For many years, when it comes to e-commerce, there has been one undisputed leader — Amazon. However, as consumers began changing their buying behaviour, newer brands began to pop up to upend the online shopping juggernaut. Take Shein for instance, the Chinese company that only recently took the world by a storm for its ultra fast fashion approach has overthrown Amazon, topping the chart as one of the most downloaded shopping apps in the world in 2021.

In fact, Shein is not the only one. According to the newest data from Apptopia, two other e-commerce companies leapfrogged Amazon in the global rankings: Shopee, based in Singapore, which serves Southeast Asia and Latin America; and Meesho, based in India, which specializes in social e-commerce for categories including fashion and home products.

All data is iOS + Google Play combined, except for data from China which is iOS only. Source: Apptopia

The US e-commerce giant came in fourth place overall in global shopping app installation last year. Just the year before, Amazon had the most app installs worldwide. It is fair to note though that Amazon is still first in Apptopia’s US rankings for shopping app installs in 2021. This is given considering data from Statista that shows the Seattle-based company holds 41% of the US e-commerce market in 2021.

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Singapore-based Shopee came in first with a total 203 million downloads while China-based Shein came in second with 190 million downloads and the company has been a growing force in the fast fashion market. India-based Meesho took the third spot with 153 million downloads.

Amazon, Shein, Shopee vs social commerce

At this point, online is growing at a torrid pace. New data from fintech and payments research specialists Kaleido Intelligence has found that B2B and B2C e-commerce spend on physical goods and digital services will reach US$6 trillion this year, up from US$4.8 trillion in 2020. 

But it is shopping on social media platforms that will top the chart as it is currently growing three times faster than traditional e-commerce platforms. In fact, it is on pace to reach US$1.2 trillion globally by 2025, according to a study by Accenture. Most of that growth (62%) will be driven by Gen Z and millennial shoppers.

“The social commerce opportunity will nearly triple by 2025. Growing at a CAGR of 26%, the social commerce opportunity will reach $1.2 trillion by 2025. This accounts for 16.7% of the US$7 trillion e-commerce total spend,” Accenture said in a separate report.

The report also believes that China will remain the most advanced market both in size and maturity, yet the highest growth will be seen in developing markets such as India and Brazil. As for the US, social commerce is expected to more than double, reaching US$99 billion by 2025.

The post Shein, Shopee and Meesho overtake Amazon in 2021 appeared first on Tech Wire Asia.

Pine Labs has started 2022 with a big announcement. The leading merchant commerce platform has received a new investment of US$20 million from India’s largest commercial bank, the State Bank of India (SBI).

Pine Labs a fintech company that serves prominent large, mid-sized, and small merchants across India and Southeast Asia.

Its cloud-based software platform enables it to offer a wide range of payment acceptance and merchant commerce solutions including enterprise automation systems such as inventory management and customer relationship management. Its stored value platform includes issuing, processing, and distributing digital gift cards for corporate customers around the world.

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Pine Labs has recorded incredible success thus far. In 2021 alone, the company raised almost US$600 million from a marquee set of new investors and followed it up with a US$100 million fundraise from the US-based Invesco Developing Markets Fund.

In addition to augmenting its merchant commerce offerings at the offline point-of-sale, Pine Labs is now looking to invest in scaling Plural, its newly launched brand of online payment products, and emerge as an omnichannel partner of choice for merchants.

According to B. Amrish Rau, CEO, Pine Labs, having the largest bank of India, the State Bank of India places their trust in them, welcomes them in this journey where they are empowering merchants with seamless and secure payment experiences across offline and online platforms.

“In the last one year, several marquee investors have placed their trust in our business model and growth momentum and that is a gratifying feeling. This association with SBI is a personally satisfying experience as I had started my career selling financial services technology to SBI,” added Rau.

In April 2021, Pine Labs acquired Southeast Asian startup Fave in a deal valued at US$45 million as the Indian firm looks to strengthen its consumer-focused offerings in the domestic and international markets.

Since then, the company has continued expanding its Buy Now Pay Later (BNPL) business across India and Southeast Asia. It also has a leading presence in the Gift, Prepaid and Stored Value segment through its 2019 acquisition of Qwikcilver.

The BNPL industry has been seeing growing competition in Southeast Asia as more companies are now jumping on the bandwagon and offering such services. Last month, Pine Labs announced a regional partnership with insurtech firm Igloo as well.

