[Disclaimer] I am a co-founder of Kyarlay.com, an omni-channel specialty platform for mum and baby products in Myanmar.

Ecommerce in Myanmar is in a nascent stage with just 6 million USD in market size ¹. In comparison, Myanmar's retail market is estimated to be 10 billion USD ².

However, with high mobile phone and internet penetration ³, eCommerce start-ups are optimistic about the exponential growth in the near future. Urbanization and the youthful population, 70% of whom are under 40 years old, will also be driving factors in the eCommerce growth. With urban population just around 30%, there is room for huge growth. ⁴.

Based on eCommerce growth forecast from Belt and Road country - Myanmar by PwC Myanmar

The Dominance of Facebook

Facebook accounts for over 85% of all internet traffic in Myanmar ⁵. Its dominance means that a lot of online shopping happens on the social media behemoth. Any individual can set up a Facebook page to become a seller in minutes. Anyone with the Facebook app is a potential buyer. With some budget for "boosting", sellers can reach out to these potential buyers with relative ease. The Facebook instant messaging also allows quick communication between sellers and buyers. Since most shoppers in Myanmar prefer cash-on-delivery, Facebook proves a sufficient and efficient platform to facilitate online sales.

Facebook user demographic in Myanmar, retrieved on 06 Sept 2019

Many physical shops also set up Facebook pages to reach out to buyers online. Endra Store, Suu Baby & Mommy Store are such examples. Brand owners and distributors such as Pigeon also use Facebook pages for direct sale to customers online, bypassing the middlemen. Small wholesalers also find potential buyers through Facebook groups. Sale through live videos on Facebook is also on the rise. Myanmar Snaker 42 broadcasts a three hour long live video a day on Facebook to sell second-hand shoes with most videos attracting more than 10,000 viewers and 1,000 comments.

Online Marketplaces

For the past few years, relatively significant investments have been poured into building online marketplaces.

General platforms

Alibaba enters the Myanmar market in 2018 with the acquisition of Daraz Group, previously owned by German based Rocket Internet, which operates shop.com.mm ⁶. Shop.com.mm now adopts zero-commission strategy to attract sellers to its platform. It aims to expand its current workforce from 230 employees to more than 1,000 over the next few years ⁷. It has partnered with Yoma bank to provide sellers on its platform with digital small business loans between 100,000 and 10,000,000 Kyats ⁸. Shop.com.mm also started the local version of Alibaba '11.11' online sale where they offered discounts on 50,000 items in 2018 ⁹.

Shop.com.mm offers zero-commission for its sellers. Screenshot taken on 7 Sept 2019.

City Mart Holdings, which is the largest retail chain in Myanmar, has also launched citymall.com.mm to enter eCommerce space in 2017. It currently provides selected items from its supermarkets and offers the-next-day delivery. A local startup, RGO47, received funding from Daiwa PI Partners and claims to offer delivery services in 230 towns across Myanmar ¹⁰. Barlolo.com is another local start-up that aims to empower small businesses and connects them with buyers across the country ¹¹. Other notable online marketplaces include Shopmyar and 365 Myanmar.

Niche Players

In addition to general eCommerce platforms, there are few niche start-ups, focusing on a product vertical.

Kyarlay.com focuses on mum & baby products and uses three pronged approach of Commerce, Content and Community to attract and retain users. Kyarlay regularly publishes health and parenting articles and video contents. It also organizes seminars with doctors and experts to establish a level of trust with customer¹². Kyarlay website currently has more than 1 million pageviews from 300,000 unique users every month. The GMV from its mobile app has also been growing at 6.5% weekly compound rate since the beginning of 2019 until the writing of this article.

Lola.com.mm and Enfanto are other notable niche eCommerce start-ups.

Kyarlay promotional images from Google Play Store

Challenges

Despite optimism about the growth of eCommerce market, there are significant challenges for online marketplaces.

Love-hate relationship with Facebook

One of the challenges is the love-hate relationship with Facebook. Facebook is a great marketing channel to reach out to potential customers. However, its dominance and the alternative shopping options on Facebook means that customers are reluctant to use another shopping platform. U Aye Chan, the Chief Strategic Officer of RGO47, said that “We mostly depend on Facebook. We offer promotions with discounts on our apps and websites to encourage people to use them, but most online shopping is done on Facebook and Messenger” ¹³. 150,000 Shop.com.mm app users during 11.11 online sale, the largest online sale event in Myanmar in 2018, also seems meager compared to 12 millions followers that Shop.com.mm has on Facebook.

