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Manufacturer to Consumer (M2C): An opportunity in SEA Market


This article was contributed by our exhibitor Everpeaks. Learn more about their business here!

For the last 20 years, we have seen eCommerce essentially and entirely revolutionised retail. eCommerce companies grew in numbers, out of necessity and to ensure that they are able to compete with their competitors that have turned to eCommerce on top of their brick and mortar existence. But now, there’s a new trend and it appears that the lines that differentiates between B2B and B2C are blurring. More and more, we are seeing the trend of manufacturers being aggressively reinventing themselves by selling direct to consumers too! With better technology, communication tools and an evolving distribution business model, manufacturers are willing to jump onto the eCommerce bandwagon. For decades, most manufacturers do not sell directly to consumers, but the situation is becoming more common now. Getting to the consumers via wholesalers was traditionally the only way for manufacturers to get their products to consumers with wholesalers providing infrastructure, manpower and retail space. This scenario has definitely changed.

M2C - A Growing Ecosystem

The emerging trend that is stealing the spotlight as the next big thing is M2C, or Manufacturer to Consumer eCommerce. Previously, manufacturers selling direct required a massive capital investment but now with the inadvertent presence of technology, the investment needed is much smaller. Direct sales can be a powerful way to increase profit and strengthen control of the brand, however it is not without risk.

If you are in the business, you will immediately understand and realise that the shifts that we are witnessing are more than just a trend. It is in fact a growing ecosystem. The amount of interaction consumers have with the brands they love is growing at an exponential rate. M2C companies are capitalising on this shift by focusing their time and effort on customer experience over logistics. The result has been an overwhelmingly positive consumer response, which is in turn helping fuel new brands entering into the space. As the industry evolves it is clear that developments will be closely tied to the consumer groups that drive demand. However, this is not a straightforward effort - Being a manufacturer side of the coin, a formulation needs to be in place that includes the integration of many things.

With the changing landscape, manufacturers are also now able to explore businesses beyond their shores and grow to target international markets rather than just only serving customers at home. With the scale and impact of the current pandemic being unknown in the future, exploring a new market consisting of sophisticated consumers is an attractive move forward.

Seizing the opportunity, companies like Everpeaks had decided to be the changemaker that connects manufacturers from the rest of the world, to Southeast Asia via their facility based in Malaysia which is geographically positioned at the heart of Southeast Asia. With strong partnerships with global leaders in the eCommerce industry being the only Southeast Asian Amazon Service Partner Network Member, the only Malaysian eBay Channel Partner and the Malaysian Community Partner for Payoneer, Everpeaks have all the right tools to ensure the success of any M2C efforts.

The Future of Consumer in SEA

According to Euromonitor International -- Asia Pacific was home to over one billion households in 2019 and the region is tipped to add another 166 million households between 2019 and 2030, the fastest growth of all regions over that time period. Population demographics in Asia Pacific differ slightly when compared to North America, Australasia and Western Europe. The average size of households in Asia Pacific stands at 3.64 persons, the second highest globally, pointing to more children per household in Asian countries.

Asia Pacific markets are also characterised by young populations with Generation Z accounting for roughly 24% of the total population in 2019, slightly higher than other regions. Young consumers are digital natives, both familiar and comfortable with using technology in their everyday lives. Interestingly though, home broadband connectivity in Asia Pacific tends to lag behind other regions due in part to technology infrastructure not keeping pace with more developed markets. Consequently, the future is mobile in Southeast Asia, with mobile internet penetration rates expected to almost double between 2019 and 2030. Mobile internet helps to enable everything from foodservice delivery to Mobility-as-a-Service, as well as augmented reality.

Malaysia as the SEA Hub

Malaysia is well placed geographically within the Southeast Asia region and as a country have created a good business ecosystem. Businesses have been capitalising on its existing supply chain, access to the global market, and pool of talented multi-racial and multicultural community.

An initiative by the Government, Malaysia’s Digital Free Trade Zone (DFTZ) is positioned to capitalise on an exponential growth of the internet economy and cross-border eCommerce activities. The DFTZ is set up to facilitate seamless cross-border trade and enable local businesses to export their goods with a priority for eCommerce. DFTZ will provide physical and virtual zones to facilitate SMEs to capitalise on the convergence of exponential growth of the internet economy and cross-border eCommerce activities. There are three components comprising both physical and virtual zones:

? eFulfilment Hub : To help SMEs / businesses in exporting their goods easily, with the help of leading fulfilment service providers.

? Satellite Services Hub : To connect SMEs / businesses with leading players who offer services like financing, last mile fulfilment, insurance and other services which are important in cross-border trade.

? eServices Platform: To efficiently manage cargo clearance and other processes needed for cross-border trade. Malaysia’s robust infrastructure, open policy to foreign business, strong talent pool and connectivity with other ASEAN markets makes it the ideal location for a regional operation. It’s capital Kuala Lumpur is the most centrally located city among the major economic hubs of Southeast Asia. You basically are able to reach every capital city in the region in less than four hours.

What’s Next?

The pandemic has resulted in an unprecedented crisis with the future being difficult to ascertain. With this scenario and the pandemic showing no signs of early recovery, part of the economy fueled by the consumers takes a different turn. Consumer behaviours and purchasing habits are definitely changing and many of these new ways will remain post-pandemic. They will also continue to learn, connect and play via digital means. SEA is a market to explore that has a lot of potential. While there are many ways to get started, setting a solid foundation should be the top of the list. For any digital transformation progress looking at a new market away from home, you need to embrace a new mindset because you will be dealing with product fulfilment orders from retailers or wholesalers far away from your playground - you will now be creating and crafting strategies to market to a different set of consumers. And of course to have a successful transformation you will need the right tech in place with the right partner that shares the same aspiration. Now is the perfect time considering the shifting market frontiers that create opportunities for retailers and brands already in-market or considering entering Southeast Asia.

 

-Joachim Sebastian, CEO & Founder of Everpeaks