Towards the end of 2021, Pine Labs also announced the launch of Plural Tokenizer, a tokenization solution that works across leading card networks. This Card-on-File or CoF tokenization solution will replace the debit or credit card details of the cardholder with what are called ‘tokens’ or randomly generated numbers. The launch is in line with the Reserve Bank of India (RBI) guidelines that mandate no entity other than the card issuer or card networks to store actual cardholder data with took effect from January 1, 2022.

The post Pine Labs secures investment from India’s largest bank appeared first on Tech Wire Asia.

Kicked in on 1 January this year for 10 countries in the Asia Pacific, it was initiated in 2012 by the Association of Southeast Asian Nations (ASEAN) in order to strengthen ties with China and other APAC nations.

Asia and cross-border trade

The Asia Pacific, especially ASEAN, has long had a history of close and successful cross-border trading, primarily due to proximity and similarity of cultures, which facilitates logistics and market demand for goods. 

However, unlike the European Union (EU), the APAC region had been a little on the slower side to rectify existing bottlenecks in processes, laws, regulations, tariffs, and access to financing, especially in relation to global value chains. 

Furthermore, most trade agreements tend to be within these countries’ sub-regional parameters, i.e. Greater Asia, or Southeast Asia. 

Leading tech nations in Greater Asia — namely, Japan, South Korea, and China — have been embroiled in political tensions for decades, slowing inter-regional trade there.

This RCEP, interestingly, will mark the first time that China, Japan, and South Korea would be in a free trade agreement — certainly a movement that has gotten the world on the edges of their seats to see how it plays out.

Who are in the RCEP?

Ushered in four days ago, the RCEP agreement kicked into action for Brunei Darussalam, Cambodia, Laos, Singapore, Thailand, Vietnam, China, Japan, Australia, and New Zealand.

South Korea would join the bloc on 1 February 2022, 60 days after its ratification. Other signatory nations including Malaysia, Indonesia, Myanmar, and the Philippines are expected to ratify it soon. 

Their agreements will enter into force 60 days post ratification instrument deposit, acceptance, or approval to the Secretary-General of ASEAN. 

What will the RCEP bring for signatories?

The RCEP comprises a mix of low, medium, and high-income countries. Its key selling point is the elimination of tariffs for cross-border trade in goods. 

It is a big deal, as inter-Asia trade already is bigger than trade between Asia, North America and Europe put together. 

Once the RCEP came into effect, 65% of tariffs have gone down to zero — and this number is expected to rise to as much as 90% within 20 years. 

For RCEP exporters to enjoy these tariffs, they would need to abide by its common “rules of origin” framework, shared Ajay Sharma, HSBC’s regional head of global trade and receivables finance for the Asia Pacific, in a report by SCMP. 

This means sourcing at least 40% of inputs from within the RCEP bloc, in order for their end-products to enjoy the tariffs when they’re exported to other member nations. 

Sharma further opined that diversification of supply chains and FDI (foreign direct investment) will be accelerated as companies will find it easier to use ASEAN as a base of production, given lower associated business costs. 

He also added that it would “streamline existing FTAs in APAC and strengthen intra-regional trade linkages.”

Digitalization and cross-border trade in ASEAN

As previously mentioned, cross-border trade in ASEAN has been strong and will keep growing as regional cooperation between private and government players further harness the power of technology, given the pandemic’s movement restrictions.

According to Google, Temasek, and Bain, Southeast Asia is predicted to reach a US$1 trillion digital economy by 2030. 

Whilst trade was admittedly negatively impacted by the pandemic in the past two years, heavy damage was largely averted through several approaches. 

Digitalization in the form of enhanced digital connectivity, automation of operational services, and strong governmental policies prioritizing digitalization in cross-border trade played a huge role in dampening the effects of the pandemic in ASEAN.

Furthermore, the region is one that’s quick to recognize and take advantage of fintech. This is largely applied to foster better financial inclusion, in the region home to the world’s largest population of unbanked and underbanked consumers. 

The Asia Pacific has a huge appetite for fintech — reflecting the changing finance and banking landscape, as well as consumer demand, in these regions.

According to Findexable, five ASEAN nations — namely Singapore, Indonesia, Malaysia, Thailand, and Vietnam, are also in the top 20 Asian fintech nations. Findexable publishes the annual Global Fintech Rankings.

For example, the central banks of Malaysia and Thailand launched a cross-border QR payment system in June last year. The retail payment linkage enables consumers and merchants in both countries to make and receive instant cross-border QR code payments.

