Shaping the Future of E-commerce: Insights from Shopify's Director

Thank you so much for having us, Brian. It's wonderful to meet you.

I'd love to do that. I think this may be a surprise to many folks, but we've actually been in Southeast Asia for very long, Brian, over a decade now. Our journey really started with countries like Vietnam, having a very vibrant partner ecosystem who are entrepreneurs in their own right, even before the merchants come, who supported merchants go online with Shopify globally. These were several web agencies, service shops in Vietnam, Indonesia, Singapore, and multiple other countries in Southeast Asia. That was really the first five years, starting the early 2010s. But around the mid-2010s, something changed in Southeast Asia. E-commerce as a channel became viable, meaningful, and gave birth to the first digital native brands who were online first. As e-commerce hit the 10 billion dollar GMV mark annually, we started seeing brands be born on the platform and grow up. This could be anyone from Secret Lab to Beyond the Vine and so many more. Then in the last five years, Brian, I see increasingly the large established brands, the traditional brands that have been around forever, have started taking their own website very seriously for a multitude of reasons. COVID put steroids on that, but number one, they realized that we all discover brands, products, and engage with our brands much more online today than ever before. Even if you eventually shop at a store, you're probably discovering a brand online first. Second, there's the ability to talk directly to the consumer versus via other channels when it's your own website. Thirdly, it can be a meaningful sales channel that gives you real-time feedback to improve your offering and experience to your end consumer. That's really created a lot of momentum for us. Brands like Bata, Vinamilk, Curatex, these are well-known brands in their own right in their categories and countries who now build on Shopify Plus, our enterprise offering in the region. It's been a very exciting journey, but it still feels like we're just at the start of it in Southeast Asia.

It's a great question. I think I'd go beyond saying Southeast Asia is diverse to saying Southeast Asia in the world of e-commerce is dynamic. Things are changing all the time, new things are being born. It's truly cutting edge in terms of what experience it offers consumers. This region has a lot the world can learn from what happens in Southeast Asia. I think there are three key things we've done over the years that have really made us a compelling proposition for consumer brands looking to make their website a point of sale. Number one, Brian, it's very important to be local when you do business in Southeast Asia. Take basic infrastructure that powers commerce globally: you need solid payment partners, solid shipping partners, without which a merchant can't really even start business. What does that mean in Southeast Asia? It's often not the same partner. We partner with the top payment partners in each of these markets. A merchant in the Philippines is using PayMaya, and the same merchant running his business in Malaysia is using eGHL or iPay88 and so on. Similarly on the shipping side, all the local big names like Ninja Van and J&T are our partners today, and they offer app store plugins to merchants to make our offering complete in region. Number two, I always go back to saying Southeast Asia is not a country, it's a region. What does that mean for our customer, the merchant trying to build a business in commerce online and offline? It means he or she is building a business not just in one country but is often starting in Singapore but shipping into Malaysia, Vietnam, Philippines. The other day I met a merchant who does excellent modest wear in Indonesia who's now shipping into Brunei and Malaysia. We make that super simple with our offering, Brian. With one license from Shopify, you could set up the right customs, taxes, assortment, inventory points in different countries, and make it easy to do business simultaneously in multiple countries. That is very important and unique when you think about what merchants need in this region. Finally, you cannot talk about Southeast Asia and commerce without talking about social commerce. It's not just about being on marketplaces and your own website, it's also about using multiple social media channels for communication. I always say where consumers spend time is where they will spend their money. It's really important to be present and make it easy for merchants to offer not just Instagram and YouTube, which are globally available channels with Shopify, but also locally available communication and commerce channels. That is another focus area that makes our offering truly complete.

