EQuarterly Ecommerce Quarterly The latest trends in Southeast

E-Quarterly Ecommerce Quarterly The latest trends in Southeast Asia Q 1 2018 DATEin Asia-Pacific The latest trends

Ecommerce Quarterly / April 2018 o The Ecommerce Quarterly, produced by Econsultancy, is a guide to what’s happening right now in ecommerce in the Asia-Pacific region, and what you should be keeping an eye on. o With ecommerce evolving rapidly, this Quarterly acts as a snapshot of the trends and updates in the industry and region. o This deck can be integrated into your own documents, allowing you to prepare a pitch at a moment’s notice. o We welcome submissions related to ecommerce in the Asia-Pacific region. Please contact us at apac@econsultancy. com.

CURRENT LANDSCAPE

Top ecommerce websites (by total traffic) Country Website Traffic (desktop and mobile) (in millions, Oct 2017 -Mar 2018) China Taobao 1, 220 India Amazon India 392. 45 Indonesia Tokopedia 125. 86 Philippines Lazada 70. 50 Thailand Lazada 63. 00 Taiwan PChome 54. 90 Malaysia Lazada 52. 43 Vietnam Lazada 39. 66 Singapore Carousell 15. 50 Data accurate as of Mar 2018 o Alibaba’s Taobao is the most visited ecommerce site in the region, with 1. 2 billion visits over six months. Amazon India is a distant second o Within Southeast Asia, Lazada is the most popular ecommerce site in the Philippines, Thailand, Malaysia and Vietnam o Rivals Alibaba and JD. com have made substantial investments in companies in the region and can be expected to expand their presence Source: http: //www. similarweb. com (accessed 25 Apr)

Ecommerce sites with the most mobile traffic Country Website Mobile traffic (Oct 2017 -Mar 2018) Mobile traffic (%) Thailand Lazada 44, 112, 600 70. 02% China Tmall 408, 992, 316 65. 82% Taiwan PChome 35, 174, 430 64. 07% Singapore Qoo 10 9, 025, 800 61. 40% Indonesia Lazada 74, 676, 416 61. 12% o As mobile subscriptions increase in APAC, ecommerce sites are seeing significant growth in mobile traffic o In 2016, Thailand had an average of 173 mobile subscriptions per 100 people, making it the highest the region o o Singapore came in second at 147 subscriptions per 100 persons India had the least density of subscriptions at 87 per 100 persons (World Bank) Data accurate as of Mar 2018 Source: http: //www. similarweb. com (accessed 25 Apr)

Digital payments poised to boost APAC ecommerce Country Expected growth (from 2016 -2021) India 24% Indonesia 23% Vietnam 22% Philippines 21% South Korea 19% Thailand 17% Malaysia 15% China 11% Hong Kong 10% Australia 9% New Zealand 9% Singapore 9% Taiwan 9% Japan 7% o As digital payments gain popularity across the region, ecommerce in APAC is set to grow at 12% annually from 2016 to reach US$2. 1 tn in 2021 o E-wallets are seeing increased adoption across Hong Kong, China, and India o Credit and debit cards are expected to slowly lose ground relative to bank transfers by 2021 as emerging economies push for higher levels of financial inclusion o Bank transfers are the easiest and most attractive avenue for consumers in growing economies for online purchases, and are perfectly positioned to be a key driver for ecommerce in APAC Source: https: //worldpay. globalpaymentsreport. com/