Both countries had recently undergone pivotal shifts in digitalizing payments. Malaysia promoted its real-time retail payment system and DuitNow, whereas Thailand charted an e-payment roadmap to bolster intra and inter-country retail e-payments.

Multiple countries in Asia have or are in the process of embarking on their own sovereign digital currencies, or, CBDCs (central bank digital currency). 

Singapore has taken the lead to develop retail CBDC through the Global CBDC Challenge, whereas Malaysia is still experimenting. 

In September last year, it was reported by Tech Wire Asia that central banks of Singapore, Australia, Malaysia, and South Africa will develop prototypes and test shared platforms to process cross-border digital currency transactions. 

China has successfully carried out multiple iterations of its digital yuan trials, and Japan is reportedly looking at starting its own too.

The RCEP and ASEAN’s digital economy dominance

Aside from fostering smoother payments, digitalization brings with it a host of other benefits for businesses and consumers alike, especially in the digital payments powerhouse that is Southeast Asia. 

E-Commerce has been identified as a key driving force of strong intra-regional trade between countries, and its potential is immense in developing nations such as the Philippines.

The role that technologies such as AI and analytics play, especially in e-Commerce, cannot be underestimated too. 

E-Commerce players are not just concerned with swimming with small fish — they have far bigger fish (markets) to fry.

Last year, China-based fashion mogul Shein overtook Amazon as the biggest fashion mobile e-Commerce platform in the US. Shein has quietly racked up a valuation that exceeds US$15 billion, too.

In Thailand, fashion e-commerce players such as Pomelo have developed their own machine learning system to boost their platform presence. 

Furthermore, emerging fintech such as BNPL also play a part in growing financial inclusion for not just consumers, but MSMEs (micro and SMEs) as well. 

A report by Deloitte predicts that digital trade will further accelerate, and leapfrog the region into the golden age of digital trade within the next three years.

The report also suggests that this pivotal shift will be largely facilitated by increased dynamic cross-border e-Commerce activities, which are further strengthened by regional cooperation through the RCEP, increased digitalized lifestyles, and the ongoing development of digital infrastructures.

It’s just a matter of when — not if.

The post APAC will dominate the digital economy with RCEP appeared first on Tech Wire Asia.

With so many shopping apps available, merchants and platforms now find themselves in a fiercer competition than before. Before the pandemic, most brands were slowly building their online stores. However, when the pandemic enforced global lockdowns, the demand for such apps increased so much in recent times.

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In fact, Google’s SEA e-conomy report in 2021 stated that 8 out of 10 of SEA’s internet users are digital consumers. The report also indicates that 90% of Thai, 81% of Malaysian, and 71% of Vietnamese internet users have had an experience of shopping online. As online shopping becomes the norm, the market itself is predicted to reach between US$ 700 billion and US$ 1 trillion by 2030.

Today, shopping apps sell almost anything. From clothing to services to even cars. But the demand from consumers is not just for more products but for a better and seamless experience when using shopping apps and platforms.

This includes the entire experience on the app from product details to the payment checkouts. Integration is key in almost all apps today, especially when it comes to payment systems. The more options and simplicity an app offers to customers, the likelier they are to return for more purchases in the future.

Innovating the perfect shopping app experience

Paul Harapin, Stripe APAC Revenue Growth Lead

According to Paul Harapin, APAC Revenue Growth Lead at Stripe, brand loyalty is heavily practiced in the region. When customers go online, the engagement shopping apps give them needs to be fluent and seamless.

“25% of customers abandon their sales at checkout because organizations don’t focus enough on customer experience at the point of their excitement to purchase something. If there are hurdles on shopping apps, like too many questions, navigation issues, they will move away. We are helping our clients improve their customer experience especially when it comes to the checkout experience,” said Paul.

He added that organizations are adopting technology much faster now. Most companies have accelerated dramatically by bringing on a decade’s worth of transfor

mation with 12 months. He also pointed out that some companies posted an increase of over 47% in revenues this year by improving their customer and digital experience on their shopping apps.

Customers want more payment options

At the same time, the delivery of new payment methods is becoming crucial for shopping apps. Today, shoppers want to make payments beyond the traditional credit or debit card and online banking methods. Digital payment methods like e-Wallets and buy now pay later (BNPL) transactions are becoming increasingly popular among certain customer demographics on shopping apps.

