17 June 2019
Accessing the ASEAN Consumer Market: Toys and Games (Online Sales Channels)
The proliferation of mobile devices has caused significant changes within the toys and games industry. Through the online channels, consumers can buy both the latest and older versions of toys and games anytime, without having to make a trip to a bricks-and-mortar store where only the latest model is available. Moreover, online shops provide more attractive promotions and discounts than offline stores.
In ASEAN, e-commerce has long been an important channel for purchasing online games, but it is now increasingly becoming a popular way of looking for traditional toys and games as well. Traditional toymakers and retailers are embracing e-commerce by building their own online shops, as well as listing on popular third-party e-marketplaces.
In Indonesia, internet retailing dominated sales of video games as increasingly digital-savvy consumers became more confident about purchasing toys and games online. In Malaysia, most traditional toys retailers and distributors have developed their own e-commerce sites. In Thailand, according to a survey by market research company ecommerceIQ, the main factor inhibiting online purchases is a lack of trust. Thai people feel either that the pictures of products online are heavily photoshopped or that they are usually disappointed when receiving the product. Even given that, 43% of respondents in the survey in the 18-24 and 25-34 age groups were likely to buy toys and games online.
E-commerce in ASEAN is Reaching an Inflection Point
The recent entry of Chinese tech heavyweights into the ASEAN market may help the region to realise its vast e-commerce potential. Tech-related investments from Chinese companies, such as Alibaba, JD.com and Tencent have introduced digital payment and logistics expertise, which should help ease the two main difficulties facing business-to-consumer (B2C) e-commerce in ASEAN, especially when it comes to cross-border transactions.
Malaysia and Thailand, which both have a more developed infrastructure, are better positioned than other ASEAN countries to benefit from the growth in e-commerce. In Thailand, alliances have been formed between Chinese e-commerce giants and large Thai retailers with extensive offline distribution networks, the most notable example being the joint venture between JD.com Inc and top Thai retailer Central Group. At the same time, Thailand has decent infrastructure connectivity and there has been a significant rise in the number of e-commerce logistics enablers. The government is proactively pushing for e-payment adoption via the Promptpay scheme and the use of QR code.
With its large and rapidly growing market of young and middle-class consumers, however, Indonesia has perhaps the greatest long-term potential in ASEAN when it comes to e-commerce. Meanwhile, the traffic congestion in the capital Jakarta, which hinders offline shopping, may benefit e-commerce as it forces consumers to make purchases on their computers and smartphones. In 2017, Alibaba invested in Tokopedia, the largest C2C marketplace in Indonesia. Lazada and Tokopedia, the two online platforms in which Alibaba has invested, account for about half of Indonesia’s web traffic, while Shopee is the market leader among mobile apps.
Competition in this sector is likely to become even more intense in the near future. While improving the integration of the e-commerce infrastructure should be a priority, industry players should also be looking at building trust with consumers and improving the overall consumer experience.
Technology Leapfrogs and the Fragmented E-commerce Market
With more than half of population under the age of 35, ASEAN’s consumers are young and tech-savvy. Many consumers, especially those outside first-tier cities, are “technology leapfrogs” – i.e. they have bypassed desktops, accessing digital platforms primarily through smartphones. Another characteristic setting online shoppers in Southeast Asia apart from those in other markets is that they use many B2C e-commerce sites. The market is so fragmented that no retail platform is the preferred platform for more than 20% of consumers in any ASEAN country.
The e-commerce market in ASEAN is crowded, with a number of regional and local platforms in each country. It includes classifieds like Mudah and OLX, C2C and B2C marketplaces such as Lazada, Tarad, Tokopedia, Bukalapak, Shopee, Baby Empire, ELOYZA, Babies Culture, Kiedler, B2B platforms including Toys1.com and retailers’ own sites like Toys”R”Us and Early Learning Centre. In ASEAN, brands are selling via B2C marketplaces and their own websites, as well as through e-tailors like Central Online and MAP.
Major Online B2C Platforms in ASEAN
Lazada – A horizontal marketplace where consumers can find a wide selection of product categories. It dominates monthly web traffic in many Southeast Asian countries. Lazada operates in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
Shopee – A peer-to-peer online marketplace that allows individuals to upload products for sale using their mobile phone. It has a presence in Singapore, the Philippines, Malaysia, Thailand, Indonesia, Vietnam and Taiwan. In “mobile-first” countries, Shopee is a primarily mobile platform.
Kiedler – An Indonesian independent online retailer of educational toys and learning resources.
Babies Culture – The appointed Authorised Distributor in Singapore and Indonesia for all MOTHER GARDEN merchandise from Japan. The merchandise includes several brand portfolios, such as the NOICHIGO range, USAMOMO, SIROTAN and FURI FURI DOG. Goods are delivered between one and five working days after receipt of payment. Domestic orders are shipped via SmartPac, NinjaVan or TAQBIN courier, while international orders are fulfilled by Fedex and TNT.
Baby Empire – Jakarta's Baby Empire sells a range of product categories, including toys and baby essentials, delivering orders directly to customers’ doorsteps. It selects products based on the products’ environmental and safety standards. Being a sole distributor in the region, Baby Empire’s products are marked as being unique and exclusive.
ELOYZA – An online toy shop from Penang which sells educational toys including baby and toddler toys, educational wooden toys, kinetic sand, playset toys, and building blocks. It promises to deliver orders within three working days.
ENGINOU – An online platform based in Bangkok which carries toys, games and books for children. Only products that conform to international safety standards are allowed to be listed. It currently has a team to provide insights on product trials, and offers a 30-day money back guarantee.