TRENDS AND UPDATES

Southeast Asia (SEA) governments mull ecommerce tax o Governments in Southeast Asia are considering implementing a tax on online transactions, including: o o o Sales over social networking platforms Advertising on Facebook and Google Journeys booked and paid for via ride-hailing applications Individual sellers look set to be included under the new laws Enforcement of the new laws is expected to be difficult, particularly if retailers sell on multiple accounts on social media networks and online marketplaces o Indonesia, Malaysia and Vietnam are drafting legislative proposals o Thailand is conducting a public hearing on its proposed amendments. The Philippines has already put taxes in place since 2016 and Taiwan imposed a 5% tax on crossborder ecommerce companies in 2017 o Singapore is taking a “wait and see” approach o The ecommerce tax is intended to level the playing field between local retailers and overseas sellers Source: http: //www. straitstimes. com/asia/se-asia/taxmen-cometh-online-in-s-e-asia (accessed 25 Apr) http: //www. taipeitimes. com/News/biz/archives/2017/12/30/2003684867 (accessed 25 Apr)

JD. com strengthens presence in SEA o JD. com moved into Thailand in September 2017 with a US$500 million investment together with Central Group o JD. com has also backed ride-hailing startup Go-Jek in Indonesia, and Pomelo, a fashion marketplace based in Thailand o JD. com is now entering Vietnam with an investment in Tiki, a Vietnamese online retail platform, becoming one of its largest shareholders Source: https: //techcrunch. com/2017/09/18/chinas-jd-com-announces-500 m-ecommerce-and-fintech-joint-ventures-in-thailand/ (accessed 25 Apr) https: //techcrunch. com/2018/01/18/jd-com-tiki-indonesia/ (accessed 25 Apr) o These investments strengthen JD. com’s position in the SEA ecommerce arena against Alibaba’s advances

Alibaba invests in Citiesocial o In January 2018, Alibaba led a Series A funding round worth US$2. 75 million in Citiesocial, a Taiwanese ecommerce company that helps companies grow their market share in Asia o Citiesocial has around 600, 000 customers across Taiwan and Hong Kong o Its services include: o o o Localization of branding Tools for sales and marketing Assisting with cross-border logistics Customer support Inventory management Alibaba has made significant investments in various industries, and is likely looking to diversify its services Source: https: //e 27. co/alibaba-leads-us 2 -75 m-round-taiwan-ecommerce-startup-citiesocial-20180108/ (accessed 25 Apr)

Alibaba doubles down on SEA ecommerce o Alibaba has invested an additional US$2 bn in Lazada o Prior to this investment, Alibaba held 83% of Lazada – its stake after the investment is undisclosed o Alibaba is in tight competition with Amazon and JD. com o All three have significant investments in Southeast Asia Source: https: //www. reuters. com/article/us-alibaba-lazada-funding/alibaba-doubleslazada-investment-to-4 -billion-in-aggressive-southeast-asian-expansionid. USKBN 1 GV 09 W (accessed 25 Apr)

Alibaba acquires food delivery platform Ele. me o Alibaba acquires online food delivery service Ele. me for US$9. 5 billion in April 2018 o Alibaba now has a 43% stake in the company o This marks Alibaba’s intention to expand into the on-demand delivery arena o The on-demand service complements its online grocer, Tmall Supermarket, and offline supermarket chain, Hema o Unlike JD. com, Alibaba does not have its own transport and logistics operations Source: http: //www. scmp. com/tech/ecommerce/article/2139924/alibaba-acquires-food-delivery-platformeleme-it-ramps-new-retail (accessed 25 Apr)

Australian retailers remain strong o Amazon launched its services in Australia in December 2017 and has thus far opened one fulfilment facility in Dandenong, Victoria o While the ‘Amazon effect’ – where Amazon’s dominance in ecommerce affects the retail market significantly and often negatively – has not been felt, stock prices have taken a dip o Share prices of major Australian retailers Myer, Harvey Norman and JB Hi-Fi are down 47%, 25% and 22% respectively o Major shopping mall landlords Scentre Group and Vicinity Group have trimmed their portfolios to focus on “experiential” retail tenants, including dining, lifestyle and entertainment Source: https: //www. theguardian. com/technology/2018/feb/14/australianretailers-resilient-as-they-face-down-amazon-effect (accessed 25 Apr) https: //www. forbes. com/sites/forbesasia/2017/11/01/amazons-impendingarrival-in-australia-has-retailers-trembling/#33 e 73644794 d (accessed 25 Apr)