“Customers want choice. We worked with various e-Wallets and BNPL players in Southeast Asia. Merchants report that BNPL customers are not only bringing in larger sales but also sales in larger basket sizes. The advent of BNPL in Stripe has enabled retailers to not just sell more, but also bigger payments,” explained Paul.

Interestingly, CNBC recently reported that Stripe also isn’t ruling out accepting crypto currency as a method of payment in the future. For now, the market for crypto payments is still in its infancy stage but Paul believes that this can change soon, given the growing interest in crypto payments. And Stripe is also no stranger to accepting crypto payments as they had previously offered bitcoin payments but ended the support in 2018.

The future of shopping apps is all about the experience

(Photo by Matthew Hatcher / GETTY IMAGES NORTH AMERICA / Getty Images via AFP)

“In 2022, the customer experience will be the center of focus for most e-Commerce providers. Shopping apps will want to capture customers the moment they start the app. Because if they can’t capture the customer at that moment, it is only going to be harder,” Paul highlighted.

He also pointed out that innovative organizations may try new methods. This includes engaging the creator economy which will become great access to market for retail environments. The creators can leverage their brand and make content that only drives revenue for themselves but also other retailers.

“Over the next 12 to 24 months, you will see more merchants looking to access different ways to connect to their customers and different advertising brand awareness methods like via social media or shoppertainment, to access the audience that they want to sell to. The great thing about the online market is that you can be very targeted to a specific segment. Our customers want to know how they can expand their business rapidly without having to spend months accessing local regulations and understanding requirements of each country, especially with regulations.”

And this is where e-Commerce players want to have as little complexity as they can and focus more on their customers. Paul added that they will want to focus on their customers and let tech providers like Stripe worry about the back end for them, especially as they look to capture global markets at a lower cost footprint.

For example, Stripe recently announced it has entered into an agreement to acquire Recko, a leading provider of payments reconciliation software for internet businesses. Payments reconciliation is an accounting process that compares two or more sets of records—for example, a company’s internal sales log and their external bank statement—to confirm accuracy.

Finance teams perform reconciliation to uncover discrepancies, avoid incorrect accounting, and understand a company’s financial health at a point in time.

With that, the market and opportunities for shopping apps and e-Commerce players in the region are only going to get bigger and more competitive in the future. For now, businesses want to be able to retain their customers, keep them satisfied and provide them a seamless experience. Simply put, they’ll focus on their customers and leave the backend issues to service providers like Stripe.

The post How will shopping apps capture SEA customers in 2022? appeared first on Tech Wire Asia.

Chinese e-commerce giant Alibaba Group Holding Ltd has been facing intensified competition that has been eating into its market share. The pandemic and evolution in the way consumers shop has even widened the difference in revenue growth of Alibaba and its peers. Having its position in the industry challenged, Alibaba realized it needs to do what it takes to have its e-commerce business especially to stay relevant.

For starters, the company announced that it will be reorganizing its international and domestic e-commerce businesses and have its CFO replaced. According to the company’s statement on Monday, the changes come “as the tech giant grapples with an onslaught of competition, a slowing economy, and a regulatory crackdown.”

To recall, the company was fined a record 18 billion yuan (US$2.8 billion) in April for abusing its dominant market position. Alibaba broke the country’s antimonopoly law by preventing merchants from selling their goods on other shopping platforms.

How will Alibaba and its e-commerce unit be structured then?

The reorganizing of its e-commerce unit will begin with the formation of two new units — international digital commerce and China digital commerce which the company said was part of efforts to become more agile and accelerate growth. In Alibaba’s last quarterly earnings, the company announced its annual active consumers (AAC) overseas reached 285 million and reiterated its ambitious goal of serving 2 billion consumers globally.

Apparently, the international digital commerce unit will include AliExpress which sells to retail buyers particularly in Europe and South America, its Southeast Asian e-commerce business Lazada and Alibaba.com which is more focused on selling to overseas business customers. The newly-formed International Digital Commerce will be led by Jiang Fan while Alibaba veteran Trudy Dai will lead the new China Digital Commerce that combines Alibaba’s China consumer-facing and wholesale marketplaces. 

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Toby Xu will also be succeeding Maggie Wu as CFO from April 1,next year. In a letter to employees outlining his strategy and leadership changes, Alibaba Group Chairman and CEO Daniel Zhang said “We will continue to focus on becoming a truly globalized company, and we believe that overseas markets present many exciting potential and opportunities for us to capture. We have confidence in our local teams, and we are charting a path forward with a holistic strategic blueprint and organizational stability for winning our overseas markets.”