It may be beneficial to increase Gross Merchandise Volume (GMV) by advertising on Facebook and accepting orders through Messenger in a short term. However, the over dependance on Facebook will make online marketplaces vulnerable to changes in Facebook policies which may impact them adversely in a long run. For example, the decrease in organic post reach or the increase in ads cost will decrease the sale and drive up the cost. U Nyan Linn Pyoe, the co-founder of 88 Toys Online Store, said that "The advertising cost on Facebook has already become expensive and we are experimenting alternative methods through digital marketing and marketing channels off Facebook". It would be extremely challenging to improve unit economics and become profitable in the long run if the userbase is not on its own platform.

The struggle against the social media behemoth

Stock management

Another challenge is to manage the sellers who may not be familiar with the process of selling online. Mismanagement by sellers means that stock outage is a common problem for online marketplaces. Small sellers also do not hold a large quantity of stocks on hand. This results in delayed delivery and unpleasant customer experience, potentially causing customers to leave the platform.

Last-mile delivery

The growth of eCommerce also depends on the capacity of last-mile delivery services which are also in a nascent stage. Online marketplaces will need to invest in the last-mile delivery themselves if the sale volume increases to a certain level. With a new law allowing companies like Alibaba to invest in a network of local logistics and distribution companies, they may look at building their own warehouses or open other e-commerce and digital start-ups of their own ¹⁴.

Online payment

Although most online customers still prefer cash-on-delivery payment, the recent traction of KBZ Pay and Wave Money offers encouragement to eCommerce start-ups. Wave Money has announced that they have moved more than 1.3 billion USD in mobile remittance volume in 2018 ¹⁵. KBZ Pay has also facilitated one million transactions by early April 2019 ¹⁶. With the operation of Myanmar Credit Bureau soon ¹⁷, credit card usage is expected to grow as well. According to Mr Jasoria, the former regional managing director for Shop.com.mm, the use of cards has already increased tremendously during 3.5 years since shop.com.mm began operating in Myanmar ¹⁴.

Road Ahead

Along with the progress in logistics and online payment sectors, eCommerce market is expected to grow quickly in next few years ¹⁸.

According to Daw Win Nandar Thyke, the founder of RGO47, the market would be worth 68 million USD if it improves to just 0.1% of the GDP ¹⁹.

U Mike Than Tun Win, the founder and CEO of travel portal FlyMya, also predicts 20-30 million people in Myanmar to become digitally savvy over the next two years, offering substantial opportunities in the eCommerce space ¹⁹.

As the market grows and matures, more robust competitions are expected. Alibaba is expected to invest significantly into Shop.com.mm and a few other regional players might enter the market. Local eCommerce start-ups need to be prepared to compete with well-funded and regionally-experienced players to survive in the long run.

Sources

[1]Colliers Myanmar Retail Quarterly Report Q4 2018

[2]Burma Consumer Goods

[3] The State of Mobile Internet Connectivity 2019 ~ GSMA

[4]Belt and Road Country - Myanmar ~ PwC

[5]What Myanmar's Facebook supremacy means for business ~ Ben Roache

[6]Alibaba secures foothold in Myanmar market, growth in e-commerce expected ~ Thiha Ko Ko, Thompson Chau

[7]Five-fold growth projected for Alibaba’s business in Myanmar ~ Khine Kyaw

[8]Yoma Bank to Provide Digital Small Business Loans to SHOP.COM.MM Sellers

[9]Myanmar Shoppers Spend $90,000 in 1 Hour During Alibaba’s ‘11.11’ Online Sale ~ Nan Lwin

[10]E-commerce marketplace rgo47 secures funding from Daiwa PI Partners ~ Prisca Akhaya T.

[11]Empowering small businesses via e-commerce - BarLoLo.com ~ Thompson Chau

[12]Start-up envisions a digital ecosystem for the whole family ~
Saw Yi Nanda

[13]Online shopping site rgo47 eyes a growing market ~ Thiha Ko Ko

[14]Alibaba secures foothold in Myanmar market, growth in e-commerce expected ~ Thiha Ko Ko, Thompson Chau

[15]Wave Money sees higher demand for its mobile-money services

[16]KBZ Bank sees rising adoption for its mobile wallet app

[17]Credit bureau to be up and running within next 12 months ~ Htin Lynn Aung

[18]E-Commerce in Myanmar: A Rising Tide

[19]E-commerce in Myanmar expected to develop fast in next five years as legislation on the back of growth potential