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Asian Angle | Is Chinese-style e-commerce the way forward for Southeast Asian players like Shopee, Lazada and Tokopedia?
- Despite regional characteristics that led to operational differences, the region’s e-commerce sector has taken inspiration from China in the past and will continue to do so
- Shopee’s rise as the largest, strongest and most popular contender on the back of free shipping is an example of how Chinese-style e-commerce can be adapted
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When Chinese investors analyse e-commerce in Southeast Asia, one question they often ask founders in the region is whether the sector’s development in the region is “five or eight years behind China”?
The fundamental question that both parties should ask instead is whether Chinese-style e-commerce is the way forward. This style of e-commerce means building up massive selection, using the “invisible hand” of the market to select the best suppliers, and squeezing efficiency out of the whole marketplace.
Those in Southeast Asia may find the question arrogant and offensive. After all, Southeast Asia is diverse, and deeply fragmented. The bloc’s six biggest economies – Indonesia, Thailand, Philippines, Vietnam, Singapore and Malaysia – have huge variations in languages, customs, levels of economic development, legal frameworks and traditional retail landscapes.
But while these variations pose operational and organisational obstacles, they are not strategic challenges. There are fundamental similarities between customer and seller behaviours between the region and China.
First, customers are attracted to a vast selection of goods that offer value for money, and can be delivered to them fast. This is universal.
Second, a significant percentage of the selection, whether sold by local or cross-border sellers, is manufactured in China, and exported through the country’s vast supply chain.
Third, sellers want more customers.
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