Strengthening its domestic presence

As with its international commerce integration, Alibaba will also be combining all domestic commerce businesses to foster more collaboration and synergy across business units to serve its consumers and customers better. For this, the company appointed Alibaba veteran Trudy Dai to lead the new China Digital Commerce.

“An Alibaba founding member and partner, Dai has served various leadership roles within the company over the years. She has strong expertise across the China consumption sector, a keen understanding of consumer needs, and deep knowledge of the Alibaba ecosystem,” the blog posting reads.

The new structure for domestic e-commerce will put Dai in charge of all China retail marketplaces, including Taocaicai — its community e-commerce service; Taobao Deals, as well as Lingshoutong, a retail management platform for mom and pop stores, according to 86research.com analyst Xiaoyan Wang.

Competition and hefty fines have not been the only dilemma faced by the tech giant. The company was affected by weaker growth and fierce competition from a plethora of rivals.

Conditions have even led Alibaba to slash its forecast for annual revenue growth to its slowest pace since its 2014 stock market debut. To make it worse, Alibaba’s sale during this year’s Singles Day — the company’s own banner event — grew at the slowest rate.

The post Alibaba reshuffles e-commerce arm, replaces CFO appeared first on Tech Wire Asia.

We are living through times where the opportunity for social media as a sales channel cannot be ignored. It is the sheer amount of time spent by people, especially younger generations, on social media apps that are making social commerce the new indisputable market trend.

Being one of the youngest and largest communities in the world, Southeast Asia has been and is expected to continue being the biggest market for social commerce. Especially given how a large chunk of its population is entering its prime of technology adoption. 

In fact, according to the latest report by Google, Temasek Holdings, and Bain & Company, more than 75% of the population in six major Southeast Asian countries have access to the internet. To top it off, this year alone, as many as 40 million people across Singapore, Malaysia, Indonesia, the Philippines, Vietnam, and Thailand came online for the first time. 

That has led to the total number of internet users in those six countries rising to over 440 million people, of which 80% made an online purchase at least once, the report said. In short, it is clear that social commerce offers significant long-term potential for businesses willing to leverage it.

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Tech Wire Asia had the opportunity recently to speak with iKala’s CEO & Co-Founder, Sega Cheng to discuss the potential for social commerce within the Southeast Asian region. For context, iKala recently published a report titled ‘Riding the Pandemic Wave & Beyond’ which surveyed 1600 social shoppers and more than 23,600 social sellers across Thailand, Malaysia, the Philippines, and Singapore to identify emerging trends in the region’s social commerce space.

What does the rise of social commerce mean for SEA’s retail industry?

Southeast Asia is home to some of the most avid social media users in the world, and in recent years, many of them have started leveraging social platforms not just to connect and explore, but also to shop. According to our new research report, social commerce (78%) has overtaken traditional brick-and-mortar (35%) to become the second most preferred shopping channel in the region, second only to e-commerce platforms (91%).

As usage continues to increase, social media platforms — from Facebook to TikTok — are rapidly adding new shopping features and capabilities to support the surge in demand. This is creating new channels and opportunities for retailers to easily reach shoppers and provide them with unique, engaging experiences.

But these opportunities are not without their challenges. Higher shopper expectations mean retailers need to work harder than ever to win consumers’ attention and share of wallet. Fortunately, technology is evolving at an equal pace — and leveraging the right tools will enable them to unlock growth.

How has the pandemic played a role in accelerating the transformation of the industry?

The agility and convenience of shopping on social media had already made it a popular alternative to e-commerce and brick-and-mortar in recent years, but the pandemic has played a huge role in accelerating the growth of this format. The closure of physical stores amidst Covid-19 restrictions saw consumers flocking to online mediums for all their shopping needs. 

Those who weren’t already selling via online channels had to quickly pivot towards a digital-first strategy, while those who did have an online presence began to look at new, innovative ways of engaging with their customers. These shifts in shopper behavior are here to stay. For brands, the key to success is to focus on ways in which they can continue to engage and hold the attention of their customers through emerging digital platforms and channels.

Which of these trends are the most crucial for brands to note & take action on?

Our research found that not only are consumers buying in higher volumes and more frequently on social media, they’re also exploring newer shopping categories. Social commerce is no longer restricted to categories like clothing, beauty, and electronics. 

