Earlier this summer, some-more than 35,000 attention leaders collected during Mobile World Congress Shanghai 2015 to plead a destiny of mobile, origination it a largest-ever mobile-focused eventuality in Asia. Whereas a infancy of a contention focused on new technologies such as 5G and Internet of Things, we was assimilated by peers from Netflix, Line, Ola Cabs, Flipkart and Twitter to plead destiny business models for a mobile Internet.
Most of this contention directed toward China and India, though we was there to concentration on Southeast Asia. This viewpoint (or some would say, bias) isn’t usually since my association operates in Southeast Asia, though rather is because of a $16 million dollar gamble that origination and intrusion in mobile will be entrance out of Southeast Asia distant faster than other regions, such as a U.S., China and Japan, as expected.
Why? we will disagree subsequent that Southeast Asia is during a crossroads of dual vital socio-technical army that are formulating a ideal charge scenario: a fasten of “no-tail” and “mobile leapfrogging.”
No-Tail: Southeast Asia Jumped Straight Into Web 2.0 And Commerce Will Outlive Ad-Driven Business Models
Remember a early millennial heyday of GeoCities homepages, and after a expansion to self-publishing/blogging, user-generated content? That stately epoch of Web 1.0 and, some-more importantly, Web 1.5 in Western markets was what gave birth to a monolithic monetization indication around ad networks like Google AdSense and reward ad networks by an ecosystem of “long-tail” publisher calm on platforms such as Blogger.com, MovableType and WordPress.
But in Southeast Asia, a Internet took off a bit after than a Western counterparts, when a tiny little site like Facebook was already many Asian Internet users’ initial online experience — a finish of a Web 2.0 wave, that strike Thailand in 2007 when Internet invasion crossed a 20 percent mark.
We use Thailand as a substitute for Southeast Asia since a nation is a many grown one in a segment (excluding Singapore/Malaysia) and, distinct Singapore/Malaysia, many VCs tend to determine that a trends and lessons schooled in Thailand request opposite a rest of a region, generally in arriving vital markets such as Indonesia, Philippines and Vietnam.
If we review Internet invasion information from a U.S. and Thailand, you’ll notice that a U.S. went by a Web 1.0 and Web 1.5 booms while carrying poignant double-digit Internet adoption rates of 36 percent and 61 percent, respectively. In Thailand, this series was in a gloomy singular digits during a same periods. It wasn’t until Web 2.0, around 2007, that Thailand started to see Internet adoption take off rapidly, significantly contributing to a expansion of inhabitant GDP and e-commerce.
Coming to a Internet celebration late resulted in user-generated calm origination going loyal onto sealed amicable media systems such as Facebook, Instagram and Twitter — in effect, what marketers languished job a “no-tail” landscape with miss of peculiarity long-tail publisher inventory.
Because of a miss of this long-tail in Southeast Asia, a online promotion attention has lagged behind, forcing both determined firms and startups to demeanour for non-advertising-based monetization sources. Enter e-commerce and digital goods.
From Traditional Ad-Driven Monetization Toward Hybrid And Commerce-Driven Business Models
One of a some-more engaging effects of “no-tail” is a accelerated expansion and proliferation of singular and Asia-specific business models. This is where a Asian enlightenment and ecosystem meets internal skill and entrepreneurship. Whereas startups and Internet companies in a U.S. have a bent to go with promotion as their default monetization strategy — see Pinterest (Promoted Pins), Instagram (Carousel Ads) and recently Snapchat (“Vertical, Video, Views”) — Asian businesses in a space have had to demeanour elsewhere to make money.
China’s Tencent is a print child of this. The association generates some-more than 80 percent of their income from VAS (value combined services, generally practical goods) and e-commerce. Less than 10 percent of their income is from offered ensign ads and hunt keywords. Another instance is Mogujie, a female-focused amicable offered site that raised more than $200 million before being acquired by Alibaba. Mogujie started as a Chinese Pinterest clone, though fast pivoted into e-commerce and amicable shopping. Unlike Pinterest, who creates income off “Promoted Pins,” Mogujie struggled to monetize by promotion and had to pierce into e-commerce to survive.
