BySimon Lim
Chief Strategist, Pankosmia Consulting & Investments Pte Ltd
(Edited and refined by Bai Kelei, with the assistance of AI translation.)
As Chinese e-commerce platforms step up their expansion into Southeast Asia (SEA), their business model of ultra-low prices, low delivery charges and powerful supply chains is putting mounting pressure on local e-commerce players, traditional retailers, small and medium-sized enterprises and brand owners.
Amid such competition, many businesses instinctively respond by cutting prices, offering free delivery, issuing vouchers and increasing advertising spending. Yet if every company competes according to rules set by major cross-border platforms, they are likely to end up in a price war with no winners as consumers demand ever-cheaper goods, while merchants and platforms struggle to turn a profit. Retailers’ margins will continue to shrink, and the traditional commercial ecosystem will steadily weaken.
Therefore, what Southeast Asia truly needs to consider is not how to build a platform that is cheaper than the likes of Pinduoduo, but how to establish a new business system that can compete with major global e-commerce platforms without relying on price wars. Instead of letting individual retailers fight alone, I propose connecting retailers, suppliers, brand owners, logistics companies and consumers across the region to build an artificial intelligence (AI)-driven Southeast Asian global commerce platform with the following five capabilities.
A single retailer sourcing from China has limited order volumes and therefore little bargaining power. But if tens of thousands of Southeast Asian retailers make joint purchases through a single platform, they can generate enormous order volumes. A regional commercial network with substantial purchasing power could negotiate directly with global suppliers.
Such a platform coulduth Korea, India, Europe, the US and elsewhere around the <a href="https://bitcomme.com/salesforce-to-sponsor-gukesh-sindarov-world-title-match/” title=”Salesforce To Sponsor Gukesh-Sindarov World Title Match”>world. More importantly, it should not regard Chinese manufacturing as a competitor, but turn China’s formidable manufacturing capacity into its supply-chain advantage. Rather than competing against Chinese supply chains, it should draw on global supply chains to create greater value for Southeast Asian consumers
There are plenty of convenience stores, supermarkets, pharmacies, specialist retailers and neighbourhood shops in Southeast Asia. Through AI and the digital platform, they can be upgraded from merely points of sale to become showrooms, micro-warehouses, collection points, returns and exchange centres, and after-sales service centres.
After an order is received, the integrated platform automatically identifies the nearest partner merchant with inventory to fulfil delivery. This saves the platform operator from building extensive warehouse capacity or bearing huge inventory costs. Instead, it could tap the widespread physical retail network to provide same-day or next-day delivery. This advantage in delivery time and proximity would allow it to compete with cross-border platforms that may have an edge in pricing.
Beyond writing advertising copy, AI can also be the platform’s commercial brain for analysing consumer demand, forecasting product trends, determining purchasing volumes, managing inventory, optimising prices, recommending products, generating short videos and livestreaming content, conducting multilingual marketing and continually adjusting market strategies based on sales data.
In the future, the core competitive strength of e-commerce platforms will be helping consumers find the most suitable product fastest instead of offering the most products.
Rather than having to navigate vast product catalogues, a consumer might tell AI, “I need a durable air fryer suitable for family use, with a price less than S$300 (US$237).” AI then recommends the best-value option based on price, quality, reviews, delivery speed, after-sales service and warranty coverage.
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One of the most important strategies for distinguishing the platform from low-cost Chinese e-commerce players is that not all its products should come from China. Instead, it should have a three-tiered “Global+Southeast Asian+Local” merchandise structure with “Global” denoting products from around the world; “Southeast Asian” denoting distinctive products from countries in the region; and “Local” denoting local brands and retail goods from the consumer’s own country and region.
A unified platform could provide consumers with one-stop access to Thailand’s fragrant rice, spices and natural products; Vietnam’s coffee, cashews and pepper; Indonesia’s coffee, furniture and handicrafts; Malaysia’s food and distinctive agricultural products; the Philippines’ coconut and seafood products; and Singapore’s premium food, design and technology products. Beyond selling Chinese products in Southeast Asia, the platform brings global products to regional consumers while enabling regional products to reach the world.
More importantly, the platform operator could establish a unified “Made in SEA” brand and certification system to provide quality and origin certification, AI-enabled traceability, brand packaging and global marketing for distinctive regional products. In the past, owners of small farms or factories, or artisans would have struggled to enter international markets. Through the platform, however, they can become part of a global commercial system with AI marketing and logistical, payment and consumer networks.
While the biggest advantage of cross-border e-commerce may be price, that of local commerce is after-sales support like local returns, exchanges, repairs, warranty support and customer service. The operator of the proposed platform could even establish a unified product quality rating and supplier credit system. This way, consumers would not simply be buying a cheap product, but also peace of mind.
Ultimately, as more retailers join, collective purchasing volumes will expand, causing procurement prices to fall, improving product competitiveness, enticing more consumers to sign up, generating more orders, expanding local inventory, improving delivery speed, creating greater customer satisfaction, and resulting in a virtuous business cycle. In the era of major global e-commerce platforms, this is the strategic direction that Southeast Asia should most actively pursue.
We should not fight platforms such as Pinduoduo in a war over who can be cheaper, because price wars often end with profits disappearing. Changing the battlefield would be the smarter way to compete. This can be achieved through using global supply chains to reduce costs, AI to improve efficiency, collective purchasing to gain bargaining power, local retail networks to create distributed warehousing, same-day and next-day delivery to establish a time advantage, local after-sales service to build trust, and offering distinctive ASEAN products to create differentiation.
If successful, this platform could ultimately evolve beyond e-commerce to become a Southeast Asian commercial infrastructure connecting global suppliers and regional manufacturers, agricultural producers, brand owners, retailers, logistics companies and consumers. Its true mission then would not simply be to resist any one Chinese e-commerce platform, but to help Southeast Asia seize the commercial initiative: allowing global products to enter regional markets and vice versa; enabling global supply chains to serve Southeast Asian markets and regional commercial networks to connect with the world. This may be the commercial landscape that the bloc should strive towards in the new era of global e-commerce competition.
This article was first published in Lianhe Zaobao as “面对平台拼低价 亚细安出路在哪里”.