Pandemic-induced lockdowns and restrictions across Southeast Asia have prompted more people to turn to social media for essentials, including food and beverage (F&B) and grocery shopping.

In fact, the latest report by Facebook, Bain & Company found that groceries were the fastest growing online shopping segment in the region for this year.

As the landscape continues to evolve, opportunities are emerging in new and underpenetrated sectors. It is imperative for brands to keep an eye on these changing trends and adapt quickly in order to achieve success in the new shopping world. In fact, retailers who are quick to make shifts are already reporting tremendous success. 

One example is e-grocer HappyFresh, which reported a 10-20x growth in online traffic in Indonesia, Malaysia, and Thailand amidst the pandemic last year.

What does the future of retail look like (bearing in mind these new trends)?

The retail industry is undergoing a massive shift right now. As physical retail came to a standstill amidst global restrictions and lockdown orders, online shopping thrived. Trends like social commerce and live-selling are growing at an exhilarating pace — and this is only going to intensify.

The rules of retail are changing, which means that brands and sellers must either adapt now or lose out. The key to success lies in adopting emerging technologies and providing consumers with new and unique experiences. It is crucial for brands, retailers, and even individual sellers to start looking at social commerce as a long-term sales solution instead of a short-term gimmick. They need to be willing to invest in a growing array of value-adding technologies to lay the foundations of a robust strategy.

The post The age of social commerce will be powered by Southeast Asia appeared first on Tech Wire Asia.

Whether you want it or not, we are constantly being disrupted digitally. For instance, in just two years—between 2017 and 2020—statistics show that the number of e-wallet users globally exploded from 500 million to 2.8 billion. While digital growth differs in every country, one region that has been the fastest-growing market is Southeast Asia. In fact, the region is now poised to even be the world’s digital payment powerhouse.

According to a new IDC report commissioned by global payments platform 2C2P, Southeast Asia is experiencing a financial transformation driven by digital payments. To top it off, the report reckons that e-commerce spending will rise by 162% to reach US$179.8 billion by 2025 across the region, with digital payments accounting for 91% of transactions.

As it is, the recent report from Google, Temasek Holdings and Bain & Company indicated that more than 75% of the population in six major Southeast Asian countries have access to the internet and a majority of them have shopped online at least once. The report also noted that ,more than 60 million people in the region used digital services for the first time due to Covid-19 — and 20 million of them did so in the first half of 2021.

The rise, according to IDC, will be powered by changing consumer and retail trends and more inclusive payment options. And while e-commerce is already booming with 222 million users in 2020, IDC said it is estimated to grow further to an estimated 411 million users in 2025, fueled by the emergence of new payment methods. 

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It is fair to say that new payment methods such as mobile wallets and buy now pay later (BNPL) are shifting transactional behavior away from incumbent payments like cash on delivery. “BNPL made up 1% of the total ecommerce payments in 2020 and is estimated to rise to 5% in 2025, growing by 9.7 times spend value,” the report said.

An emerging digital payment powerhouse

The report highlighted that Southeast Asia’s growth is staggering with the e-commerce market becoming far more accessible. IDC estimated that there will be 188.6 million new e-commerce users by 2025. The largest markets for e-commerce payments are forecast to be Indonesia (US$83 billion), Vietnam (US$29 billion) and Thailand (US$24 billion).

Payment Methods Are Rapidly Evolving in SEA

Additionally, with the entry of new e-commerce consumers, IDC believes a broader range of payment services are required. Besides that, the Philippines, Vietnam and Thailand are projected to have noteworthy shifts with declining cash usage and increasing digital payments usage by 2025, IDC said. 

Interestingly, the report noted that local payment options like mobile wallets are preferred for ease and convenience across Southeast Asia. From 2020 to 2025, mobile wallets and BNPL in the region are expected to grow 30% and 58%, respectively. It will be led by Indonesia, which would welcome over 100 million new mobile wallet users by 2025, IDC claims.

The post Here’s why Southeast Asia is a digital payment powerhouse appeared first on Tech Wire Asia.

Annually, November 11, known as “Singles Day,” never fails to be the world’s biggest 24-hour shopping event. The statistics have always been staggering, both for the sheer volume of sales transacted and its year-on-year growth. This year’s sale wasn’t different, except for the fact that Alibaba Group Holdings Ltd recorded its first single-digit growth in sales since 2009.