The same thing is function in Southeast Asia as it follows a identical trail as China because of similar ecosystems. Publishers are seeking assistance to monetize by e-commerce since they onslaught origination income from offered ads by ad networks. For example, shaped on normal Thai RPMs (revenue per 1,000 impressions/page views), a renouned internal loyal publisher like Cosmenet.in.th will usually make $350 per month shaped on page perspective numbers from SimilarWeb. This isn’t even adequate to cover hosting fees, that is since it’s not startling that these publishers are looking for non-traditional monetization channels such as e-commerce.
Mobile Leapfrogging: Southeast Asia Is “Mobile-First” — How This Will Be The Breeding Ground Of Future Business Models
Everyone talks about how China and India are going to be a subsequent large thing in mobile, that is not startling since of how large those markets are. However, if we normalize a numbers and demeanour during mobile phone and mobile Internet adoption rates, Southeast Asia is indeed a some-more engaging case.
The Average Thai User Has 1.4 Mobile Phones
Mobile phone adoption has skyrocketed in a new years in Thailand with a latest numbers outpacing a U.S. and China in terms of mobile dungeon phone penetration. Unburdened by a desktop Internet bequest and driven by ever reduce costs of smartphone manufacturing, dungeon phone adoption in Thailand has accelerated to a indicate where a normal Thai chairman has 1.4 mobile phones, or 140 percent adoption. Compare this to a U.S. and China, that are “only” saying 91 percent and 77 percent adoption rates, respectively.
Mobile Leapfrogging: Thailand Has Surpassed The U.S. And China in Mobile Internet Penetration In Less Than One Year After Introducing 3G
Mobile Internet invasion in Thailand has jumped from a tiny 1 percent in 2009 to a whopping 56 percent in 2013, with a bulk of a expansion entrance right after a country’s central 3G launch in early 2013. Mobile Internet adoption in Thailand beats mature markets such as a U.S. and China, that mount during 40 percent and 34 percent, respectively.
Another approach of looking during this is by examining a commission of mobile Internet users out of sum Internet users. For Thailand, this series is 139 percent, definition that Thailand has some-more mobile phones connected to a Internet than there are Internet users. Thailand pummels a U.S. and China, whose numbers are 47 percent and 75 percent, respectively.
Companies in Southeast Asia are seeing this trend and are fast bettering to it. For example, Lazada now gets more than 50 percent of their trade from mobile channels after origination app expansion a priority. They’re also one of a initial e-commerce players in Southeast Asia that launched both their iOS and Android apps. MatahariMall, Lippo Group’s new e-commerce venture, started with their mobile website and worked back to emanate their desktop experience. Others, such as SaleStock, a fast-growing fast-fashion e-commerce site in Indonesia, are foregoing desktop totally and usually yield a mobile, despite non-native, offered user interface.
The Perfect Storm: No-Tail Meets Mobile Leapfrogging — A Peek At The Future Of Mobile Business Models In Southeast Asia
At a crossroads of “no-tail” and “mobile leapfrogging” we can design to see a melting pot of new and singular mobile business models to Southeast Asia.
C2C Models: The Six Steps To Quick Social Commerce In Southeast Asia
One interesting, and singly Southeast Asian, materialisation is “shadow marketplaces.” Because of a dual army in play — high mobile invasion and calm origination strong on amicable media platforms — there’s been a arise of spontaneous C2C e-commerce on amicable media, such as Instagram, Facebook and Line. These are not your tiny mom-and-pop stores that sell pieces and pieces here and there — an estimated and whopping one-third of sum Thai e-commerce GMV comes from exchange function on these shade marketplaces.
This is how it works: Merchants underline their products on Instagram and a transaction is finished around Line messaging, a many renouned discuss app in Thailand:
This might seem really low-tech to many of us who are used to some-more “advanced” and seamless e-commerce offered on platforms such as Amazon and Tmall, though a governmental and careful impact it has on e-commerce in Southeast Asia can't be ignored.
