Essay: E-Commerce Trends In Southeast Asia

Impact of the Internet and E-Commerce on Consumer Behavior

Question:

Discuss about the Trend And Development Of E-Commerce In Asia.

Internet has changed the world ever since its emergence. Its growth and rise has completely changed the consumers in terms of behavior and expectations (Murphy and Dweck 2016). It has become one of the important distribution channels for most of the successful organization in current era. As there is a rapid change and improvements in technology, E-commerce too is growing in terms of size and is reaching more and more people. The online websites available for purchasing of products are concentrating on the consumer’s behavioral and shopping patterns by bringing a drastic change (Mittal 2013). Such e-commerce activities have intensified the competition among the countries, enabling the consumers, businesses and the government as well in order to benefit them with more choices, better services and comparatively lower prices. It has the ability to facilitate the entry and expansion of the companies into the market. With improved and ever increasing internet access and personal computers penetration rate, this trend is providing greater opportunities for the countries like Singapore in order to conduct online shopping and business.

Current trends in e-commerce of Singapore and Indonesia: Singapore is one of those cities of Southeast Asia that have the highest speed of internet in their region. Singapore has 18.2 mbps of speed on average (Kemp 2014). Around 60 % of the total consumers in Singapore get their first information on the products from the internet. There are very less number of people who get updated about their products via TV advertisement, magazines or any other sources. Among the most visited internet websites, the name of the top websites comprises of online shopping sites such as the Amazon, Lazada and Qoo10. According to the studies conducted by the International Telecommunications Unions (ITU), in the year 2013, about 31% of the total individuals and 32 % of the total households of the Asian region had access to internet (Kurihara and Fakushima 2013). However, though Indonesia has the largest population, it still has lower internet penetration than that of other Southeast Asian countries, which is making it one among the hottest market of e-commerce in today’s world (Ezeh, Bongaarts and Mberu 2012). The Singaporeans spend more of their total income online rather they do offline. It has been observed that most of the Singaporeans are technologically shrewd and they are often connected to the internet. In addition, the manner in which the Singaporeans shop is more or less fundamentally affected by the rise of ‘mobile-commerce’.  The internet penetration of Indonesia is about 15.63 % and that of Singapore is 74.18 % but the online population of Singapore is far less than Indonesia (Lim 2014). The high penetration of smart phones and the internet coverage are providing a fertile ground for all the retailers in order to improve the quality of their online offerings.

Current Trends in E-Commerce of Singapore and Indonesia

As of January 2017, the total population of Indonesia is near about 262miillion and among them, its online population comprises of 37,918,340, whereas that of Singapore is 3,940,738. With the same, Indonesian market is not as matured as that of Singapore or Malaysia but it has more than 250 million of population that is bringing millions and millions of new online shoppers each day (Cheong and Lee 2013). The love for mobile phones is also high among the people of Southeast Asia. However, the percentage of smart phone usage among the Indonesians is less than that of the Singaporeans i.e. it is 43 to 47 % in Indonesia and 88 to 91 % in Singapore. The computer usage is however less than that of the smart phone usage in both the countries. People often use their smart phones in order to get access to internet. Data services and smart phones are getting cheaper day by day. This in turn is promoting people more towards the use of internet more often. According to the studies conducted in 2016, the total number of respondents, who were using internet each day, was very high and it was observed that it was increased by 10 % in the countries like Singapore, Malaysia and Philippines from the former years while the percentage was comparatively higher in Indonesia i.e.  it has undergone a rapid growth of 30% but still it is relatively small (Ecommerce in Southeast Asia, Reports, Data, Insights, 2018). The amount of time that people are spending with media is rising side by side. In Indonesia people spend 8.5 hours a day surfing internet on their mobile phones while in Singapore, they use around 2.5 hours, which is comparatively less. With the same, the e-mail marketing has become one of the most successful tools for the e-commerce businesses in order to lure the consumers and drive their conversions. However, it is observed that both the countries still have strong preference for shopping in the stores rather than online. According to the recent survey conducted by the Infocomm Development Authority (IDA), one of the primary reasons behind not shopping online is the “preference to shop in person or deal personally with a service provider” (Lin et al. 2016).Also, there is also a “showrooming effect” in the Singapore. This means that the local customers visit stores in order to test products before buying them online.