Sales had grown by double digits every year since Alibaba founded the festival in 2009 and that eventually made Singles Day the world’s biggest online sales festival. But for this year, amidst a rather slow local economic expansion and the Chinese government’s relentless crackdown on tech giants, Alibaba’s sales grew only 8.5%, its slowest rate ever.

Overall, the total gross merchandise value (GMV) for Alibaba’s Singles’ Day sale this year grew by 8.5% to a record 540.3 billion yuan (US$84.5 billion) during the 11-day campaign. For context, the e-commerce giant recorded an 85.6% sales growth in 2020. Experts reckon that the contributing factors would be the slowed consumption in China and Alibaba’s relatively muted version of a sales festival this time around.

As it is, China just recorded its slowest economic expansion pace in decades, to 4.9% in the third quarter, while retail sales increased at a mere 4.4% in September from a year ago, according to China’s statistics bureau. 

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To be fair, analysts have long relied on the sales figure to gauge the health of China’s economy as well as the country’s number one e-commerce platform operator. A report by the Wall Street Journal (WSJ) attributed the rather sluggish Singles Day sales this year to “supply-chain crunch”

“China’s factory-gate inflation has been climbing as energy and other raw materials get more expensive. Power outages have halted or slowed manufacturing in several provinces, while the global semiconductor shortage continues to weigh on electronics production. Some imports are arriving slower than usual amid a global logistics disruption,” WSJ said.

Separately, CNN said the increased inflation in China threatens to erode profit margins and the purchasing power held by consumers. “The cost of goods leaving China’s factories surged by another record rate last month — China’s Producer Price Index jumped 13.5% in October from a year ago — and there are now signs that the higher costs are trickling down. China’s Consumer Price Index rose 1.5% in October from a year ago, double the rate of the previous month and the fastest pace of increase since September 2020,” the report noted.

To top it off, Alibaba also toned down its marketing hype amid ongoing regulatory tightening from Chinese authorities, while its focus shifted towards sustainable growth this year. On the other hand, its competitor JD.com said, its total transaction volume increased 28.6% to 349.1 billion yuan this year. The growth rate was also lower than last year‘s 32.8% but higher than 2019’s 27.9% increase.

JD shared that users from so-called lower-tier markets accounted for 77% of all shoppers during the Singles Day period. The company said it had seen “rapid growth of consumption” from these markets in home appliances, medicine and home decoration. The same was for Alibaba. When the sales began on November 1 to November 3, Alibaba said spending in lower-tier cities and rural areas increased by nearly 25% from last year.

The post Here’s how this year’s Singles Day sales played out for Alibaba, JD.com appeared first on Tech Wire Asia.

Singles Day in China is the world’s largest annual shopping day and for the first time,  customers were allowed to make payments with China’s digital currency, the digital yuan (e-CNY). Accepted by local e-commerce giant JD.Com via its shopping app, over 100,000 customers have paid using e-CNY during the Singles Day promotional period, which first began October 31. 

Being also the first major economy to create a central bank digital currency (CBDC), China’s digital yuan has yet to be officially rolled out nationwide, but the move by JD is another step toward broader acceptance. A spokesperson for JD told Cointelegraph that they “will continue to work with related parties to explore the application”, but the value of the digital yuan processed during the promotion was not disclosed.

The acceptance of China’s digital yuan

The spokesperson also said that JD was the first Chinese e-commerce company to have accepted digital yuan back in December 2020. From Dec 11 till June 18 this year alone, a total of 450,000 customers used e-CNY for payment on the JD.com app, with total sales in digital yuan apparently netting over 100 million yuan (US$15.6 million), the spokesperson stated.

Nationwide, the People’s Bank of China (PBOC) announced last week that the use of e-CNY had jumped to 140 million personal accounts and 10 million business accounts. Mu Changchun, who heads the bank’s Digital Currency Institute, said pilot programs in more than 10 regions using the digital yuan hit 62 billion yuan (about US$9.7 billion). The volume of transactions totaled 150 million, he said.

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The adoption is boosted by the central bank’s partnership with fintech and e-commerce giants like Ant Financial and JD.com to promote the use of its CBDC. For those who are in cities of the pilot projects, their e-CNY wallet is accessible via Alipay, which has more than one billion users in China. As of October, it was reported that over 123 million people in China have a “digital wallet” that can hold the CBDC, and the total transaction amount reached RMB 56 billion (US$8.77 billion).

