E-commerce in Southeast Asia is burgeoning, and is expected to grow fivefold in five years, Jason Tay, regional director of business development at M-DAQ, said during TechNode Global’s fifth Tech Insights webinar on Sept. 30.
The evolution of cross-border trade and a shift to expand beyond the domestic market drove Southeast Asia’s e-commerce market to blossom into a $38 billion market in 2019.
“The growth is fuelled by an intrinsic rise in middle-income spending,” said Tay. The region’s e-commerce industry is projected to skyrocket to a valuation of $150 billion in the next five years, he added, noting that there are still many untapped opportunities in the huge halal market.
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A customer-centric approach: going hyper local
On average, a customer pays a foreign exchange fee 3.25% to 7% leading to an increase in a product’s price. This is made worse by other charges.
“Merchants and retailers mark up their prices to accommodate for a margin of error should the foreign exchange rate work against them,” Tay said. Customers are increasingly dissatisfied with having to bear all these additional costs.
“A big part of pricing in today’s world of e-commerce has to do with how your customers perceive what they are ultimately paying for your product,” Tay said. To succeed in e-commerce buying experience, he said, platforms must localize the buyer’s payment experience while allowing merchants to sell their products globally.”
Echoing Tay’s point, Akul Dewan, merchant growth director at hoolah, a startup that offers a buy-now-pay-later payment solution, stressed that startups should be hyperlocal to improve customer satisfaction. “Localizing campaigns and prioritizing local reviews on a platform may be helpful in showing relevance and building trust with the customers,” Dewan said. It’s important to understand the customer journey in each market and observe what industry leaders are doing to create a better experience on the back of that, he added.
The concept of hyperlocalism is based on the principles of geography and time. It might be easier for B2B companies to get away with not having a local team than their B2C counterparts, as customers expect to be purchasing from a local provider.
“At the end of the day, it goes back to who your customer is and what it takes to engage that particular customer,” said Elena Chow, founder of ConnectOne, a talent solutions consultancy for the startup and innovation ecosystem.
“Startups are advised to prioritise customer experience over their channels,” said hoolah’s Dewan. Many merchants make a common mistake of separating their online and offline channels into two separate entities, he added. With a customer-first approach in mind, merchants have to provide a uniform and seamless shopping experience on both online and offline channels, Dewan said.
Companies scaling overseas with a new product opt for value-based pricing by identifying the right market and price it to the value that people want, added Jeffrey Seah, partner at Quest Ventures, a venture capital firm that focuses on early-stage digital startups across Southeast Asia. “Instead of worrying about burn rate, startups should focus on the product roadmap which will attract customers and make them stick,” said Seah.
Hiring a successful team
COVID-19 has accelerated the trend toward telecommuting. There is a drop in full-time employment rate and rise in contract and fractional hires Full-time employment is falling while contract and part-time work is on the rise in the light of the increasing prevalence of people having to work remotely, said Chow. “With greater openness to remote hires, employers would want to be cognizant of where the shortage of talent is or [how] rising skills [vary] in different Southeast Asian countries,” she said.
While tech startups are known for including stock options in salary packages, Chow said that equity is generally not sought after in some countries. “Whether to offer employees stock options depends on the philosophy of the founders, the size of the equity pool, and the motivations of the employees,” said Chow. Ultimately, she advises startups to be more prudent and reserve equity for key employees or founding team members.
The cornerstone of cultural competence is acknowledging the uniqueness of each culture and understanding people from different countries have different sets of values and beliefs. This is essential in the workplace.
Startups tend to hand out inflated job titles easily which might create a culture fixated on superficial distinctions and an organization structure without the flexibility to grow. “Startups often make the mistake of using the C-suite title in their hiring process,” Chow said, noting that they end up cornering themselves because the candidates assume no career progression after taking up a C-suite role. An early-stage startup is recommended to use the title “technical lead” instead of “CTO” in a job description.
Startup hiring is never a one-and-done proposition. However, founders often do not have the luxury to devote time and resources to the hiring process. “Many startups made the mistake of jumping straight into crafting the job description before first determining clear quantitative milestones and ensuring the time is right for hiring,” said Chow.
Speeding up go-to-market plans
“To speed up the go-to-market plans, startups have to trial their beta product, focus on new core competencies while building a minimum viable product, and look for quality revenue that is defensible,” said Seah.
“Startups ought to reinvent and improve their business model continuously to be a value-added provider to the customers and continue to be with them on that journey of loyalty,” added Tay.
While startups might have opened up a second market and disrupted the original legacy players, they should continuously disrupt themselves in their primary market, Seah added, noting that startups assume they have redesigned the way the marketplace works but processes in the secondary and primary markets might work differently.
The key is knowing when to stay, when to leave, and when to venture forth. It’s important for a business to assess its readiness to enter new markets. Seah cautioned startups to leave a non-performing market, even if it means upsetting investors. “The smart move is to get out fast,” Seah said.
“To be a successful startup, you need to be extremely instinctive. If you need someone to tell you that something is a new trend, you are already too late,” said Seah.
About the panellists:
Jeffrey Seah, Partner, Quest Ventures
Jeffrey Seah is Partner for Fund II Asia at Quest Ventures, a leading venture fund for technology companies that have scalability and replicability in large internet communities. Prior to this, Jeffrey co-founded a transformation advisory partnership with services in go-to-market, corporate venture capital, digital transformation and corporate reorganisation strategy & implementation for Asia-based MNCs.
Elena Chow, Founder, ConnectOne
Elena is the Founder of ConnectOne who since 2013 have partnered the early stage technology startup ecosystem to build and optimise teams for growth. In doing so, she and her team have met, coached and built a robust community of entrepreneurial minded individuals. She is well known for her generosity in mentoring startup founders, teaching at accelerators/incubators and doing corporate-to-startup career transition coaching. Prior to ConnectOne, she had spent 15 years in Procter & Gamble. She is a proud mum of four kids aged 12 to 22. Outside of work, she teaches the youths in church, sits on a board of a kindergarten and is an advocate of functional training.
Jason Tay, Regional BD Director, M-DAQ
Jason Tay is the Regional Director of Business Development in M-DAQ; a Singapore based Fintech Company focused on providing innovative Foreign Exchange solutions to empower the vision of a world without currency borders. In his capacity, Jason is responsible for the coverage of the firm’s institutional clients that span across global ecommerce platforms, regional corporates, stock exchanges to fintech heavyweights across the region, as well as organising the firm’s infrastructure and partnerships for growth and expansion. Prior to joining M-DAQ, Jason accumulated more than 12 years in corporate investment banking covering the Asia Pacific region across a myriad of industries ranging from oil & gas / energy, technology, consumer goods, automobiles, and defense to Diversified Industries. He held the role of director (coverage) for regional multinationals based out of Singapore as well as the country banker for Thailand and Indonesia in Société Générale until 2019. He also held origination and regional coverage roles in J.P. Morgan, Standard Chartered Bank and Citibank as part of his banking career. Jason holds a Bachelor of Business Management (honours) from the Singapore Management University.
Akul Dewan, Merchant Growth Director, hoolah
Akul leads Merchant Growth at hoolah, Asia’s leading Buy Now Pay Later platform. Akul focuses on educating merchants about Buy Now Pay Later and driving new leads into hoolah’s sales team. With hoolah consumers can responsibly afford the things they want or need by paying over 3 months or salary cycles with no extra costs. For merchants, hoolah helps them grow their business by helping them convert more sales and driving new customer demographics to shop with them.