Types of E-Commerce Industries

Types of e-commerce industries: The e-commerce players such as Pomelo and Glazziq have achieved their popularity through online only. They are prevailing as an online-only business but people have made it popular in such a way that they are now planning to expand their business offline as well by launching showrooms in different places. With the same, Qoo10 is regarded as the king of Singapore’s e-commerce, with average of 8.4m of monthly visits. It is a commercial site, owned by the Giosis and has gained double the popularity of the Alibaba-backed Lazada (Briefing, 2018). Singapore is the second largest market of Qoo10 in terms of sales performance and users after Japan. Lazada, though is the second largest e-commerce player in Singapore, it is the leader of e-commerce in Indonesia. According to SimilarWeb, Lazada leads with about 4.3 million monthly visits on an average. Also, It has the highest number of followers in Facebook in both the contries. In addition, Love, Bonito has the highest number of followers in Instagram. Other e-commerce players include EZBuy, Zalora, and MGP (My Glamour Place).

Legal and security issues in Singapore and Indonesia: Security, trust, legal and confidence assurance are one of the fundamental requirements for managing and conducting e-commerce in the countries. These requirements are lacking in these countries, especially in Indonesia. The countries have faced several issues in the past years related to e-commerce such as typo pirating, cyber squatting, defacing and sites vandalism. Singapore has also experienced several cases on cyber crime (Terpstra, Foley and Sarathy 2012). Due to lack of laws and regulations, the culprit can easily get away. The legality of the contract that is formed electronically has also legal uncertainty. Hence, having a cyber law in the country is very important. The e-commerce activities are not tractable of the criminal acts. Increasing number of cybercrimes in Singapore and Indonesia has affected their image in conducting the e-commerce activities (Kaligis 2012). The use of credit cards as a medium of payment in e-commerce, coming from the Indonesia are often been denied. The current regulations on e-commerce in both the countries are law No 8/1999, No 11/2008, No 82/2012, No 7/2014, on consumer protection, information and electronic transaction, electronic system and transaction and trade respectively. The other legal regulations include the presidential regulation of No 44/2016 on the e-commerce business for the foreign investment.

Possible future developments: It has been observed that there may be high expansion of 11.2% in the market of e-commerce by 2021. The main reason behind this is that there is a rapid increase in the use of internet among the people all over the world (Lee 2013).  Over 82% of the total population of Singapore has access to internet and they use it on their daily basis. However, in case of Indonesia, the rapidly growing telecommunication infrastructure and internet connectivity through mobile phones are sure enough to make the place the leader of all Southeast Asian countries in terms of e-commerce in the coming years (li 2015). The IT, Telecommunications, entertainments, electronics and media are converging increasingly. With such a drastic changes, which are taking place in the e-commerce and t is believed that the coming century would be the internet century.

The above analysis has critically discussed the trends and developments of e-commerce in the Southeast Asian environment, especially in Singapore and Indonesia. It is extremely important in both the countries, as it is delivering various benefits to the business and economy by creating new growth channels. It has been observed that the Singaporeans are likely to shop more online and hence, there is a high rise of mobile-commerce in the country. Also, there are numerous other positive trends in the country that is clearly suggesting that the activities of e-commerce will continue to grow even further. 

References

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Cheong, M.F. and Lee, Y.H., 2013. 7. Malaysia and Singapore. The Political Economy of Competition Law in Asia, p.215.

Ecommerce in Southeast Asia, Reports, Data, Insights. (2018). Digital in 2017: What the Latest Trends Mean for Ecommerce Businesses in SEA. [online] Available at: https://ecommerceiq.asia/digital-2017-ecommerce/ [Accessed 10 Jan. 2018].

Kaligis, O.C., 2012. MEDIATION PRACTICES: EXPERIENCE IN INDONESIA.

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Mittal, A., 2013. E-commerce: It’s Impact on consumer Behavior. Global Journal of Management and Business Studies, 3(2), pp.131-138.

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Terpstra, V., Foley, J. and Sarathy, R., 2012. International marketing. Naper Press.