As pandemic drags on, South-east Asia's retailers accelerate their shift online

South-east Asia added 40 million Internet users in 2020 alone.
South-east Asia added 40 million Internet users in 2020 alone.PHOTO: PIXABAY

JAKARTA - When the first cases of Covid-19 were confirmed in Jakarta in March last year, sales at Mr Richwan Hartono's two ice cream kiosks at shopping malls plummeted by 90 per cent.

By August, the 29-year-old co-owner of Comeagain ice cream had closed his physical stores and switched to selling online, helped by two-for-one offers and reviews from customers affirming that their orders of triple chocolate did not melt on the way.

Now, Mr Richwan says costs are way down from where they were before the pandemic while sales have doubled and are "growing steadily".

"We're really happy to get the operational costs down and stay in business," Mr Richwan told The Straits Times.

While the explosion of e-commerce in South-east Asia has helped mint multi-billion-dollar companies, buying and selling online has remained relatively niche. E-commerce accounts for less than 5 per cent of retail sales in Indonesia, while in China, it's roughly a quarter.

But the pandemic is changing that.

Online payment methods, the rise of ride-hailing apps that double as bespoke logistics companies and growing familiarity with e-commerce are underpinning an accelerating shift online.

"We have the foundations and the catalyst was the pandemic," said Mr Santitarn Sathirathai, group chief economist at Sea, owner of e-commerce platform Shopee.

In a World Bank study of more than 15,000 vendors using the Shopee platform last December, 25 per cent of respondents said they had joined the platform after the start of the pandemic.

Tokopedia, which started in 2008, said that of its more than 11 million vendors, 3.8 million joined in the past year alone.

Bukalapak said the value of wholesale merchandise ordered by mom-and-pop vendors through its platform tripled.

The influx of products, including many new to e-commerce like iced coffee, attracted more shoppers, who in turn bought more products, Ms Inna Chandika, vice-president of marketplace at Tokopedia told ST.

"In 2020, we saw a surge of people selling online because their existing channels are non-existent, and that became a network event," Ms Inna said.

"People were saying 'Hey! My favourite coffee is online. I can find more things online' and more people bought more and that creates a virtuous cycle," Ms Inna said.

And once online, shoppers and vendors are staying there.

More than 90 per cent of new Internet users since the onset of the pandemic continue to shop online, watch streaming services or order their groceries via the Internet, according to an update this month of the November 2020 e-Conomy SEA report compiled by Temasek, Google and US management consulting firm Bain & Company.

South-east Asia added another 40 million Internet users last year alone, compared with 100 million users amassed during the previous five, the report said in November.

The majority of new users since the start of the pandemic in Indonesia, the Philippines and Malaysia have come from non-urban areas, the update said.

Even so, competition is tough.

Selling online requires mastery of finicky details like click-through rates and ensuring one's company pops up on search engines. And while the e-commerce platforms say they offer tutorials on these and other skills like taking photos, selling online isn't for everyone.

"The fun and joy of meeting a customer in real life is different," said Mr Richwan.

In addition, access to broadband and logistics services outside built-up areas can be "very challenging", Mr Howard Gani, senior vice-president of Bukalapak told ST.

Only roughly half of Indonesia's population is thought to have regular access to the Internet, owing to spotty coverage across the vast archipelago.

"Delivering to these remote areas is what we strive for but it depends on what the available infrastructure is," Mr Howard said.

Amazon, which opened its marketplace in Singapore in 2019, woos vendors as a means to reach overseas customers.

"If you talk to a vendor in Chiang Mai, they probably only think about selling to customers in Bangkok," Mr Bernard Tay, head of Amazon Global Selling for South-east Asia, told ST.

"They probably haven't realised that they can sell to customers in Kentucky, too."

Mr Uda Irman, 44, owner of women's shoe outlet, Pollenzo, first started selling via messaging groups in 2015 before joining Shopee a year later. Now he sells across Indonesia as well as exporting to Singapore, Malaysia and Vietnam from his base in Bogor.

"In this business you have to be proactive," Mr Uda explains. "You have to be dedicated and know where you want to go."