<article>The Southeast Asian online retail journey is taking an interesting shape. While 2014 brought in huge investment- a trend that is expected to continue next year- other factors will take the center stage as e-commerce influencers, in 2015.</article>

The Southeast Asian online retail journey is taking an interesting shape. While 2014 brought in huge investment- a trend that is expected to continue next year- other factors will take the center stage as e-commerce influencers, in 2015.
Even as the investment inflow continues,the space will see more consolidation, a renewed focus on m-commerce, the strong influence of AEC (ASEAN Economic community), emergence of a strong B2B (business to business) and innovations in COD (cash on delivery) and Uber-based product delivery models.
According to an <a href="http://www.acommerce.asia/10-trends-will-shape-future-e-commerce-southeast-asia-2015/" target="_blank">aCommerce report </a>, the current year saw the region’s e-commerce get massive influx of investment, letting them embark on fast-track expansion. A $249 million <a style="color: #0000ff; text-decoration: underline;" href="http://www.wsj.com/articles/alibaba-to-buy-stake-in-singapore-post-for-249-million-1401263907" target="_blank">SingPost investment by Alibaba</a>, a <a style="color: #0000ff; text-decoration: underline;" href="http://www.forbes.com/sites/ryanmac/2014/10/22/softbank-and-sequoia-capital-mark-first-investment-in-indonesia-with-100-million-backing-of-tokopedia/">$100 million inflow into Indonesia’s Tokopedia</a>, and Lazada’s $250 million bid of confidence &#8211; SEA saw some of the largest injections of financial capital in the emerging markets in 2014. “We are seeing more $100 million deals in the last month in Southeast Asia than we have in all internet funding to date,” commented Ardent Capital CEO, Adrian Vanzyl, as quoted in a <a href="http://www.acommerce.asia/10-trends-will-shape-future-e-commerce-southeast-asia-2015/#" target="_blank">report</a> on the SEA e-commerce trends for 2015.
The coming year 2015 will see the space going to the next logical step -consolidation. Also, the mobile-first markets of SEA, which did not take to m-commerce as quickly as the experts had predicted, will continue steady growth in that space, but the real hero of 2015 might turn out to be the B2B (business to business) e-commerce, which might finally get the attention it deserves, in the region. According to the <a style="color: #0000ff;" href="http://www.acommerce.asia/10-trends-will-shape-future-e-commerce-southeast-asia-2015/#" target="_blank">report</a>, here are the top ten e-commerce predictions for Southeast Asia for 2015:
Consolidation: M&amp;A for B2C e-commerce space 
2015 will see startups consolidating to tap the mass organic growth potential of Southeast Asia. According to <a style="color: #0000ff; text-decoration: underline;" href="http://www.acommerce.asia/">aCommerce</a> report, this would be much more visible in the B2C retail in Indonesia and Philippines, which are capital intensive markets with margins being achieved through economies of scale.
Driven by a continued influx of capital, B2C companies will accelerate their growth by acquiring, or merging with peers. While the region’s e-commerce space is still fragmented, early entrants such as<a href="http://www.dealstreetasia.com/?s=Lazada" target="_blank"> Lazada</a> are, thanks to <a style="color: #0000ff; text-decoration: underline;" href="https://www.techinasia.com/lazada-raises-250-million-totalling-486-millio/">deep pockets</a>, pulling far ahead of the game.
The region is already witnessing  e-commerce coalition, such as Thailand-based companies Whatsnew, <a style="color: #0000ff; text-decoration: underline;" href="http://www.wearyouwant.com/en">Wear You Want</a> and <a style="color: #0000ff; text-decoration: underline;" href="http://www.moxyst.com/">MOXY</a> teaming up in order to remain competitive. “With so much cash floating in the market, bigger players will look to buy,” says <a style="color: #0000ff; text-decoration: underline;" href="https://www.linkedin.com/profile/view?id=5561137&amp;authType=NAME_SEARCH&amp;authToken=qM9z&amp;locale=en_US&amp;trk=tyah2&amp;trkInfo=tarId%3A1418901618177%2Ctas%3Apaul%20%2Cidx%3A1-1-1">Paul Srivorakul</a>, group CEO aCommerce &amp; executive chairman at <a href="http://www.ardentcap.com/">Ardent Capital.</a>
 Digital agencies: adapt or be extinct
Although traditional 4A digital agencies have known for years that e-commerce is a booming market, they will continue to struggle with developing e-commerce products and services for clients. Digital agencies will try to make up for this by moving down the value chain as WPP has been doing in China with acquisitions of <a href="http://fuwu.taobao.com/" target="_blank">Taobao Partner </a>companies – agencies that manage and operate Taobao and Tmall stores for brands such as Nike and L’Oreal.
aCommerce witnessed this first hand when <a style="color: #0000ff; text-decoration: underline;" href="http://www.acommerce.asia/huawei-selects-acommerce-ascend-mate-7/">Huawei selected the Marketing Division</a> over more traditional agencies, or when <a href="http://www.acommerce.asia/uber-kiehls-acommerce-luxury-marketing-campaign-thailand/">Uber and Kiehl’s partnered with this e-commerce agency. </a>
Marketplace space will get overcrowded
Inspired by Alibaba’s blockbuster $25b IPO, companies across the entire value chain will be looking to build their own marketplaces. In addition to incumbents Lazada and Rakuten, we will see telcos, media companies, banks, as well as B2C retailers entering the game. According to Max Bittner, 70 per cent  of Lazada’s goods are already coming from third party sellers. These companies are looking for additional ways to generate value from their user base beyond the usual value added services (VAS).
“As the marketplace model heats up, brands need to be able to take an omni-channel, customer-centric approach towards retail by making sure their products are available across all these platforms. Investing in the technology or partners to seamlessly distribute products will be a core differentiator for brand success in 2015.” says Srivorakul.