At a Mobile World Congress panel, we common a theatre with Hanna Lee from Line Corp. She’s a GM for Line’s China and Hong Kong business. Hanna showed Line’s expansion from a messaging app to a sum media resolution covering digital goods, song and video. In Southeast Asia, realizing a change toward mobile commerce, a same association has launched several commander projects to daub into e-commerce monetization, many particularly Line Flash Sale, Line Hot Deal and Line Groceries.
Line Groceries launched initial in Thailand since it’s Line’s second-biggest marketplace outward of Japan, with more than 29 million users out of a sum 600+ million users. This is explanation that large players like Line are foregoing rising in their largest markets, like Japan, and jumping loyal into a many fruitful drift for contrast new and innovative business models.
We’ve recently seen players like Pinterest, Facebook and Google going aggressively into e-commerce for monetization. Earlier final month, Google announced “Purchases on Google” enabling buy buttons on mobile. The same day, Facebook started contrast digital stores with a buy symbol for Facebook Pages, fasten a ranks of Twitter, Instagram and Pinterest who ventured into buy buttons in a months prior. All these firms are looking into e-commerce as an additional, despite lucrative, income stream.
However, in Southeast Asia, this might not be a oppulance underline compared to mature markets like a U.S. and Europe. Instead, enabling e-commerce by buy buttons might be a necessity, and even a presence mechanism, since a market, as we argued before, is commerce-driven, not ad-driven. Also, given a ideal compare of supply and demand in Southeast Asia as we’ve seen in a shade markets case, we design adoption of buy buttons to be most faster here.
Given a engorgement of determined e-commerce platforms available, even in an rising marketplace like Southeast Asia, one would consternation since Google and Facebook enabling e-commerce is such a large deal. A discerning demeanour during tangible mobile function in a marketplace like Thailand helps us bond a dots. Below is an picture that shows dual mobile phone home screens of a Thai high propagandize student.
Screen one, on a left, shows amicable media and discuss apps like Instagram, Facebook and Line, in further to a folder dedicated to games. The other shade shows zero though camera apps.
Three engaging observations can be done here:
- There’s no Google. Despite Google’s new large numbers, as good as media newly proclaiming that mobile isn’t ruining Google’s hunt business during all, it would be engaging to see these numbers damaged down by market, generally Asia and privately Southeast Asia. Blending numbers and function opposite markets doesn’t exhibit a loyal impact of a “mobile-first” or “mobile-only” marketplace like Southeast Asia. Don’t get me wrong — Google Search is here to stay, even on mobile. However, a impact will be reduction distinguished in a mobile age. As a MediaPost explanation points out: “In a sense, then, a arise of mobile means that — in some cases — hunt engines are being leapfrogged; we’re going directly to familiar, renouned or mobile-friendly channels though visiting a hunt engine first.”
- There’s no YouTube. Video is relocating to Instagram, Facebook and messaging apps like Line. Facebook now has more than 3 billion video views per day. And Line recently launched a YouTube-like video use in — where else though — Thailand. Line picked Thailand over a biggest marketplace (Japan) for this launch since Thailand, not Japan, is a truly mobile-first market.
- There are no commerce apps. Granted, this is an 18-year aged high propagandize tyro in an rising market, though as shortly as habits are formed, they are really tough to change. Also, as discussed earlier, there might not be a need for commerce apps during all as Instagram, Line and Facebook already are apropos a de facto commerce platforms in Southeast Asia. Facebook, Instagram and Twitter strictly going into buy buttons will usually strengthen this, generally in this region. This materialisation with a subsequent epoch will poise a vital plea to determined e-commerce retailers and platforms in Southeast Asia, given how widespread Facebook, Instagram, Line and Twitter are in this region.
Driven by dual singular forces, “no-tail” and “mobile leapfrogging,” Southeast Asia is in a special position to be a melting pot for new mobile business models. Stop looking during a U.S., China or even Korea/Japan for impulse for a destiny of mobile, since it is not function there. Ironically, mature and grown markets lift a complicated bequest of a desktop Internet era, since Southeast Asia started with a purify slate, permitting a latter to be in a singular position to examination and rise new business models on mobile, essentially driven by commerce.
View or download my Mobile World Congress Shanghai 2015 display – “Commerce + Mobile: Evolution of New Business Models in Southeast Asia”
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