (price threshold below which no

taxes are charged) is RM 500 / EUR 106 for B2C air

freight

● Above RM 500: SST 5-10%, Import duties 0-25%

● For products on prohibited / restricted list, addtl.

permits, documents and licenses may be required

● Very strict regulation on food & fashion products to

be “halal” due to predominantly muslim population

Cross-border Logistics

● Very strict MCO in four different waves so far, with

limited mobility (<10km away from home) and strong

enforcement by army and policy

● MCO starting to be lifted from May 4th onwards

almost across all industries with strict SOP’s in place

● E-Commerce volumes doubled in April 2020

compared to January 2020 with strong demand surge

for personal care / FMCG products & food deliveries

● Little government support for startups / companies


E-COMMERCE

IN

THAILAND

Georg Krenn

AC Bangkok

Thailand - Status Quo:• Thailand 4.0 scheme drives digital economy/e-commerce• Tech-Savvy young generation, majority of Thais is Gen Y• 85 % of population active internet users• 75 % of population active social media users• M-Commerce dominates in Thailand: 70 % browse with

their smart phones• Thais are still resistant towards digital payment,

Cash/Collection on Delivery (COD) still dominating (>50 %)

Constraints:• E-Commerce platforms are still not very B2B sales focused,

marketplaces are mostly B2B2C (Alibaba dominating)• Average order value comparatively low• IP infringements hard to prevent and pursue• Cross-border sales not feasible directly from Austria• Legal requirements for setup challenging• Import of specific goods restricted or prohibited; import

license required for most FMCG goods, medicine,

cosmetics, food supplements, cigarettes and alcohol

Thailand‘s E-Commerce in detail:• Total value of E-Commerce 2019: approx. 16 billion USD;

thereof 55 % B2B, 27 % B2C, 18 % B2G• Thailand’s B2C sales leading in value in SE-Asia (2019)• Foreign investors (mainly Alibaba) investing heavily in

infrastructure (distribution centers)

• Leading product categories sold online (2018):

Mobile & Electronics (25 %), Fashion (15 %), Beauty (12 %);

Lifestyle & Hobby (11 %), Health & Wellness (8 %)

Current developments with regard to COVID-19:• COVID-19 pandemic makes e-commerce mainstream,

100 % rise in Lazada sales (mid-March to mid-April ‘20)• Decline in sales of high value products (IT gadgets,

smartphone), shift to every day products (clothing, food

supplements, FMCG)• Lazada added 26,000 new merchants in March 2020,

bringing the total number to 200,000 sellers• Online Payments finally rising in numbers• New focus on offline-to-online programs (O2O)

15

MARKET OVERVIEW THAILAND

E-Commerce in Thailand

16

• E-Marketplaces: Lazada (#1), Shopee (#2), JD.Central (#3)

• Brand Webstores: E.g. Samsung, Microsoft, Apple, Kiehl’s

NEW: E-Marketplaces offer special platforms for leading

brands: LazMall, ShopeeMall and JD Mall

• E-Retailer: E.g. Advice, Power Buy, Central Department

Store, Watsons, JIB, Makro Click, HomePro

• Social Commerce: Facebook, YouTube, Line, Instagram

Source: Bangkok Post, E-commerce

set to build on successes, 27.01.2020

DOMINATING E-SALES CHANNELS IN THAILAND


• Cross-border E-Commerce is possible

• Chinese sellers/products dominate cross-border sales

• Alibaba sets up its distribution center in the free-trade

zone of the Eastern Economic Corridor; products will be

kept without paying import tax

• Average order value:

- 738 baht for local products

- 350 baht for cross-border products

Cross border e-Commerce:

• Express consignment goods with a value below

1,500 Baht: import duty & tax exemption

• Goods exceeding 1,500 Baht: Customs declarations

necessary (income duty & tax to be paid)

• New e-commerce law currently under consideration; Law

will be aimed at taxing e-business operators which are

based outside of Thailand (sales tax)

