Vietnam has the highest e-commerce adoption rate in Southeast Asia | Digital Asia

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This is partly due to rising income levels

Consumers in the land of smiles may have the most voracious online shopping habits in Asia but a higher percentage of Vietnamese are tossing items into online carts.

According to the Economist Intelligence Unit (EIU)’s Inclusive Internet Index, 50 per cent of consumers in Thailand shop online once a week or more, and 44 per cent shop online once a month or less. That leaves a mere 6 per cent who didn’t jump on the e-commerce bandwagon.

Singapore came in second, with 35 per cent of consumers buying goods online once a week or more, and 54 per cent shopping online once a month or less.

clinched third place, though, interestingly, it actually has more online consumers than both Thailand and Singapore — even if they shop less. 66 per cent of consumers shop online once a month or less, and 32 per cent shop once a week or more.

In Indonesia, 68 per cent of consumers shop online once a month or less, while 26 per cent shop online once a month or more.

In Malaysia, 82 per cent of consumers shop online once a month or less, while 10 per cent shop online once a week or more.

And finally, in the Philippines, 80 per cent of consumers shop online once a month or less, while only 8 per cent shop online once a week or more.

Rise of the middle class households

It is easy to understand why affluent countries like Singapore have been quick to warm up to the world of e-commerce, but emerging markets are catching up fast, owing to their increasing spending power.

In Indonesia, the EIU estimates that by 2030, middle class households — defined as those earning US$10,000 or more per annum — will rise by 51 million.

In other developing Southeast Asian countries including Vietnam, the Philippines, Thailand, middle class households will rise by 18 million, 11 million and 8 million respectively.

It is important to note that the growth of these households is not uniform in each of these countries — especially in large, fragmented markets like Vietnam and Indonesia.

Main metropolitan cities will be a large driver of this growth. In 2017, 16 urban areas in Southeast Asia accounted for 44 per cent of middle class households. By 2030, EIU predicts that these cities will account for only 32 per cent of these households, indicating that peripheral cities will be the next drivers of growth.

Paving the way for smoother e-commerce transactions

While e-commerce is seeing an increased uptake in all markets, many challenges remain before it can truly become the main mode of shopping.

For one, internet speeds are not optimal in emerging markets. Broadband prices there are also quite expensive when factoring the average income per capita.

Thankfully, though, mobile data prices in developing countries are low (even if speeds are still slow). So as long as shopping apps there are finetuned to run smoothly under those limitations, the consumer experience will not be diminished.

Emerging countries also face fundamental infrastructural and policy challenges.

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For example, in Indonesia, goods take nearly four days to be cleared by customs. If you factor in shipping, it could take weeks or even months for someone to receive their item; at this point, it is easier to head to the city to pick up the item instead — especially if it is something essential.

To compound the problem, Indonesia’s logistical infrastructure is also lacking. According to EIU, retail and distribution networks, as well as road networks in the country, are at “high risk” (poorly developed), while its port facilities and air transport facilities are under “medium risk”. Interestingly, Vietnam is plagued by the same problems despite having the e-commerce in Southeast Asia.

What all these classifications mean is that the importing and exporting of goods, as well as transportation of goods within the country, is going to be slow and problematic.

To tackle challenges, ASEAN member countries have launched a series of initiatives to simplify cross-border transactions.

In April this year, five ASEAN — Indonesia, Malaysia, Singapore, Thailand and Vietnam — launched the ASEAN Single Window, a digital platform to help merchants speed up the custom clearance process by submitting their trade documents online.

These countries are also setting up a framework to streamline regulations to help online merchants to navigate different e-commerce regulations in different markets.

Finally, a MoU has been inked between different countries’ major payment networks — Malaysia’s PayNet; Thailand’s ITMX, Vietnam’s NAPAS, Singapore’s NETS, Indonesia’s Rintis — to connect their payment infrastructures to enable real-time cross-border payments between each system.

The post Vietnam has the highest e-commerce adoption rate in Southeast Asia: EIU Report appeared first on Tech News.

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