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Cambodia’s Unique Version of E-Commerce – The Diplomat

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E-commerce in Cambodia is not new. Systems for ordering online, and systems for delivering those items, have developed steadily over the last decade, alongside the rise of social media, particularly the rise of Facebook. Following the pandemic, the evolution and adoption of e-commerce in Cambodia has accelerated. But it was precisely the creative systems that gave rise to Cambodia’s early e-commerce infrastructure that have allowed the sector to thrive, even in the chaos of the pandemic.

As the sector continues to grow, we should not forget where the sector came from.

Cambodia’s E-Commerce Landscape in 2016

Cambodia’s first moves into e-commerce were all about creatively overcoming obstacles. In fact, you could say it was these obstacles – poor road quality, the lack of a functioning postal service, an unpredictable system of addresses, low numbers of consumers with access to credit cards, and a large unbanked population – that shaped Cambodia’s e-commerce system from the very beginning.

In 2016, for example, if you wanted to buy something off Facebook here’s what would have happened behind the scenes:

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A call center worker posts a photo of a newly arrived dress on her small, locally owned clothing store’s Facebook page. Minutes later, she responds to a comment from a potential customer under the photo, beginning a negotiation about price. After several direct messages and a telephone call, she agrees with the customer about a price for the item. She prints two receipts detailing the product, price, expected delivery time, and location of delivery. She packages one receipt with the product. She posts the other on a bulletin board for the delivery manager, who then decides who on his team will deliver the package to the customer by motorcycle. He then calls the customer to finalize a delivery point and ask how much change in cash he needs for the exchange. The next day, a member of his delivery team follows up with a series of calls to find the customer and deliver the product.

That description comes from an ethnographic paper on online buying, selling and delivery in Phnom Penh from researchers based at Cornell University and NYU Abu Dhabi. The paper highlights the ways Cambodia’s e-commerce sector took shape.

One of the central truths this paper points out about Cambodia’s e-commerce sector relates to the “context-specificity and interpretive flexibility” of these systems. The researchers describe the online business environment in Cambodia as a one of creative infrastructural action with resourceful and imaginative development of homegrown infrastructure.

Simply put, e-commerce infrastructures in Cambodia were built because of, and for, the local context – using ingredients that were already abundant, like motorcycles and willing delivery drivers – while circumventing the obstacles that presented themselves – like “routinely chaotic roads and neighborhoods that are difficult to navigate.”

Unlike the typical e-commerce markets in places like North America and Europe, where systems are often run solely by human computer interaction (HCI), e-commerce in Cambodia is combines social media with traditional methods of payment and delivery service.

And the e-commerce sector in Cambodia wasn’t just built to adapt to the local environment. It was also built to change.

The rapid growth of the internet in Cambodia, the paper argues, has given the e-commerce sector a uniquely improvisational quality. “The online buying infrastructure might look drastically differently in the summer of 2017 than it did in the summer of 2016, as trends change and new tools are introduced.”

It is the legacy of these systems, and the way of thinking behind them, that has allowed Cambodia’s e-commerce sector to remain so uniquely adaptable to our quickly-changing world. The unprecedented COVID-19 impact has further shaped the e-commerce ecosystem in Cambodia.

Digital Penetration and E-Commerce in Cambodia’s New Normal

The lockdown, curfew restriction, and social distancing imposed by the government necessitated a tremendous change to the Cambodian lifestyle. Since people were unable to move about freely, online buying and selling has become an even more popular way for people to consume goods and services. This new context has given rise to technological developments and infrastructure reinvention to eliminate the barrier between consumer and supplier.

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Along with Facebook, Instagram continues to play a very significant role in e-commerce. Perhaps directly related to this use of these platforms, the number of Facebook accounts and Instagram accounts in Cambodia has skyrocketed. Facebook users in Cambodia increased from 7.9 million to 12.4 million between 2018 September to 2021 June. At the same time, the number of Instagram users tripled from 692,000 to 1.9 million. Cambodian youth, between 13 and 35 years old, are considered to be the main driver in social media penetration. With this significant increase of social media users, small and individual online sellers have also shown a great increase in their operations all around Cambodia.

When food delivery service Nham24 was launched in 2016, it had 20 delivery people; in 2017, it had 220 partner restaurants. The company has since increased their operations to include more than 350 employees making deliveries and about 2,000 restaurants in their network as of 2020. In 2018, e-commerce platform E-GetS was founded by Chinese entrepreneurs to target Chinese expats. Foodpanda, a Singaporean company, and Muuve, a youth-led local startup, were founded in 2019 and 2020, respectively.

During the lockdown, companies like Nham24, E-GetS, and Foodpanda have played an important role in distributing necessary food and products to people who were advised to stay at home. Recognizing the importance of such services, the Phnom Penh local government issued a statement that allowed delivery drivers to pass all checkpoints. In the course of the pandemic, delivery drivers had to shift roles, and have become de facto frontline workers.

The pandemic has also prompted more of these services and their users to reduce their use of cash. The National Bank of Cambodia (NBC) encouraged customers and businesses to use digital payment to lessen direct cash transactions as well as curb the spread of the virus. The e-commerce sector is also strongly pushing for increased digital payment in Cambodia.

By May 2020, the NBC reported that more than 59 percent of Cambodians were conducting payment transactions online. Meanwhile, Nham24 and E-GetS reported that the number of e-payments recently exceeded cash transactions for the first time, as digital payments increased to 55 percent of all transactions in mid-2021.

All the creative infrastructural actions described here emerged as a reaction to changes in technology, the increased access to the internet, and the pandemic, which have combined to create a whole new ecosystem of e-commerce activity.

According to Margaret Jack, a professor at New York University who co-authored the previous report on selling and delivering in Cambodia in 2016, e-commerce in Cambodia is continuing to operate in a very creative way and the recent development of e-commerce is a big move. She also emphasized that Cambodian people have made Facebook’s platform their own in a truly interesting way. “It goes beyond social media,” Jack said in a phone interview.

She also stressed that creative work happens not only in professional tech companies, but also at the level of individual users. In this context, we can draw the conclusion that even though Cambodia doesn’t have a big professional tech company to improve the e-commerce sector, individual Cambodians have creatively transformed the available technology and resources into a platform that can support their business operations, including online selling and buying.

The online buying infrastructure may look different in the summer of 2021 than it did in the summer of 2016, but the legacy of those early years clearly remain. As Cambodia continues to formalize this sector – including projects that seek to integrate even more small and medium enterprises in digital markets – we must not forget the creative history of the e-commerce industry.