There was a time, not so long ago, when the only hot thing going on in Southeast Asia was the weather. Not anymore. These days, it’s one of the hottest growth regions in the world. Digital products in the region is also booming, with double-digit growth rates of smartphone sales in 2011 as well as the world’s highest usage of social networks such as Facebook, Twitter, and Instagram. Amidst this exciting landscape, e-commerce still remains a nascent opportunity, and is only beginning to take off. What took it so long?
Reasons for slow e-commerce penetration
The first observation that comes to mind is that people there are too attached to their airconditioned malls. Probably because of the need to escape the humid, tropical weather, ‘mall-ing’ is not just a favorite activity of Southeast Asians, it’s deeply embedded into their cultural and social fabric. Some of the biggest shopping malls in the world are located in Indonesia, Thailand, and the Philippines.
The second issue is underdeveloped infrastructure. Two of the biggest Southeast Asian nations, Indonesia and the Philippines, are composed mainly of islands, so transportation even over short distances can be challenging. Roads are not well-paved in many areas. Payment is also an issue, since credit card adoption is low and people still mostly rely on cash for transactions. Internet penetration has grown through the years but still remains low, with many people accessing the internet in places not exactly conducive to shopping, such as internet cafes or mobile phones.
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