Additional influx of capital, most notably Softbank’s recent $100m investment into Tokopedia, will result in hyper-competition in this already crowded space.
AEC: Accelerating cross-border e-commerce
Several big trends will help accelerate cross-border e-commerce in 2015. T<a style="color: #0000ff;" href="http://www.economistinsights.com/countries-trade-investment/analysis/growing-together-free-trade-and-asia%E2%80%99s-technology-sector">he ASEAN Economic Community (AEC) will open borders</a> and stimulate trade and commerce across SEA first through better logistics capabilities.
Companies like Amazon and London-based ASOS already count SEA countries such as Singapore, Thailand and Indonesia as their fastest growing markets in Asia. AEC will be a force-multiplier for this trend. Chinese companies such as Alibaba and JD.com are increasingly looking at SEA, as their growth within China stabilizes.
Demographic evolution: Foreign entrepreneurs will flood the market
After China and India, SEA is probably the hottest market in Asia right now to work in for e-commerce and tech talent.  The last years have seen SEA receiving a lot of organic interest from foreign entrepreneurs.
This trend will continue in 2015 as full economic recovery remains a few years away for the Europe and the US. This capital inflow will address capacity gaps in the local market while also raising the talent and output bar, says the report.
The Uber-ization: of logistics &amp; everything
Uber solves the same problem as a marketplace. It is crowdsourcing—connecting buyers and sellers together. The only difference is that Uber is an app. 2015 will be the year Uber and GrabTaxi moving into deliveries.
<a href="http://www.wsj.com/articles/amazon-testing-taxis-for-deliveries-1415209630">Amazon is already testing deliveries via Uber.</a> Uber also recently partnered with <a style="color: #0000ff; text-decoration: underline;" href="http://www.acommerce.asia/uber-kiehls-acommerce-luxury-marketing-campaign-thailand/">Kiehl’s and aCommerce</a> to distribute Kiehl’s products to Uber riders in Bangkok. In the Philippines, <a style="color: #0000ff; text-decoration: underline;" href="https://www.techinasia.com/uber-lbc-express-delivery-christmas-philippines/">Uber joined forces with LBC Express</a>, Philippines’ largest cargo and logistics firm, to deliver Christmas presents on-demand.
With an under-developed logistics infrastructure across most of SEA, companies like Uber and GrabTaxi will be much better positioned to create value via deliveries in this region than in their more developed home markets like the US or Singapore/Malaysia.
Mobile commerce: Crippled by poor user experience
2014 proved the potential and scratched the surface of mobile as a shopping channel in SEA, driven largely by LINE.  Although mobile commerce is on rise, it is is still a couple years away from dominating desktop. aCommerce’s <a style="color: #0000ff; text-decoration: underline;" href="http://www.acommerce.asia/mobile-commerce-explosive-sales-channel-thailand/">mobile commerce case study</a>, found that mobile’s prime use was for browsing. While 89 per cent of LINE users browse, only 56 per cent of all transactions in Thailand actually bought.
The main reason being that the user experience on mobile is not optimized yet for shopping and as retailers find their footing in e-commerce this coming year they will not jump straight into app development.
While, desktop may still be dominant over mobile, aCommerce report advised companies to take a long-term, strategic view and start investing in mobile through responsive websites or mobile apps.
B2B: The new black
Long overshadowed by its B2C e-commerce, B2B will take off in 2015. Investors and companies will start realising the hyper-competition and razor-thin margins that come with B2C, especially in emerging markets where most of the bestselling products are low-margin consumer electronics and mobile phones.
While B2B might not impress, it will help pay the bills. In China for example, B2B accounts for over <a style="color: #0000ff; text-decoration: underline;" href="http://www.ajpr.com/wordpress/wp-content/uploads/2014/02/China-ECommerce-Share.jpg">75 per cent of the total e-commerce Gross Merchandise Value (GMV),</a> with SME B2B accounting for two-thirds of that share. And it’s not just emerging markets that are focused on B2B. Jeff Bezos has been making <a style="color: #0000ff; text-decoration: underline;" href="http://www.forbes.com/sites/clareoconnor/2014/05/07/amazons-wholesale-slaughter-jeff-bezos-8-trillion-b2b-bet/">huge investments into AmazonSupply</a> at $8 trillion, Amazon’s B2B arm targeting the hugely lucrative wholesale and distribution market.
COD: Necessary to win SEA
COD alleviates two of the biggest concerns of online shoppers in South East Asia, namely product and payment fraud. Most consumers are still afraid of providing their credit/debit card information online (or they do not have access to them) and unsure if the delivery will actually happen.
This, in combination with difficulties in handling bank and ATM transfers, OTC and Paypal resulting in high cancellation and drop-out rates, makes COD the most viable choice. About 70 per cent of online orders in most countries in SEA are Cash-on-Delivery. Cancellation rates for over the counter, bank and ATM transfers are between 50-70 per cent, compared to 5-8 per cent for Cash on Delivery. “We see COD as a new standard of service required for our market,” agrees Srivorakul.
Drone deliveries will definitely happen
No. Not really.
Image: <a style="color: #0000ff;" href="http://www.freedigitalphotos.net" target="_blank">www.freedigitalphotos.net</a>

SEA 2015: Top 10 trends for e-commerce

Bring stories like this into your inbox every day.

Sign up for our newsletter - The Daily Brief

SEA 2015: Top 10 trends for e-commerce

Start your deal-making journey now!

Bring stories like this into your inbox every day.

Sign up for our newsletter - The Daily Brief