Your point on the cost of shipping in Malaysia being so much cheaper is likely correct. If you look at the urbanisation rate of the country it is ~80%. This is in line with OECD countries and means the drop density for Sea is higher. As such, logistics costs will be substanitally lower vs somewhere like Indonesia which has low urban concentration (roughly 5% or so live in Jakarta) and low urbanisation rates. We should be able to apply this same logic to Singapore so it'll be interesting to see if they do roll this out in the country.
Whether they can replicate something simlar in countries like Indonesia will be much more difficult. If they did, it would be more a function of market dominance (in my mind?) over favourable drop densities etc etc.
Thanks Raj! To your point, I think Indonesia is a little difficult outside of Tier 1 Cities. The countryside really hasn't been developed at all, which is why e-commerce mainly takes place through the local village grocer as the last-mile recipient.
I think there's another reason why it hasn't happened in Singapore yet despite being more developed than Malaysia - competition. My anecdotal sense is that Shopee has somehow achieved Amazon-like quasi-monopoly power in Malaysia, but not yet in Singapore. Otherwise, it would've made more sense to use Singapore as a testing ground first, given its smaller size and higher purchasing power.
Great read - thank you!
Your point on the cost of shipping in Malaysia being so much cheaper is likely correct. If you look at the urbanisation rate of the country it is ~80%. This is in line with OECD countries and means the drop density for Sea is higher. As such, logistics costs will be substanitally lower vs somewhere like Indonesia which has low urban concentration (roughly 5% or so live in Jakarta) and low urbanisation rates. We should be able to apply this same logic to Singapore so it'll be interesting to see if they do roll this out in the country.
Whether they can replicate something simlar in countries like Indonesia will be much more difficult. If they did, it would be more a function of market dominance (in my mind?) over favourable drop densities etc etc.
Thanks Raj! To your point, I think Indonesia is a little difficult outside of Tier 1 Cities. The countryside really hasn't been developed at all, which is why e-commerce mainly takes place through the local village grocer as the last-mile recipient.
I think there's another reason why it hasn't happened in Singapore yet despite being more developed than Malaysia - competition. My anecdotal sense is that Shopee has somehow achieved Amazon-like quasi-monopoly power in Malaysia, but not yet in Singapore. Otherwise, it would've made more sense to use Singapore as a testing ground first, given its smaller size and higher purchasing power.