Big companies in all kinds of businesses are being disrupted as e-commerce gains ground, but even established online sellers are not safe unless they keep adapting to changing conditions. This phenomenon has created a perfect opportunity for technology and service providers to fill in the gaps, says Paul Srivorakul, the CEO of aCommerce.
Founded in 2013 by Mr Paul and his brothers Tom and John in Bangkok, aCommerce is now the region's leading end-to-end e-commerce logistics and service provider.
With 1,400 staff in five Asean countries -- Indonesia, Thailand, Malaysia, Singapore and the Philippines -- the company counts some of the world's biggest names among its clients, among them Adidas, Hewlett-Packard, Levi's, L'Oréal, Philips, Samsung and Unilever.
"A lot of these brands have to adapt and to simplify it -- the marketing, retail, logistics -- and it is not about doing that locally but actually doing that regionally and globally as they are really getting disrupted," Mr Paul told the CLMVT Forum in Bangkok last month.
"What we provide are the technology and services to enable these big companies to become successful … and help them execute a pan-regional strategy."
For example, his company is now helping L'Oréal to move its products to more than 30,000 salons in the five countries where aCommerce has a presence.
Every company these days has a website, but only a few have good e-commerce capabilities. If they lack that capability, Mr Paul says, "it is like having a store without a cash register".
"Why would you want people to come in and leave? Don't you want to sell something?" he asked rhetorically. "This is the biggest mind shift that needs to happen where every business needs to be digitised."
Once companies are digitised, they have to take the next step to commercialise their online offerings. That is why platforms like Alibaba are now branching out from being pure e-commerce players and becoming tech providers for offline businesses looking to sell online all over the world.
Governments can help by encouraging businesses of all size to join the digital movement. Getting started can be as simple as taking pictures of your products and placing a "buy" button on the website.
"The key is to educate local SMEs to think that way," said Mr Paul. "Southeast Asian (e-commerce) markets started very much with consumers first and businesses were not savvy enough, and there was not enough support for consumers from the governments."
The strong interest in buying online in the region has provided opportunities for social media including Facebook and Line to cash in on C2C (consumer to consumer) or social commerce (SC), which is becoming "a very big market", he said.
Asia is the world's largest B2C (business to consumer) e-commerce market, accounting for US$1 trillion out of $2.3 trillion in global sales in 2015, according to a study by the UN Economic and Social Commission for Asia and the Pacific (UN Escap) and the Asian Development Bank (ADB).
E-commerce accounted for 4.5% of the region's gross domestic product, compared with 3.1% in North America and 2.6% in Europe.
But e-commerce development varies across Asia in terms of readiness, as measured by the UN Conference on Trade and Development (Unctad). Its 2017 E-commerce Index takes into accounts processes involved in online transactions including internet access, sellers' web presence, payment methods and logistics.
Only South Korea and Japan made the top 10, in 5th and 8th positions respectively. This was far ahead of Malaysia (38th) and Thailand (48th). However, C2C is actually more vibrant in Southeast Asia, especially in Thailand.
According to a study published earlier this year by King Mongkut's University of Technology, C2C social commerce is now flourishing in Southeast Asia, especially in Thailand, where the C2C-SC market size is "significant".
Fee-free fund transfers for C2C under the government-backed PromptPay e-payment scheme have helped the market in Thailand, it said.
The research found that Asean has now the most active social media users in the world and over 60% of its 150 million internet users in the region purchase online. One-third of online sales take place on social media. A region-leading 51% of online users in Thailand purchased products through social media channels, according to PricewaterhouseCoopers (PwC), compared with 31% in Malaysia and 30% in Indonesia.
With B2C companies such as Lazada and JD.com and C2C companies such as Carousell and Shopee firmly entrenched in Asia, Mr Paul believes what is still missing in the link is B2B.
"One of the biggest needs in Southeast Asia, I think, is B2B," said Mr Paul, who is surprised by the number of businesses that are not doing e-commerce. "If they are businesses they should be selling, not only to consumers, but each other as well."
Import and export activities in Asean, where intra-regional export volume is forecast to reach $375 billion by 2025, could receive a big lift if more of the activity was conducted online, in his view.
B2C cross-border e-commerce is already growing rapidly, the Escap-ADB study showed, with a value estimated at $189 billion by Unctad, while AliResearch and Accenture put the figure at $308 billion.
Unctad estimates that global cross-border B2C e-commerce was only 7% of total B2C e-commerce in 2015. Nevertheless, cross-border e-commerce is more prevalent in Asia compared with other regions. For example, 40% of Malaysian and 55% of Singaporean e-commerce transactions were cross-border, according to Frost and Sullivan.
There is ample room for e-commerce to grow further in Asean and B2B is expected to become a big part of this expansion.
"If you think about selling in China (in terms of B2B) then obviously it is Alibaba's Tmall but what about Japan's Rakuten, Flipkart in India, and Amazon?" asked Mr Paul.
"Local businesses have this big opportunity to not only sell locally but sell globally, even doing manufacturing for consumers globally, such as what Pomelo Fashion has done here in Thailand."
A housewife in China, he said, can now sell globally via Taobao because Alibaba provides that platform for her. So the opportunity is "huge" for consumers and businesses alike, he said. What governments in the region have to ensure is that there is no "friction" impeding growth.
Apart from helping companies to sell globally by digitising their marketing, retail and logistics activities, aCommerce also provides data that is crucial for business expansion.
"When you think about data all you have to think about is how you can use it to sell more and how you can use it to do smarter marketing," said Mr Paul. "It is about using data to help make better business decisions.
"It is very simple. What we do is to help brands take the data, whether it is from Line, Facebook, Instagram, Google and other different platforms, and use it to build, know and understand your customers," he said.
"Today, brands are not thinking that they want to sell to a consumer only, they are now thinking how to sell B2B, B to small B, and even B to government, like government procurement of utilities."