Burapatoys – An online shop from Thailand that specialises in toy vehicles and accessories. All products are certified by the Thai Industrial Standard (TIS). Deliveries can be made to destinations within Bangkok and the surrounding area.
MyToyShop – A Singaporean online shop that specialises in LEGO merchandise, including exclusives and items that are not readily available locally. It also carries brands like 4M and Alex, educational toys, arts and crafts kits, science experiments kits, and all major board games brands like Gamewright, Mayfair Games and Monopoly.
THOTS – Better known as The House Of Thoughts, the online toy shop offers a broad range of collections, such as toy microwaves, BBQ grills, and construction sets. All toys are tested to comply with European standard EN 71 and US standard ASTM.
Tokopedia – One of Indonesia’s biggest online marketplaces, it allows individuals and business owners in Indonesia to open and maintain their stores for free.
Bukalapak – Another leading Indonesian marketplace. Anyone can open an online store and then serve prospective buyers from all over Indonesia. Individual and corporate users can buy and sell all types of products.
Selling on Key Online Marketplaces
A seller that wants to list on Lazada must submit a business paper and/or valid documentary proof of authorised distributorship. The marketplace constantly monitors product information provided by its sellers, firstly to ensure that all items offered for sale on Lazada comply with all laws and regulations, and secondly to try to combat the problem of counterfeit merchandise.
Lazada’s online merchants do not have to pay listing fees. Instead, they pay a commission based on the product category when someone buys their products. All sellers get paid on a bi-weekly basis. Lazada gives sellers a wide range of back-end support and management tools to develop their online sales.
Lazada also runs a cross-border logistic programme for sellers. All sellers need to do is stick a label on the parcel and deliver it to one of Lazada’s sorting centres in Asia (in Hong Kong, Shenzhen and Korea). Lazada’s cross-border logistic team take cares of the export and import paperwork, customs clearance, and last-mile delivery. Cross-border delivery takes three days, but if the product is already in the local warehouse, then delivery time can be cut down to just one day.
Lazada offers multiple payment methods – cash on delivery, credit/debit card, Lazada Wallet, PayPal/AMEX, and Instalment Payment Plan.
Launched in 2015, Shopee is one of the fastest growing online marketplaces in the region. It only takes a few steps to register on the platform – open the Shopee app, take a picture of the product, write a short description, set a price, and then upload the picture.
Sellers can organise their inventory, manage their buyers, and measure their online store’s performance with Shopee’s Seller Assistant feature, which is accessible via a mobile phone. Cross-border sellers from China and Hong Kong can sell to ASEAN consumers via Shopee. The platform provides an in-app chat feature that allows potential customers to communicate with sellers about the product and make transactions directly.
Anyone can sign up to Shopee, but anything that they list will be vetted by its content team. Sellers on Shopee are likely to find that they face competition from a large number of rivals selling the same product. This means that customers can be more selective about who they buy from on the platform. They can use reviews and ratings to make judgements about a seller, or see what sort of category of seller they are classed as – a “managed seller” from Shopee Mall, for example, or a “preferred seller” (i.e. a seller who meets certain criteria set by Shopee).
According to Shopee, successful sellers are those who proactively study the local market trends and offer the right products at a competitive price. Good customer service when handling in-app chats with buyers is also crucial. Customer reviews and ratings are effective ways for buyers to know if a seller is trustworthy.
Nowadays, people spend much of their time on social networks built around their interests and relationships. As a result, the shopping process has moved from one driven largely by a goal to find an item to one that is more based on discovering things within one’s social life or circle of friends. This mode of consumption, social commerce, is growing rapidly in ASEAN due to three factors – the high mobile phone penetration, consumers’ reluctance to share financial and personal information online, and the fact that less than 30% of the population (except in Malaysia and Singapore) use either debit or credit card to make payments.
However, social commerce is tricky to measure because although browsing and negotiating happen online, payments typically take place offline. Merchants set up “shops” on Facebook or Instagram and post images and details of goods for sale. Shoppers browse and inquire about product availability and arrange a method of payment, through the in-app messenger or via a popular chat app, such as LINE in Thailand.
Social media is an ideal marketing and sales platform for toys and games as buyers and sellers can communicate directly, and users can share product reviews. User comments are a crucial factor in purchase decision making as shoppers tend to trust them more than advertising.
The most effective platforms for social commerce are Facebook and Instagram. Videos posted to the websites, content uploaded on Instagram, and links to shoppable content all allow users to move quickly and easily from browsing to buying. Social commerce provides small suppliers or non-brands with a great opportunity to test the markets in ASEAN without having to make too much of an initial financial commitment.
|Major Differences between Selling via Online Marketplaces and Social Media|
|Online Marketplaces||Social Commerce|
|Traffic Generation||Buy banner ads or be a sales leader||Circle of friends and social media ads|
|Marketing and Promotion||Marketing tools are available for merchants (at a fee)||Through word of mouth or buy ads from social media|
|Customer Ownership||Online marketplaces||Sellers|
|Payment Methods||Dictated by the online platforms||Cash-on-delivery or bank transfers|
|Logistics||Logistic programme offered by marketplaces||Own delivery arrangement or third-party service providers|
 Euromonitor International
 Osman Husain, Analyzing the Thai Online Toys & Games Industry, 28 February 2018
 PromptPay is an interbank mobile payments system launched in Thailand on 27 January 2017. PromptPay is one of several initiatives under the Thai government’s National E-payment initiative, which began to take shape in December 2015.
 Source: ecommerceIQ
 Bain Report “Can Southeast Asia Live Up to Its E-commerce Potential?” 2016 Bain & Company
 For more details on each payment method, please refer to Lazada – Payment Methods
 World Bank, The Little Data Book on Financial Inclusion 2018
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