Home Insider Insider Review The Future of Myanmar E-Commerce

The Future of Myanmar E-Commerce

Remembering history correctly, mobile phone access in Myanmar was at a miserable 2% until 2011. A single SIM card was being retailed at $600. At that time, the mobile penetration rate in Thailand was 115%. With the political will and leadership of reformist Ministers within President U Thein Sein’s government, at least eight laws related to telecommunications sector were passed to liberalize the telecom sector, despite protests based on personal interests from sections within the Parliament.

Seven years later, Myanmar is one of the fastest growing market in the mobile telecommunications and in smart phones usage. Based on 2017 statistics, there were 32 million people using smart phones out of the total population of around 53 million. Many licenses have been given out; nationwide telecommunications licenses, network facilities licenses, application service licenses and network service licenses. Based on internet world statistics, we can compare Myanmar with our neighboring developing country Bangladesh as follows:

If we remove the elderly and young children from the above, nearly everyone in the whole of Myanmar is now with internet and FB access.

Ther Future of Retail

Digital technology is affecting all aspects of our lives, but the retail sector throughout the developed world is experiencing particularly severe turbulence at the moment. There are regular news stories about store closures and job losses on the high street, and the underlying dynamic is not hard to identify: an accelerating shift away from in-store shopping towards e commerce, particularly via mobile devices (a.k.a. m-commerce), with Amazon and Alibaba taking the lead.

This trend does not necessarily mean that the department stores and supermarkets are heading the way of the dinosaurs. However, the retail market is changing, and those that fail to adapt certainly face decline and even extinction. Myanmar will not be an exception to this trend.

Today you can research a product, compare prices, order and pay for it, and often have it delivered to your door the same or next day — all from a smartphone. All traditional retail businesses based on brick-and-mortar stores urgently need to update their business models for the age of everyone going online.

There’s a wealth of analysis and survey material available online (again!) to elucidate these trends, with suggestions  as to how retailers should adapt to them. The bottom line here is retailers in Myanmar have to either use it or lose it.

E Commerce Players

Myanmar e commerce market is very much spread out, starting with individuals who sell the wares they no longer need online to large online shops, where one can buy almost everything on their online platforms.

Myanmar online shopping is led by two players namely shop.com.mm and rgo47. The former is a 100% foreignowned entity, previously started by Germany’s Rocket Internet. Rocket Internet founded Daraz in 2012 and it operates in Pakistan as well as Bangladesh, Myanmar, Sri Lanka and Nepal. Alibaba has acquired the entire Daraz business in first half of 2018. Rumor had it that Myanmar’s operations were given away as part of the package deal i.e., Alibaba does not attach any valuation to Myanmar entity. The emerging local startup Rgo47 has come along way since its early days in 2013, where it started selling clothes through FB promotions. You always associate Rgo with the reflective stickers at the back of most cars throughout Myanmar. Now standing toe to toe with the global giant, Rgo may not be able to rely only on its famed customer service to compete. It needs every help it can get not only from investors but also from ardent local shoppers and Myanmar government. Even with distributors in 10 regions and more than a thousand smile centers, it can never compete with Alibaba on the funding front. Offering credit to shoppers though tying up with Mother’s Finance and another Microfinance company may spur its sales, yet it needs an environment to compete on a level playing field. Many retailers may be tempted to enter into this e commerce world on their own. It is certainly one of the options. It means setting up a website, an app, hiring programmers and back end support personnel, putting up ads on FB page. This requires money and lots of money, especially to continuously do marketing and promotions to compete. Selling through an already established e commerce company is way more effective.

Consumer Protection

With government just starting out Myanmar Consumer Union (MCU) for consumer protection, it may be a while before regulations are in place to prevent fraudulent sellers from exploiting consumers in e commerce space.

Prices are marked up much before sales, to make the discount percentage seems higher. The so-called sales prices are in fact higher than what consumers can buy in offline shops. Similar complaints were seen in the comments by consumers on the shop.com.mm FB page.

The MCU seriously needs to start looking into these practices sooner or later, for protect Myanmar consumers from unscrupulous online (and foreign) shops.

Size of Myanmar E-Commerce Market

Even if we take a very conservative estimate of 1% of internet users making online purchases, there are 180,000 active online buyers at present. Based on a recent Myanmar Insider’s survey, with an average online transaction value of $20, even if one user only buy a single time throughout the year, it’s $3.6million market at the very minimum at the moment.

Right now we are on the verge experiencing exponential growth in the e commerce in Myanmar. Currently the market still less than 0.01% of Myanmar’s GDP. In a developed market like the US, e commerce market represents approximately 2% of the nation’s GDP. Even if Myanmar’s GDP does not grow (unlikely), e commerce sector sector will continue to grow as it is where the future of retail lies. If e commerce market reaches 0.1% of the GDP, it will easily capture $68million sales in 2-3 years time. This is the future of e commerce!