Improving link-ups with mobile payment apps

As per Bloomberg’s report last week, PBOC Governor Yi Gang said the bank intends to upgrade the digital currency’s “interoperability with existing payment tools” and “improve the e-CNY ecosystem”. Yi also said the bank will create a management model for the e-CNY modeled after how cash and bank accounts are managed, while also improving on its privacy protections, anti-counterfeiting measures and efficiency.

Additionally, the PBOC wants to test the digital yuan’s impact on financial markets and monetary policy. So far, the digital currency has been tested out throughout the country by allowing citizens to use the e-CNY to purchase goods and services and pay for utilities and other bills.

Moving forward, China’s digital yuan will be mainly used for retail transactions within China and the PBOC is also preparing for a broader trial during the Beijing Winter Olympics in February next year, where foreign athletes could be allowed to use the virtual currency.

The post JD.Com’s Singles Day boosted the use of China’s Digital Yuan appeared first on Tech Wire Asia.

For a region that has 75% of its population online, Southeast Asia (SEA) is inevitably bound to dominate the world when it comes to its digital economy, according to this year’s edition of  e-Conomy SEA Report by Google, Temasek, and Bain. In fact, the report highlights that the region is on the path to becoming a massive US$1 trillion digital economy by 2030.

The report also highlighted that SEA is entering its ‘digital decade’ as the internet increasingly becomes an integral part of consumers’ daily lives. For context, the region now has more than 440 million internet users, and interestingly, 350 million of them, or about 80%, are digital consumers.

Digital consumers are internet users who have bought at least one online service and with SEA, since the pandemic began, it has added 60 million new digital consumers, of which 20 million joined in the first half of 2021 alone. Overall, within this year alone, 40 million new Southeast Asian users started using the internet for the first time.

What’s propelling SEA’s digital economy?

Since more consumers are going online, the report estimates that by the end of 2021, the region will reach US$174 billion in gross merchandise value (GMV), a growth of 65.7% from US$105 billion last year. The figure is expected to breach US$360 billion by 2025, propelled by a fast-growing base of digital consumers and merchants, acceleration in e-commerce and growing food delivery.

All the countries covered in the report also experienced strong, double-digit growth in 2021 with Indonesia contributing 40% of the region’s total GMV at US$70 billion; while the Philippines led with an impressive 93% growth to become a US$17 billion digital economy.

E-commerce and food delivery to remain center stage

Google, Temasek and Bain highlighted that SEA’s tenacious growth is primarily driven by e-commerce and food delivery and both verticals are expected to propel the region’s internet economy forward in the next decade. 

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“The food delivery sector emerged as a bright spot, growing 33% year-on-year (YoY) to reach US$12 billion in GMV. It has now become the most penetrated digital service, with 71% of all internet users ordering meals online at least once,” the report noted,

Immense headroom for growth in digital lending 

Another interesting point highlighted in the report is the new wave of digital merchants, propelled by the pandemic. The report also said that going forward, digital lending services  are likely to grow due to an appetite for consumer financing options and supply chain financing.

So far, digital financial services have seen healthy growth, specifically in the adoption of e-wallets and A2A (account-to-account), fuelled by both merchant adoption and consumer usage, Google, Temasek and Bain said. By 2025, digital payments are forecasted to reach over US$1.1 trillion in gross transaction value (GTV), up from a forecast of US$707 billion in 2021. 

Above all, the growth in usage of buy-now-pay-later services (BNPL) could also push digital lending up by 50% in outstanding balance from US$26 billion in 2020 to us$39 billion in 2021, the report said. 

A decade of digital dominance

It was also noted that the internet economies of all six countries will continue to grow rapidly, and that would in turn be the main driver and enabler of a US$1 trillion GMV internet economy. “Indonesia alone, by 2030, could potentially be two times of SEA’s GMV today, while Vietnam could grow eleven times to become a US$220 billion digital economy.” it added. 

For Bain & Company’s partner and head of digital practice in Asia-Pacific Florian Hoppe, Southeast Asia’s internet economy has rebuilt tremendous growth momentum and it is clear with the findings of the report. Given also how the region has generated tremendous investor interest over the past two years, he also believes the ‘roaring 20s’ will really put Southeast Asia’s internet economy on the global map. Above all, talent remains critical to success, along with new enablers around data regulation, infrastructure, and equitable development of the internet economy.

The post What’s making up SEA’s trillion-dollar digital economy? appeared first on Tech Wire Asia.