The online shopping wave set in motion by the pandemic, is seeing firms vertically integrate and compete for a larger chunk of the digital pie across Southeast Asia.
About 0.2 percent of total shopping in Cambodia was done online last year, according to Euromonitor International data accessed via Bloomberg.
By contrast, neighbouring Laos (0.5 percent), Vietnam (3.1 percent) and Thailand (8 percent) have matured to the point that international firms including Goldman Sachs and Chinese heavyweight Alibaba have eyed entry into those markets.
“The Cambodian market is not large enough for the biggest companies to consider entering it yet. With Cambodia’s population being six-times smaller and our gross domestic product per capita being three-times less than that of Vietnam, the market simply has not matured enough to raise interest from those kinds of firms,” Nham24 founder Chann Borima told Khmer Times.
“In the immediate future, we see smaller, local players dominating the scenes. The big players will come, make no mistake about that, but just not yet,” he stressed.
Nham24 is in the process of vertically integrating its services ahead of this eventuality. The company already offers immediate delivery. Borima said that his firm is working to “facilitate the whole buying process, including payments”.
“We are on a mission to become Cambodia’s number one online marketplace by providing fulfillment and marketing solutions for merchants,” Borima said.
Unlike other competing companies that focus on drop-shipping cheap goods from China or Thailand, Nham24 continues to specialise in providing already available goods that Cambodians are familiar with.
A total of $1.9 billion was invested into Vietnam’s e-commerce sector between 2016 and 2020, according to Bloomberg. This included the likes of Amazon.com, JD.com and Alibaba. The Vietnamese government has set a goal for online shopping accounting for 10 percent of national retail sales by 2025. Urban centres like Hanoi and Ho Chi Minh City are supposed to reach 50 percent.
Vietnam and Cambodia share strong demographic similarities, including a substantially underbanked population, shopping habits dominated by mom-and-pop shops and a younger skewing community.
However, while the likes of Amazon and Goldman Sachs have not picked up on this yet and backed any Cambodian firms, there is still interest from venture capital (VC) firms from abroad seeking to enter the market who recognize these trends.
Recently, Canada-based VC firm Haystack acquired Hanuman Capital and immediately announced it had allocated $2 million for “innovative ventures or digital projects in Cambodia”.
“Cambodia is not big enough for [large conglomerates or VCs] to come anytime soon, but we will see many of their investee companies entering the market and disrupting different industries. Some of the large regional tech start-ups are already here and they have managed to establish market-leading positions in a short timeframe,” said Shivam Tripathi, a partner at Obor Capital, one of the largest VC firms in the Kingdom.
Obor holds stakes in two e-commerce firms, including, including ShopRunBack and DeliShop.
About 30 percent of eCommerce purchases are returned, an issue that ShopRunBack addresses with its reverse-logistics services that allows for easy returns.
“Southeast Asia is the fastest-growing e-commerce market in the world. Cambodian users’ e-commerce spending stands at only five percent of the global average. There is a lot of room for growth and the Cambodian middleclass is growing quickly,” stressed Tripathi.
This article was first published in Khmer Times. All contents and images are copyright to their respective owners and sources.