It was only in July this year when German-owned internet start-up
incubator Rocket Internet launched shop.com.kh in Cambodia, an online retail
store selling electronics such as mobile phones, laptops and tablets.
Rocket Internet Cambodia
co-founder Karl Seilern told the Post in July that the country’s growth in
internet usage and the lack of competition in the e-commerce market were
driving factors to enter Cambodia.
Seilern said the company planned
to offer delivery in Siem Reap and Sihanoukville within the next few months.
But less than two months after
its launch, shop.com.kh ceased business. Now their former office on Norodom is
empty.
Rocket Internet Cambodia is not
the only player to have struggled in the local e-commerce market, a type of
business that, although having much potential for growth, still needs to
establish itself in Cambodia.
“The majority [of e-commerce
shops are] actually not really successful,” said Leng Chanprathna, CEO of
thecareerocean.com.
Cambodia had more than 2.5
million people with internet access as of last month and the figure is expected
to grow, officials at the Ministry of Post and Telecommunications told the Post
earlier this month.
The number of Facebook users in
Cambodia is about 650,000, or about 4 per cent of the population, Leng
Chanprathna said.
But according to the 2012 Media
Index Survey from Indochina Research, only 7 per cent of internet users have
used online shopping. The survey was conducted in five provinces among a sample
of 1,103 people aged 15 to 50 in urban and semi-urban locations.
Seventy-four per cent used the
internet for browsing, surfing and information, 69 per cent for MP3, video and
picture downloads, 66 per cent for Facebook, 56 per cent for messaging and
chatting and 45 per cent for games.
“Cambodian internet users are not
in the habit of using the internet for online shopping yet,” Laurent Notin,
general manager at Indochina Research said, adding that such habits will
develop with time as users become more sophisticated.
But while e-commerce in the
Kingdom still faces a number of challenges, it could succeed locally with an
internet payment system and higher use of credit cards. “There’s only one
reason why there’s no major e-commerce sites at the moment in Cambodia and that
is because there is no good payment gateway,” said Ken White, managing director
of Krawma Company, which owns the domains bongthom.com and lengpleng.com. “Once
a payment gateway is implemented, then e-commerce will just absolutely take off
here, because this has been needed for a number of years and nobody has taken
it on.”
“I did set up a system similar to
shop.com.kh. I did this back in about 2002 … You could order your products
online and then you just pay on delivery. And yeah, I think it could have
worked, but we just got too busy doing other things,” he said. “And I still
think that something like that would work.”
According to Leng Chanprathna the
market here is profitable. “But the business model here is different from
advanced countries. Because here we live without online payment like PayPal,”
he said.
Laurent Notin said online
shopping is linked to the development of online payment methods. “Currently,
the incidence usage of credit card is very low in the country and this hampers
the growth of online shopping too,” he said.
Paul Blanche-Horgan, CEO of
internet provider Ezecom, also said there is tremendous potential.
“We would expect Cambodia to
follow the examples set by neighbours such as Thailand where all kinds of
businesses use social networking platforms for marketing and sales,” he said.
“E-commerce can be used for
everything from ticketing to clothes purchases.”
Existing e-commerce businesses
have found other solutions to handle transactions.
“There is potential to use mobile
phone top-ups and credit as methods of payment which will hopefully drive the
e-commerce industry,” Blanche-Horgan said.
Small shops also arrange meetings
in person to do their trade and get the money. “So they can trade the product
usually at a shopping mall,” Leng Chanprathna said.
But these methods can make it
hard to expand business and make profit, as only a limited number of
transactions are possible.
“A true e-commerce site, you’re
looking at potentially thousands of transactions a day,” Ken White said.
Purchases in the online retail
store shop.com.kh were based on cash on delivery. But Open Development Cambodia
published an Economics Today article as reporting that tax issues in Cambodia
were the reason for the company’s pullout.
According to White, the tax
department here does not yet have the capacity to deal with digital payments
and transactions.
According to Ek Vandy, secretary
of state of the Ministry of Posts and Telecommunications, the ministry does not
get involved in tax charges for online business. But he said there has been an
improvement in online business and a lot of shops are selling their products
online.
Another reason for why e-commerce
sites in Cambodia struggle is because of poor marketing, Leng Chanprathna said.
Companies doing e-commerce in
Cambodia believe it will soon kick off but still make their profit in other
areas, waiting for e-commerce to boom.
“They might be in constructions,
or import-export or, you know, they’re big Cambodian companies that are making
money in an entirely different field,” Ken White said.
“But they see that... at some
time that e-commerce will take off here. So they’ve thrown their hat into the
ring.”
Anne Renzenbrink
Business & Investment Opportunities
Saigon Business Corporation Pte Ltd (SBC) is incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Health care and Life Science with expertise in ASEAN 's area. We are currently changing the platform of www.yourvietnamexpert.com, if any request, please, contact directly Dr Christian SIODMAK, business strategist, owner and CEO of SBC at christian.siodmak@gmail.com. Many thanks.
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