E-Commerce Growing in Myanmar But Still Hurdles Remain

Since 2014 when the Myanmar government liberalized telecoms and moved Myanmar technologically into the 21 century there has been a wonder at what tech would work in Myanmar and what wouldn’t. Immediately when Ooredoo and Telenor opened their doors to selling sim cards it was clear that Myanmar had a huge appetite for adopting new technology and fast. But with this desire to adopt technology there have been some big hurdles to overcome in every sector. In e-commerce in particular there have been big strides but somehow not the boom that was expected. Here’s my top eight reasons why e-commerce is growing but still has hurdles to overcome.

First the consumers:
1. Facebook First

Facebook pretty much owns Myanmar. It’s a joke in Myanmar sometimes to say that Myanmar people think that Facebook is the internet. It’s funny but a lot of times it’s true. They get their news there, buy things there, promote their companies, talk with friends, and find events to go to. If your company isn’t on Facebook, it doesn’t exist.

This can be challenging for an e-commerce company to get people off Facebook and onto their website. You’ll often see sale spikes when a company does big promotion on Facebook but won’t see any regular sales from your website besides that.

It can also be a plus as many Myanmar people don’t know how to use Facebook pages properly for marketing and so you can still spend few dollars to get a lot of return. But you won’t catch customers just googling you randomly, you will only catch them from them surfing Facebook!

2. Price Sensitivity

There is a very small middle class in Myanmar. Middle class is important for a successful e-commerce platform as those individuals will have extra income to spend. Since Myanmar is so close to China it’s products often win over other more quality products just because of price. Vast majority of products sold are less than $20 USD. The cheaper the better.

Second the Infrastructure:
3. Banking

The financial systems in Myanmar are still not quite up to speed to global standard. The banks have made huge strides in reorganizing themselves and offering more services that meet the needs of smaller businesses and individuals. They now even offer home loans. But for the average Myanmar making $100 -$400 USD using the bank is inconvenient and expensive still. Some banks like Kambawza Bank and Cooperative Bank now offer online payment platform solutions for e-commerce but they are expensive compared to global norms and most people still don’t use the bank.
These issues lead e-commerce platforms to depend on cash on delivery. This is good for the consumer but bad for the suppliers and the platform. Customers can cancel anytime and often are hard to get ahold of to deliver the product. A lot of products get canceled or can’t be delivered.
The banking industry is going through a renovation of local banks and foreign banks have been given the green light to operate. Within the next 2 years or earlier there will be a big boom in the banking industry and there will be more adoption of banking services.

4. Myanmar is Big

Myanmar is a huge country! The distance between the commercial hub of Yangon and the next largest city of Mandalay is a 10-hour drive! Regional cities with large populations nearest to Yangon are still at least 5 hours drive. Delivery to most regional cities isn’t possible as there are no flight connections to these cities that exist or are regular. That means everything is sent by bus or truck.
In the month of August almost every year, 1/3 of Myanmar floods……that’s not an exaggeration. When the country floods for almost a month every year then it disrupts business, roads are closed, people are displaced. It can be challenging to deliver throughout the year.

5. Taxes

The borders have lots of holes. That means a lot of products from Thailand, China, and India come into Myanmar tax free. If you are an importer that is wanting to sell on a platform, you have to compete with people that don’t pay taxes on imported goods. This can be difficult for suppliers and also difficult for the platforms as they want to stay out of dealing with that stuff as that’s the government’s responsibility.

Third the Companies:
6. Logistics is Fragmented

There isn’t a logistics company that can cover the whole country because of it’s size and cost to do so. E-Commerce platforms have to make agreements with a number of different logistics providers with varying prices to be able to meet the delivery demands. This means they are depending on outside suppliers that may be dependable or not. There could be unnecessary delays or high costs that wouldn’t be there if they were able to do it themselves.

7. Staff Instability

As Myanmar has opened up the demand for high quality staff has increased dramatically. Companies all compete for the same small pool of highly qualified and competent staff. Training new staff is an on going thing. Staff easily will jump from one job to another if the pay is better or the company has a better image. E-commerce companies have a high turnover of staff as new players enter the market.

8. Fulfillment of Orders

As stated earlier, the e-commerce companies depend on outside distribution sometimes and have to get products out to customers with only cash on delivery as the situation. This means there can be massive delays in delivery, canceled orders, and customers not being available. E-commerce companies face a huge challenge in trying to deliver as quickly as possible to collect the payments. This can be a tough situation.

In conclusion, e-commerce is growing in Myanmar but there are many issues these companies have to overcome to be successful in a very difficult market. It’s possible for success, and as these challenges get solved in the next couple of years, you’ll see a huge boom in e-commerce in Myanmar.

Written By - Charles Ryan Russell (CEO of Myanmar Business Answers)