Without India’s South Asian market, will cross-border e-commerce live better if it doesn’t do low prices?

South Asia is one of the most densely populated regions in the world, and about 20% of them are under 14 years old. The huge population base, younger population structure, and huge market growth potential make South Asia one of the main destinations for major exporting countries' cross-border online export selling. As a major economy in South Asia, India is regarded as a blue ocean market for cross-border e-commerce. However, after a series of black swan incidents in 2020, Chinese companies going overseas to India have suffered a heavy blow, and even Ali, which once invested heavily, has basically given up the Indian market. Almost overnight, there was a consensus among the people who went to other countries. The Indian market could not do it.

Without India's South Asian market, how much market space is left for cross-border e-commerce?

In response, Wu Mixiang, founder and CEO of Perfee, a South Asian e-commerce platform, said to Yibang Dynamics: "In addition to India, several countries in South Asia still have a lot of imagination and space in the market, and it is worth continuing to do it."

Cross-border e-commerce spends in South Asia in 2021

In 2021, India will be a "nightmare" for Chinese cross-border e-commerce.

In June, the Indian government announced the ban on 59 Chinese apps including Club Factory and SHEIN. Then in July, Club Factory announced the suspension of operations in India and suspended payments to sellers (but in the second half of the year, Club Factory has begun to return blood).

The All India Chamber of Traders (CAIT) also launched a boycott of Chinese products called "Indian goods-our pride", with the goal of reducing imports of Chinese products by US$13 billion by the end of 2021.

In July, Indian authorities mandated that products sold on e-commerce platforms such as Amazon clearly indicate the place of origin, otherwise they may be removed from the shelves. Bloomberg quoted sources as saying that these practices are to encourage Indian users to buy local products and exclude Chinese manufacturers.

In November, the Indian government issued a document again banning Indian users from accessing 43 Chinese apps such as AliExpress and Alipay. In addition, the first two documents banned 220 Chinese apps in total. Subsequently, AliExpress announced that it would no longer accept new orders with the delivery address of India from November 30.

However, the cross-border e-commerce path of other South Asian countries except India has not been greatly affected. For example, the South Asian e-commerce platform Daraz acquired by Ali, July data shows that Daraz already has 60%-70% of Pakistan's market share.

The number of online orders has increased by 9 times since March, and the number of active users in Sri Lanka has increased by 1.5 times compared with last year.

Wu Mixiang said that although there will be logistics and customs clearance issues in the South Asian market outside India in 2020, overall, the epidemic has prompted the South Asian e-commerce market to achieve leapfrog development.

Logistics is the lifeline of cross-border e-commerce

Like other markets around the world, the epidemic has greatly affected the logistics links in South Asia. "International logistics in 2020 will have a great impact on us. The epidemic in China began in February, and production and life in the country had basically resumed in March and April.

However, at this time the epidemic abroad began to spread, so it caused cross-border Logistics has been sealed up. For example, Bangladesh city was sealed until June and July, and the local international logistics customs and customs clearance rules in Bangladesh have all changed. It was not until October that the stability was restored." Wu Mixiang said.

He said that fortunately, these logistics problems have been basically resolved, so the current e-commerce links in the South Asian market have been able to operate normally.

More importantly, the epidemic has changed the consumption habits of users, and more and more users in South Asia are starting to shop on e-commerce platforms. "During the epidemic, more people in South Asia began to shop online, and their dependence on mobile shopping was very high."

Due to past development constraints, most people in South Asia have directly entered the mobile Internet stage, about a third The second population is using mobile services. According to Deloitte data, mobile consumption in Asia will increase more than three times by 2025 compared to 2019.

The epidemic has caused the sales of South Asian e-commerce FMCG products to soar. According to data released by Daraz, the proportion of FMCG sales in the Pakistan market has increased from 20% to 70%, and grocery sales have increased by 9 times year-on-year. This trend is also reflected in the sales of Daraz’s Double Eleven Shopping Festival.

