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Four key incentives for fragmented e-commerce buyers in SEA

Marketing and payment executives of top e-commerce sites advise offering a variety of financial solutions to consumers.

Southeast Asia’s fragmented market poses a challenge for a single firm or platform to create a unified payment option. For example, in Southeast Asia, the Philippines and Indonesia are lagging in terms of cashless payments.

Achint Setia, chief revenue and marketing officer at ZALORA, said they saw a significant reduction in transactions from cash on delivery in the last two years. But he noticed some gaps in the payment landscape of the Philippines and Indonesia in Southeast Asia compared to Singapore and Malaysia.

ZALORA data showed that Filipino cash transactions in 2021, returned to 2019 levels. World Bank’s 2021 data revealed that Indonesia has the world’s fourth-largest unbanked population.

Top e-commerce platforms, ZALORA, Tokopedia, and Amazon, suggested incentivising and ensuring trust from customers to address the different payment demands in Southeast Asia.

Return/Refund Policy

A first incentive is to ensure that the customer will be confident that they will get refunds, said Setia.

In the Philippines, ZALORA provides a clear set of guidelines to allow customers to understand the return/exchange policies.

There are also articles and guidelines posted on the website to help consumers address specific concerns.
Sujit Misra, Amazon APAC’s director of payments, said consumers demand more action to secure their purchases online. Misra said it is important to create authenticity verification mechanisms, provide reliable customer service, and enforce strict processes for sellers.

By doing these, it would reduce bad actors attempting to sell fake products on e-commerce. Amazon said it blocked 800,000 attempts to create new selling accounts, which reduced fake sellers on its platform. It marks a drop from 2.5 million attempts in 2021 and 6 million attempts in 2020.

“Offering safe payment options to customers is critical to a great customer experience, so we do everything we can to offer our customers and sellers a choice when it comes to how to pay in Amazon stores,” Misra said when interviewed recently by the Singapore Business Review.

BNPL inclusion

Vira Widiyasari, senior vice president of fintech and payment firm Tokopedia, said buy now, pay later (BNPL) options are a game changer in the payment landscape and help streamline the process.

“In the past, consumers had to visit a physical bank branch to apply for a loan when they wanted to make any substantial purchases, but today, services such as BNPL are now more readily accessible for anyone with a smartphone or device through their daily activities such as shopping on e-commerce,” said Widiyasari in a separate interview by Retail Asia.

One example of a BNPL option is Tokopedia’s GoPayLater Cicil, which was introduced in collaboration with GoTo Financial to provide users with affordable options when purchasing items whilst not having available funds.
GoPayLater Cicil users can split lump sum payments for Tokopedia purchases into monthly installments over one, three, six to twelve months, with no hidden fees.

In Indonesia, Widiyasari handphones and tablets, women’s fashion, computers, and laptops, automotive, and electronics were some of the most popular categories in the first quarter of 2023 using BNPL payment options.

ZALORA Philippines also tapped Plentina’s BNPL option, which loans up to P5,000 (US$90) in ZALORA e-vouchers to load their wallets. In a statement, the app surpassed the 200,000 mark for the number of downloads.

Although struggling, the Philippines and Indonesia are still improving in cashless services. A 2021 Visa study revealed that 84% of Filipinos have tried going cashless in 2021, and Financial Services Authority data showed Indonesia’s financial inclusion index rose to 85.10% in 2022 from 76.19% in 2019.

Instant Pay

The third payment method that will relieve customers from payment issues is instant fund transfer.
An example of this, Amazon shared, is PayNow, a real-time payment method launched by the Association of Banks in Singapore.
 
It is available to retail customers of nine participating banks and three participating non-financial institutions that cover over 95% of banked customers in Singapore.

Digital investment

The last incentive is to provide investment opportunities for customers. In Tokopedia, Tokopedia Emas (E-gold) and Tokopedia Reksa Dana (Mutual Funds) provide a seamless and integrated digital experience for Indonesians to become investors for the first time.

These products can improve accessibility and affordability by enabling Indonesians to buy mutual funds and e-gold starting from IDR10.000 and IDR5.000 respectively.

In Indonesia, Tokopedia found that there was a 1.5 times increase in the value of gold buying and selling transactions through Tokopedia Emas, whilst the number of users investing in gold increased two-fold, compared to 2021.

Customers as kings

In conclusion, Setia said businesses will continue to solve pain points and change spending behavior as “customers continue to be treated as kings.”

For example, BNPL will continue to gain traction amongst customers. This, in turn, will push e-commerce players to create a seamless way to move from the BNPL partner platform to their platform.

Setia also raised concerns about how businesses can address issues in payment systems such as processing-related errors.

“How we can solve some of these journeys with tech and take away that hassle from the customers’ mind is where a lot of effort is going right now,” he said.

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