• Generally possible for Brand Webstores & Social Media

channels, for E-Marketplaces: Negotiations are required

Opening a local online shop (Brand Webstores):• Set up of a corporate/local subsidiary• Register with the Department of Business Development• Obtain an e-license• Register with the OCPB (Consumer Protection)• Obtain a Foreign Business License• Legal compliance with Electronic Transactions Act• New Personal Data Protection Act from 28 May 2020• Handling of customs clearance

Working with an E-commerce enabler:• E-Commerce enablers can act as a one-stop solution • Enablers may take over only specific services, e.g. import

clearance, warehousing, order fulfillment, etc.• Leading enablers in Thailand: e.g. Ascend Group,

aCommerce, Silken Asia, Seven Digital, DEALCHA• Possible for E-Marketplaces, Brand Webstores, Social Media

channels and E-Retailers

Getting listed with an E-Retailer:• E-Retailers sell a variety of brand products from their own

store (focusing on specific sectors)• Requirement to get listed with the E-Retailer first• Local partner/subsidiary for import clearance is required• Leading industry companies have their own e-retail shops• Warehousing, order fulfillment, advertising, etc. will

normally be handled directly by the e-Retailer• Growth Potential: Mobile & Gadget, Fashion, Health

17

LEGAL POSSIBILITIES TO SELL PRODUCTS ONLINE


E-COMMERCE

IN

VIETNAM

Dietmar Schwank

AC Ho-Chi-Minh-City

19

● 96 mio. inhabitants, GDP growth 3-4 %

● Large, young and technology-oriented pop.

● e-commerce volume to rise from 5 bn USD in

2019 to 23 bn USD in 2025

● CAGR 35 %, low penetrance (1% of FCMG)

● Booming convenience solutions, esp. for food,

fashion, electronics, furniture, toys, etc.

● Popularity of foreign e-commerce websites

● Rising B2B e-commerce (Alibaba dominant)

Vietnam - Overview Doing Business in Vietnam

E-Commerce in Vietnam

● Poor legal guidelines for B2C cross border e-

commerce, new decree being drafted

● Challenges in tax administration, esp. with

Foreign Contractor’s Withholding Tax

● Difficulty of capital transfer abroad

● New cybersecurity law leads to weak data

protection

● Favourable FTA framework and legislation

● Investor-friendly environment

● Uncertainty in NTBs and economic policy

● Set-up of WFOE and sales companies possible


● Double-taxation agreement in force

● Relatively low wages (minimum salary around

USD 200)

● Limited talent pool outside the major cities

Legal framework

● Low trust of consumers in local platforms due to

poor product quality, discrepancy between what

is advertised vs. delivered

● Popularity of COD and avid saving mentality

● Risk of infringement of IP rights

● Inadequate technology infrastructure

● High shipping costs and traffic congestion

● Customers in rural areas are difficult to reach

Constraints

20

● E-Marketplaces

Shopee #1, followed by 3 local platforms

● Social Commerce

Facebook, Zalo, Instagram, Tiktok

● Fast delivery services

GrabFood, GoViet, Now.vn

● e-wallets

Momo, ZaloPay,…

Market Environment

E-Commerce in Vietnam

● Heated competition (local vs. foreign

players)

● Massive foreign investment in the sector

● Infrastructure investment and fierce

competition in logistics and delivery services

● Focus on platform profitability, not growth

● Digital payments on the rise

Trends

● Vietnam performed well in the crisis and will not

hit recession in 2020

● Shopping centres and retail reopened again, but

traffic there remains little so far

● Demand surge for food delivery, sports, personal

care / FMCG, electronics during the next months

● Digital transformation accelerates in the medium

run


Agenda

21

● Introduction Internet Economy & E-Commerce Market SEA



○ Market Overview



● Overview E-Commerce Market by Country





Conclusions & Recommendations

o Christopher Benz

o Hans-Peter Ressel


● Consumer Trust

○ Significantly improved consumer trust for e-Commerce, Ride

Hailing, Media, Travel; still nascent for Education, Healthcare

○ Internet economy companies have become “household brands”

