E-commerce in Southeast Asia

The Internet and the beginning of e-commerce in the 1990's made it practical for Southeast Asian consumers to purchase items from American and European companies that would be delivered in their countries.

Asia had begun to receive nearly half of the total capital inflow from developing countries, attracted by the high interest rates.

After 2000, the e-commerce market was mainly dominated by business-to-business (B2B) transactions due to consumer mistrust after going through the 1997's financial crisis in Southeast Asia and the bubble burst.

Trust of the bank system and the electronic payments is traditionally low but government initiatives such as Thailand's PromptPay is trying to push for a "cashless society."

Foreign companies no longer just ship there but actually offer products and services focused on and responsive to regional needs, from local offices to warehouses.

Rocket Internet was the first company to enter the online shopping market at a large scale in the region, through Singapore, with its fashion venture Zalora.

Zalora and Lazada Malaysia rapidly spread out to neighbor countries and are now among the top most visited and most efficient websites in Southeast Asia.

That is why international investors such as JP Morgan, Kinnevik and Summit Partners invested millions of dollars in Lazada, seeing the huge potential in the Southeast Asian market.

[8] In Thailand, WeLoveShopping was established in 2004 as a C2C online marketplace by Ascend Group, a spin-off of True Corporation and a subsidiary of C.P.

[13] Furthermore, they updated methods compared to the brick-and-mortar businesses to meet market expectations: They launched the “14 day return” policy and free and fast delivery in all countries to attract consumers back.

Even though they were already working with local and small e-commerce companies in a low customer catchment area, in Thailand in 2009 and Indonesia in 2011, their Malaysian venture is their biggest achievement in the region.

[15] In response to the significant growth in the number of online retailers, price-comparison websites became another e-commerce business on the rise.

Despite the lack of trust in e-commerce and several cultural issues coming from the recent financial crisis, the market for e-businesses has been growing at a double-digit rate and seems poised to become one of the most profitable sectors.