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Starting an Online Business in Myanmar

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Authors: Eitra Myo & May Myat Thu

 

With the privatisation of telecommunications operators in Myanmar, sim cards have become more affordable, and the number of internet users in the country has increased exponentially. Given the high internet penetration rate in a country with a population of over 50 million, digital marketplaces have become increasingly popular in recent years, thereby creating business opportunities for retail e-commerce.

 

The Change in Consumer Behaviour

The change in consumer behaviour stemmed from an increased demand for imported goods, coupled with a lack of access to such goods, as they could not be delivered directly to Myanmar. To get around this problem, online platforms were established so that consumers may access international brands seamlessly, many of which take place on social media platforms such as Facebook.

Cash-on-delivery is the most common payment method for online shopping. However, depending on the order quantity and/or value, some online retailers may prefer pre-payment instead.

The highly in-demand goods include branded clothing, bags, shoes and cosmetics from overseas, local food, and home appliances. With respect to groceries however, consumers still prefer to frequent grocery stores and wet markets, so that they may personally ensure that the goods are fresh.

 

Individual Online Shopping Pages vs E-Commerce Websites

E-commerce websites and mobile applications are other types of e-commerce available in Myanmar which have been gaining traction with consumers. Such websites and mobile applications include shop.com.mm, Zego Bird, Onekyat, Gobus and rgo47. Recently, the Alibaba group has even established a foothold in Myanmar following the acquisition of Daraz Group, a Pakistani online shopping platform which operates shop.com.mm.

A growing awareness of the importance of e-commerce has catalyzed the expansion of many businesses. Such businesses are now reaching their consumers directly through their official online pages. The online shopping platforms on Facebook do not require high start-up costs unlike e-commerce websites. However, e-commerce websites will invariably attract more consumer traffic, as many individuals such as students, working professionals and housewives resort to selling goods online as an alternative source of income.

Online shopping on social media platforms make up the biggest share of the online shopping market, since it is much easier and more accessible for consumers. However, there are nonetheless drawbacks as well – some online shopping platforms may not be able to offer returns, refunds, exchanges, or scheduled delivery, given that sellers may outsource delivery services.  Additionally, there may be trust issues between the sellers and the consumers regarding pre-paid orders. Since these sellers are not officially registered, some of them might be offering counterfeit products, or products which have not been approved by the respective authorities. To avoid such inconveniences, online shoppers gravitate towards e-commerce sites instead, as they seem to be more legitimate. Moreover, e-commerce sites normally offer a wider range of products and services.

 

Challenges of Running Online Businesses

Logistics is the biggest challenge for e-commerce businesses at the operational level. The smooth delivery of goods requires an extensive delivery network, and the creation of such a network has encountered difficulties in a country like Myanmar. In Yangon city for example, complicated delivery addresses often delay delivery schedules, thereby leading to an inevitable backlog.

In any case, since the online shopping market in Myanmar is still in its nascent years, online businesses will continue to face many problems before the market stabilises. Appropriate payment methods is another challenge which needs to be addressed. Currently, both online shopping on social media platforms and e-commerce sites practice a cash-on-delivery system, which requires the deliveryman to carry large amounts of cash, thereby incurring unnecessary risks. In the future therefore, e-commerce businesses will have to work closely with banks to implement a better payment or transfer system.

 

If you wish to know more general or legal information about investing/setting up company in Myanmar, please do not hesitate to contact us.

 

Singapore:
Vanessa Ng, COO
+65 6535 8100
[email protected]

 

Myanmar:
Eitra Myo, Legal Manager
[email protected]

May Myat Thu, Corporate Affairs Executive
[email protected]

 

Written by: Eitra Myo & May Myat Thu