● Internet Access

○ Efforts by tech and telco companies have made fast Internet

access more reliable and affordable

○ Music, Video, Social apps bundled in zero-rated plans; optimized

apps for low data usage and patchy connectivity

● Logistics

○ Leading Logistics providers can deliver nationwide and partner up with e-Commerce / Ride Hailing players

○ e-Commerce players started to provide next-day and same-day deliveries

● Digital Payments

○ Growing user and merchant adoption both online and offline

○ Loyalty and rewards programs emerge as key drivers of usage

● Talent

○ Still a challenge despite efforts to “fill the gap” (digital upskilling, exp. managers from other industries)

22

Ecosystem challenges are being resolved

Conclusions


Commerce SEA 2019

● Funding environment remains healthy (pre Covid-19) despite global headwinds

with a total of 37bn USD raised since 2015

○ e-Commerce and Ride Hailing have raised 2 out of 3 dollars

○ 24bn USD were invested in 11 Unicorns (valuation > 1bn USD)

○ 5bn USD were invested in 70 “Aspiring Unicorns” (valuation 100m - 1bn USD)

○ 7bn USD were invested in 3,000 Startups (valuation <100m)

○ Average deal size has doubled over the last 3 years (Seed: 0.5m->0.8m;

Series A: 2m->4m; Series B: 8m->16m)

● VCs are raising larger growth funds and shift their focus to SEA, PE funds are investing in earlier series

23

Funding in SEA Internet economy

Conclusions


Commerce SEA 2019


Commerce SEA 2019

24

SEA Internet Economy Metro vs. Rural

Conclusions


Commerce SEA 2019


Commerce SEA 2019

Source: Google/Temasek Report E-Commerce SEA 2019

Recommendations for the region

● booming internet economy in SEA (significant contribution of E-Commerce)

● high economic growth, big market ( > 650 million consumers)

● great potential for European products

● big and fast-growing middle-class (young, tech-savy, open-minded towards digitalization)

● small number of European investors; a lot of capital from private and institutional investors involved, international funds starting to join

● high necessity of E-Commerce development (further potential in rural areas)

● local partner needed (importer, E-Commerce enabler, local/regional warehousing, distribution partner); sustainable business relationship

● build presence, SEA very dynamic and promising

● patience with the legal framework required

● new: Digitalisierungsscheck

25

Q & A session

Any questions?

Please write your questions in the question box.

If we do not manage to answer your question, we will directly

contact you after the webinar!

E-Commerce in Southeast Asia

26

LET‘S STAY IN TOUCH

Vienna Headquarters:

Matthias Grabner | AUSSENWIRTSCHAFT Technology

T +43 5 90 900 3624

E [email protected]

W www.wko.at/aussenwirtschaft/technology

Indonesia:

Sigmund Nemeti | AußenwirtschaftsCenter Jakarta

T +62 21 2550 0186 | E [email protected]

W www.wko.at/aussenwirtschaft/id

Thailand:

Günther Sucher | AußenwirtschaftsCenter Bangkok


W www.wko.at/aussenwirtschaft/th

Malaysia:

Reinhart Zimmermann | AußenwirtschaftsCenter Kuala Lumpur

T +60 3 20 32 28 30 | E [email protected]

W www.wko.at/aussenwirtschaft/my

Vietnam:

Dietmar Schwank | AußenwirtschaftsCenter Ho Chi Minh City


W www.wko.at/aussenwirtschaft/vn

27

Christopher Benz | CEO & Founder Kemana.com

E [email protected]

Hans-Peter Ressel | CEO & Founder Momentum Commerce

E [email protected]

http://www.wko.at/aussenwirtschaft/my

http://www.wko.at/aussenwirtschaft/vn

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