Allied Technologies enters ecommerce o Allied Technologies, a Singaporean manufacturer of precision stamped metal parts, is set to move into ecommerce o It has acquired Asia Box Office for $30 million, with the goal of scaling them into market leaders o This gives Allied Tech a 51% stake in the ecommerce ticketing solution platform that focuses on entertainment, sports and lifestyle events Source: https: //www. theedgesingapore. com/alliedtechnologies-buys-51 -stake-asia-box-office-30 -mil (accessed 25 Apr)

We. Chat launches We. Chat Pay for Expats o We. Chat broadens We. Chat Pay to include credit card services from Mastercard, Visa and JCB o Expats living in China and residents of Macao, Hong Kong and Taiwan will be able to use We. Chat Pay without a locally issued bank account o This marks We. Chat’s efforts to penetrate further into Macao, Hong Kong and Taiwan o The inclusion of credit card services is likely the first step in another attempt to expand its reach outside of APAC Source: https: //www. zdnet. com/article/wechat-allows-users-to-link-overseascredit-cards/ (accessed 25 Apr)

Danone partners with Lazada o Danone partners with Lazada to create a superior online shopping experience o o Danone’s Early Life Nutrition category will be a focus The partnership will leverage on Lazada’s digital platforms to provide ordering solutions, and delivering exclusive content developed with Danone o The partnership will focus on delivering insights and tailored offers o Offering insights and information related to pediatric nutritional needs may be a first step to encourage greater engagement with the ecommerce platform o Danone is already working with Lazada in Indonesia, Thailand Singapore on individual campaigns Source: http: //www. asiaone. com/business/danone-and-lazadaannounce-a-strategic-regional-partnership-to-strengthen-theirecommerce (accessed 25 Apr)

Japan’s Rakuten broadens its services o In January 2018, Rakuten announced a partnership with Walmart subsidiary Seiyu GK to expand Walmart’s existing grocery service o o Rakuten Seiyu Netsuper will allow customers to place orders via Rakuten’s online marketplace Walmart will also offer Rakuten’s e-reader Kobo and a catalog of nearly 6 million ebooks and audiobooks in its US stores o Rakuten is moving its popular loyalty program into a blockchain-based cryptocurrency, Rakuten Coin o Rakuten Coin promises to create a “borderless” shopping experience where customers can purchase goods and services from other Rakuten services and regions o Rakuten is aiming to create an “ecosystem” of services ranging from telecommunications, insurance and ecommerce Source: https: //techcrunch. com/2018/02/27/rakuten-will-roll-its-9 b-loyalty-program-intoa-new-blockchain-based-cryptocurrency-rakuten-coin/ (accessed 25 Apr) https: //www. japantimes. co. jp/news/2018/01/26/business/corporate-business/rakutenwalmart-take-aim-amazon-alliance-groceries-e-books-japan-u-s/ (accessed 25 Apr)

Econsultancy resources o o Flipkart: Building Trust in Indian Ecommerce https: //econsultancy. com/reports/flipkartbuilding-trust-in-indian-ecommerce JD. com: More than Ecommerce https: //econsultancy. com/reports/jd-com-more -than-ecommerce Shopee: Localizing Ecommerce in Southeast Asia and Taiwan https: //econsultancy. com/reports/shopeelocalizing-ecommerce-in-southeast-asia-andtaiwan Ecommerce Best Practice Guide: https: //econsultancy. com/reports/ecommerce o o Ecommerce Performance: https: //econsultancy. com/reports/ecommerceperformance Internet Statistics Compendium: Ecommerce: https: //econsultancy. com/reports/ecommercestatistics The Econsultancy blog features regular posts on the most recent ecommerce trends and stats: https: //econsultancy. com/blog/topics/ecommer ce Ecommerce training: https: //econsultancy. com/training/courses/topi cs/ecommerce/