Wu Mixiang pointed out that this is because the epidemic has caused people to experience wage cuts and unemployment, so most users' online purchase decisions have changed from non-essential and luxury goods to necessities.

In addition, regarding the shopping festival, Wu Mixiang said: “Daraz has been promoting double eleven discount marketing for many years, so that users in South Asia have gradually become aware of the shopping festival.

But on the whole, they are relatively weak on this type of shopping festival. They are more inclined to shop during the festivals of their own ethnic groups. As for us, we rarely engage in preferential activities and don't want to burn money."

Is the South Asian e-commerce market still worth doing?

A question arises that after losing the Indian market, is the South Asian e-commerce market still worth doing?

This is something that many cross-border e-commerce sellers are concerned about. Wu Mixiang believes that the South Asian market except India is still a blue ocean with many opportunities.

Statistics show that the five countries of Bangladesh, Pakistan, Sri Lanka, Myanmar, and Nepal have a total population of more than 490 million, with a huge population base, more than 210 million Internet users, and an overall Internet penetration rate of 42.9%.

Among them, the Internet penetration rate of Bangladesh is as high as 58.4%, which is close to the Chinese and Indonesian markets and higher than the Indian market.

In terms of age group, the population under the age of 40 in South Asia accounts for nearly 63% of the population, and the younger demographic structure makes the e-commerce market in South Asia huge.

In 2020, the epidemic has changed the consumption habits of users in South Asia, and more and more people are trying online shopping. A Deloitte research report shows that 58% of Bangladeshi users have used digital services more frequently since the beginning of the epidemic.

This proportion is about 40% in countries such as Pakistan. Digital services include online games, e-commerce, social networking, online office, and distance education.

It is understood that in Bangladesh and Pakistan, many users even make online purchases because "online shopping is cool". This is good news for merchants, because online shopping has gradually become a "new fashion" in South Asia.

In addition, in countries such as Pakistan, the proportion of people who have never had online shopping experience in the total population is still as high as 25%, and there is a lot of room for growth.

Wu Mixiang specifically emphasized the issue of market education. He pointed out that Daraz, a South Asian e-commerce platform wholly-owned by Alibaba, has invested a lot of resources in the South Asian market for publicity and preferential activities, which has promoted user education in the South Asian e-commerce market.

According to the public sharing by the general manager of Daraz, "South Asian customers have now realized that e-commerce is not just about discounts, but the convenience of delivering goods to their doorsteps."

This change can be seen in Daraz Double Eleven sales. The site attracted 2.5 million users within 24 hours, with more than 2 billion page views in 7 days, and digital payments accounted for about 50% of total sales.

Although it is also in the South Asian market, Perfee does not regard Daraz as a competitor. In Wu Mixiang's view, "there will certainly be giants, but South Asia is far from a monopoly and a monopoly on the market. Small and medium-sized enterprises still have a lot of market space."

In addition, a stable business environment and policies are the basic guarantee for business development. Compared with South Asian countries such as India and Bangladesh, it happens to have this advantage.

The detailed statistics of foreign direct investment released by the Bank of Bangladesh show that China has become the largest source of foreign direct investment into Bangladesh, which has also created a good operating environment for Chinese cross-border e-commerce companies.

How should cross-border e-commerce sellers win the South Asian market?

To do cross-border e-commerce in South Asia, choosing the right product is the top priority. Wu Mixiang introduced that Bangladesh, the largest market in South Asia except India, has a well-developed local apparel manufacturing industry.

Therefore, cross-border e-commerce companies try not to choose apparel products when choosing products. It is recommended to choose beauty, luggage, shoes, household goods, 3C Products and other categories.

According to his introduction, Perfee's three main categories are fashion category, 3c electronics, and household products. "I think so, no matter how the epidemic develops, people always have to live, eat, and work, so we mainly do what these categories just need." Wu Mixiang said.

Culture is also an important factor in the selection of products. Some sellers once said that "even the color will affect the purchase." Most users in South Asia are Muslims, so be careful when choosing products to avoid Muslim taboos.

