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While slow to take hold, e-commerce prepares for take-off

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Without an e-commerce law, the industry has been slow to take hold as online shopping relies on cash-on-delivery. BLOOMBERG

While slow to take hold, e-commerce prepares for take-off

It has been a halting journey for the e-commerce industry in Cambodia since its initial breakthrough in 2012, when German-owned Internet start-up platform Rocket Internet launched an electronic online retail store shop.com.kh, only to close its virtual shutters two months later.

Since then, the e-commerce market was left uninhabited as Cambodians went about fulfilling their online shopping needs through other platforms such as Facebook, loosely termed f-commerce, and stuck to the safe tradition of cash-on-delivery receipt of their goods purchased online.

Why this sleeping giant of an industry is only starting to stir now comes down to a most vital factor: the belated drafting of an e-commerce law that is expected to be passed early next year, according to Dr Sok Siphana, Principal Attorney of SokSiphana & Associates, and Advisor of the Royal Government of Cambodia.

The drafting of such a law, that has been completed at the inter-ministerial level and is currently awaiting submission to the Council of Ministers, will ease the worries of both merchants and buyers, explained Siphana.

“Many businesses and consumers are still wary of conducting extensive business over the Internet because of the lack of a predictable legal environment governing transactions,” he says.

“The draft e-commerce law gives legal recognition to electronic records and electronic signatures by way of evidentiary presumptions to ensure these have the same legal effect, validity or enforceability as paper records,” Siphana explained.

For example, there would be no difference between an electronic signature and a physical signature when satisfying the legal requirements; and no legal difference between electronic records and paper records.

While the e-commerce law has yet to be implemented, key players are already preparing for the future. Most notably the partnership between WorldBridgE Commerce and Acleda Bank who launched an online payment gateway this past October to bolster support to their venture, My All In One Mall (MAIO Mall).

Tomas Pokorny, CEO of WorldBridgE Commerce, said that with this, MAIO Mall is entering its second phase – growth. While the venture has managed to overcome the initial difficulties of establishing such an enterprise, it has already partnered with global companies such as LINE and Amazon to bolster its products and services.

“We have been growing constantly, especially after this last month, when we [officially] launched our LINE partnership, AMAZON re-seller programme, [thus proving] to the public that we provide quality items. The main goal for the next year is to keep growing and improving on the content – which we found to be one of the biggest challenges – and to reach in total 500 merchants selling via MAIO MALL, with a targeted portfolio of 200,000 stock-keeping units and more,” Pokorny said.

Content image - Phnom Penh Post
MAIO MALL first launched their online shopping site last year. Eli Meixler

When asked why earlier ventures such as Rocket Internet’s shop.com.kh failed, Pokorny said that the market was simply not ready for it because Cambodia had no prior exposure to the world of e-commerce. Furthermore, he added, that shop.com.kh operated with an arcane business model of buying, marking up, and re-selling an item which proved unsuccessful in Cambodia’s existing tax regime.

While the sustainability of e-commerce is yet to be seen, Pokorny advised that for such an emerging industry, companies need to be prepared to have the financial backing to support operations for a few years before business takes off, while simultaneously cooperating with lawmakers and the private sector to navigate through the complex waters of taxation and financial reform.

Pokorny’s words are mirrored by Siphana’s, who said, “We must ensure that not only the government officials but also the private sector are fully involved in better understanding the benefits as well as the challenges facing this e-commerce industry.”

Until the launch of Acleda’s e-commerce payment gateway, In Channy, president and group managing director of Acleda, said while online shopping relied on cash-on-delivery payments, customers will eventually move towards secure online payments.

“The Cambodian market is still new, and it will take quite some time before the trend shifts, however it won’t take too long. It’s like the age of the smartphone, and customers will familiarise with e-commerce soon enough,” he said, referring to Cambodia’s staggering 414 per cent increase of Internet usage since January 2014 till present.

While Acleda has invested an undisclosed sum in developing their security apparatus to combat online piracy, Channy did say that the bank has implemented two gateway systems that comply with payment card industry data security standard’s used by major credit card companies like Visa, MasterCard, and American Express.

With these steps being taken towards ensuring data security, Siphana believes that once the e-commerce supply chain is codified and the law is enacted, “I expect an exponential growth in this sector, with many jobs and benefits emanating from it.”

Pokorny believes that in the end, the transition to e-commerce will actually be much smoother than in many other countries due to the rapid adoption of smartphones.

“In a way, Cambodia is more advance on this level. We have skipped that ‘desktop’ period everybody else had to go through and we are closing up on others [as a country] with contact-less, smartphone-based online business culture. Which, in the end, makes things much, much faster,” he said.


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