The 21st century economy will be an age dominated by digital companies. Increasingly, the market capitalisation of tech companies is overshadowing that of the traditional bigwig corporations such as oil barons and large financial institutions.
In fact, the top 4 most valuable companies are now held by tech giants – Apple takes the lead at US$516 billion; Alphabet is second place at US$526 billion; Microsoft takes third at US$433 billion; and American e-commerce company Amazon is at fourth place, with US$356 billion. It is also interesting to know that Facebook is at sixth place, just behind Exxon Mobil, at US$353 billion.
Beyond that, many traditional business models are experiencing unprecedented challenges due to an onslaught of online services. Instead of hailing cabs by the roadside, commuters can choose from a variety of transport options via their phones; retail malls see their tenants empty out while consumers flock online to get goods at a cheaper price in a virtual marketplace that never sleeps; foodies can have scrumptious culinary delights delivered to their doorsteps. A failure to hop on the information superhighway is to drift towards obsolescence.
Southeast Asia is one region that is experiencing a boom in tech innovation, driven by high internet and smartphone penetration rates. The region now has a population of over 600 million, 53 per cent of whom are under the age of 30 and highly digitally adept, and an average of 3.8 million users coming online daily.
To capitalise on this trend, unicorn companies such as Garena, Grab, and Uber have emerged as serious regional contenders in disruptive tech over the years. But while the region is rich with opportunity, companies seeking to win market share need to be cognisant of the unique challenges within the region.
One thing that strikes every traveller crossing into Southeast Asia is how diverse the region is. There are vast and distinct differences in language, income, consumption, and infrastructure.
For example, almost all consumers in Singapore have registered bank accounts and are more likely to use credit card/debit card-based digital payment systems, whereas in Indonesia, over two-thirds of the population remain unbanked.
Companies such as Garena have tailored their digital payment system for such emerging markets. AirPay is one such service, designed to serve the unbanked with a network of 130,000 physical counters across the region.
AirPay is a payment platform that allows users to make payments for online games, telephone bills, utilities, and e-commerce transactions without the need for credit cards or bank accounts. Users can simply top up credits using cash at any AirPay counter – in effect, a form of virtual currency for those without access to normal payments infrastructure.
Beyond that, tech companies looking to establish a foothold in Southeast Asia’s markets need to hire and train local talent who understand the nuances of the local environment.
It is the equivalent of travelling abroad and staying at a hotel versus in a homestay with a local, in the sense that they offer unique and different experiences, but a local perspective allows a level of nuanced insight on a country’s habits and customs. An insider can craft authentic local campaigns (and also, avoid any cultural faux pas) that someone from the outside would not understand or instinctively pick up on.
Additionally, hiring a strong local team ensures that the autonomy provided to them translates into a more agile regional operation to meet the rapidly changing needs of the local market. A level of decentralisation helps to minimise complex multi-country exchanges and increase efficiency in the organisation.
Diversifying and building products that respond to a consumer need
There are a few ways a business can ratchet up growth. One is to be focused on its market niche, the other is to diversify the business model.
For unicorns like Garena, diversification was the key to its success in Southeast Asia. First starting out as a social gaming company, it soon expanded towards other verticals as exemplified by video and voice messaging platform TalkTalk; mobile social network, BeeTalk; AirPay; and last year, online marketplace Shopee.
But the point of this is not to launch a blitzkrieg of different products and hope some will stick. Rather, it is about understanding the drivers of consumer needs and finding out how to develop products that will tap into these demands.
For example, Shopee, while certainly not the first online marketplace in the region, has carefully tweaked its product to create a community-driven digital marketplace. Beyond its product promise of being able to snap, share, and sell in 30 seconds, Garena aims to build a sustainable eCommerce ecosystem. For example, many of the online retailers on Shopee’s app are SMEs or people who are starting their own business for the first time.
Shopee has thus launched a programme, Shopee University, to equip retailers with the essential skills and expertise to help facilitate the inclusion of these small but dynamic businesses into the digital market.
Another aspect identified in the company’s initial market-scanning exercise was the issue of trust between buyers and sellers in such informal marketplaces, which are important drivers of the overall economy in Southeast Asia but generally underserved. Thus, they created Shopee Guarantee – with a dedicated team acting as a mediator for transactions – to facilitate smooth commerce and protects buyers from fraudulent transactions
The bottomline is: to become successful in an increasingly saturated and competitive digital economy, businesses need to understand, analyse and tailor products that fit the unique needs of each market. There is no one-size-fits-all approach to doing business in Southeast Asia. To assume so is to risk the success of your business.
Image Credit: stori / 123RF Stock Photo
Disclosure: This article was produced by the e27 content marketing team, sponsored by Garena.