Wu Mixiang gave an example: "We all know that Muslims cannot drink alcohol, so alcohol products cannot be sold in South Asia. But in fact, it is more than that. A seller on our platform once sold a jug-shaped decoration. It was supervised by the government."

As for the pricing of products, Wu Mixiang said that there is no need to make low prices when doing cross-border e-commerce in South Asia. He suggests seizing the middle-class consumer groups.

"One is because the Bangladesh market is expensive, and the prices are too low, which makes customers distrustful. Bangladesh has 180 million people and about 10% of the wealthy group. It is enough to catch these people.

The second is the logistics problem. Shipping to South Asia Too slow, usually choose to go by air. The cost of air freight in Bangladesh is about 60 or 70 yuan per kilogram. The logistics cost in Pakistan is higher. Coupled with the cost of customs clearance, it is easy to make a low price. I suggest sellers not to choose some products that are too heavy. To sell it, the logistics cost is too high."

e-cab Research Result on E-commerce

According to e-Cab research, more than 90% of e-commerce users in Bangladesh prefer the cash on delivery payment model. Although most e-commerce websites in Bangladesh support online transactions such as credit cards.

However, almost all e-commerce websites also provide other payment methods to meet consumers' preferred demand for cash on delivery. Wu Mixiang said, "Very few e-commerce companies only support wire transfer/bank transfer, and generally have cash on delivery options."

In addition, Wu Mixiang pointed out that to do cross-border e-commerce in South Asia, it is important to have local customer service. "In China, most users basically do not contact customer service after placing an order on the e-commerce platform, nor do they actively ask if the customer service has been delivered.

But users in South Asia are different. After placing an order and buying something, they will check it every day. For logistics information, I will also ask customer service. In fact, the core problem behind this phenomenon is trust.

The distrust of the platform makes them pay attention to the logistics information of the goods. Like, for kids the sellers need to deliver cartoon cakes which need to be in a cooler box so that it stays fresh.

Also, the languages of South Asian users are mostly small languages, and users post ordinary customer service can’t understand the question, and any software interpreter can interpret can’t translate it. In this case, you must insist on using local customer service.”

Indian market is comp[arable to that of Vietnam. India has Google pat and others which are prominent along with the government's app.

What is the payment model and pattern of e-commerce in Vietnam?

Although the payment methods of China and other neighboring economies have undergone drastic changes in recent years, the payment methods of e-commerce in Vietnam are still lagging behind.

Even with the booming e-commerce today, cash on delivery and direct cash payment still occupy the mainstream position.

Digital payment solutions such as mobile payment and e-wallet have not yet been fully developed, but overall, there is a positive trend for accelerated development.

Vietnam e-commerce payment model

In the Vietnamese society where cash is king, cash on delivery (52%, Cash on Delivery) is the dominant payment model. Followed by bank transfer (27%, Bank Transfer), bank card (11%, Card), e-wallet (6%, E-walltet) and others (4%).

Status of mobile payment in Vietnam

In 2018, Vietnam Mobile and other non-cash payments increased significantly, and the annual growth rate more than doubled. Mobile applications and e-wallet transactions increased by 126% and 161%, respectively. In the first half of 2018 alone, transactions through these services reached billions of dollars.

Vietnam mobile payment

Therefore, although cash is still the main option in Vietnam, e-wallets and other mobile banking solutions continue to develop rapidly, and the main payment methods may change in the next few years. The rise of e-wallets is mainly due to its convenience.

E-wallets give mobile phones instant transfer, online shopping, bill payment and other functions. Compared with electronic wallets, other payment methods pale in comparison.

Vietnam payment gateway

The three well-known payment gateways in Vietnam are MoMo, ZaloPay and Moca. Interested friends can find out for themselves, so I won’t introduce too much here.

For companies preparing to enter the Vietnamese market through e-commerce, they need to pay more attention to the payment models provided and supported by the e-commerce platform itself, especially the support for cash on delivery (COD). Major Vietnamese e-commerce platforms such as Shopee, Lazada, and Tiki all support COD.