The GSMA, a worldwide representative of mobile operators, recently explored the ways in which mobile money and e-commerce providers may be uniquely integrated in various collaborations, particularly in partnerships in Southeast Asia.
In 2016, there were millions of active users of e-commerce platforms in Southeast Asia, stimulating revenues of about $6.4 billion dollars, a value that is projected to double by 2020.
The publication, “Mobile Money and eCommerce: Three Ideas of Partnership in Southeast Asia”, discusses the massive potential for e-commerce growth in the region, as well as addressing potential challenges to scale, and how win-win partnerships can be established between mobile money providers and e-commerce participants, focusing on payments, logistics, and increasing customer trust.
While drivers for integration of e-commerce may present and the potential for growth is substantial for the region, providers face three main interrelated operational challenges:
- Cash on delivery payments
While more than 74% of payments in the region are handled by providing cash payments t the time of delivery, this form of transaction creates various challenges for providers in the form of increased operating costs, due to the required cash management, and in the increased losses when customers return products without having made any payments for them.
- Limited logistics
Logistics, which include the management of returned goods and warehousing, are estimated at about 50% of overall operating costs. In some countries, e-commerce providers may struggle to meet standards on infrastructure, delivery, storage, and troublesome customs policies, greatly affecting their dealings.
- A lack of customer knowledge and trust
Lastly, one of the most essential challenges being faced is the lack of familiarity and trust customers have with e-commerce. It is crucial for these growing ventures to expand their customer base for substantial integration. As almost half of the mobile money customer base should be expected to be more inclined for e-commerce, GSMA approximates the amount of active users to only around 10-15% of customers.
However, while the Southeast Asia has not had the same traction as other regions, it has the opportunity to grow. Mobile providers have the potential to meet the needs of the growing segment of people that don’t have access to payment services and may even find it difficult to maneuver online purchasing, although they might try.
The GSMA analyzes the various areas in which win-win partnerships between mobile money operators and e-commerce providers can be developed through increased integration in their combined services, developing networks for agents handling e-commerce logistics, and the leveraging of essential data.
For the full publication and the in-depth analysis of ways to resolve hurdles to e-commerce development in the region, click here.