Sure. Actually, I find there are a lot of similarities across India and Southeast Asia. For anyone looking to build a big business and looking for the next stage of growth in commerce and retail in the world, not being in India and Southeast Asia would really set you back if you think about the next 10 years. India is definitely one big country, so we're not shipping as often to multiple countries like we do in Southeast Asia, but India has its own nuance when it comes to payments. UPI, which was introduced by the government and embraced by the population, now does a few billion transactions monthly, Brian, and it's a very important form of collecting money from consumers. At the same time, cash on delivery, where you pay for a delivery upon receipt in cash, is an important offering that our merchants need to continue to make to their consumers. Every day in India, there are new users coming onto the internet, and every day some of those users are becoming shoppers online for the first time. Their trust takes time to build, so cash on delivery is a very important instrument. I would say that across both Southeast Asia and India, we find offline-first brands, like gigantic established brands like Vinamilk in Vietnam, or Duroflex in India in the mattress category, or Eurotix in the Philippines. They're really embracing their journey on their website. They realize the value of omnichannel, the value of selling more to their existing customers because they're able to also sell online to them now, and they realize that having a direct conversation with their consumers is super important in this new world we live in.

It's one of those things that really excites me a lot, Brian. If you think about how this happened 20 years back, even moving from having 10 stores in one city to opening your 11th store in the next city was quite a challenge. It was almost like an adventure with less information and more cash to deploy, hoping for the best. Whereas today, I see brands starting in Malaysia, like the modest wear brand Buttonscarves in Indonesia who's now selling into multiple markets in the region. Also, this young brand Christy Ng comes to mind in Malaysia. They sell footwear as well as accessories for women. They started in Malaysia and are now increasingly shipping to Singapore. Imagine this journey for a young D2C brand that's cut its teeth, seeing traction in one market, and knows there are customers in other markets in Southeast Asia relevant to its offering. How easy it is to spin up one more store that is a .sg or a .vn, offer that same assortment, figure out your pricing, speak to customers via performance marketing in those markets, understand who they are and what they want, streamline your offering, test the waters, and then at a certain milestone in sales, decide to extend that to an offline relationship and open your first store in the most important city. You can go from selling in KL to selling in Jakarta because you've already tested the waters in Indonesia via your online store. That has just become so much easier. You don't have to sit today and say I'm going to do one country for five years before I think about how I expand. You could literally start on day zero, and technology that folks like us provide has hopefully made that a lot easier in a complex and vibrant region like Southeast Asia.

Absolutely true. I think it's happening both ways. Offline brands are taking their own online channels seriously as we discussed earlier. When I take a step back, I always think a brand is a brand. Ultimately, a brand that is successful and able to scale to a certain level is able to find its consumers across channels and identify the right mix of channels for that brand. None of this is really new to us, Brian. Even in the world of retail, where I spent a lot of time before I came to Shopify, we always had the brand outlets in a mall, department stores where brands sold into and found their consumers, and high street stores. It's the same thing for online channels. You will sell on marketplaces and there's a certain value to that, but at the same time, it's very important to build an identity as a brand. Your own website does a great job in delivering that. Then eventually, if a lot of your consumers are still shopping most of the time offline, especially in categories like fashion and home where there's a lot of exploration and touch and feel before you commit to a buy, you have to be there as well. It's really about what's become easy today is where you start and how much you can scale before you explore channels that are either harder to succeed in or more expensive to succeed in.

I think our spirit and soul is all about empowering entrepreneurs. Our founder and leadership have always spoken about it. Our mission is to make commerce better for everyone. We always talk about whether you're a young brand or an old brand, it's really about walking with you on the journey from hello to IPO. That's really what we're here for. We always say to brands, look, you know retail and we know tech, and we are here to enable you so you can chase your dreams faster. Who better to start the journey with than entrepreneurs? The Shopify Entrepreneurship Index is a way to tell the story of multiple countries who are really leading the charge on using entrepreneurship to drive growth in their regions. Singapore is a great example of a country where Shopify merchants add billions of dollars every year to both economic activity, which goes beyond just being a merchant and selling, and really creating the ecosystem around it, and also to GDP growth. Some other countries that made it to the top 40 that we announced are Vietnam and Indonesia at 30 and 31. India's in the mix as well. Many of these countries, when you think about it, are really countries where there's an entrepreneur in every home in some shape or form. So many women are entrepreneurs and do something on the side while they take care of their families. So many businessmen have inherited businesses from their families that they are taking into the future now. If they're in the world of retail and commerce, hopefully they're using Shopify to grow faster and be part of the new digital world.

There are probably three things I can think of, and two are very spoken about and have been spoken about forever. Number one is social commerce. I think it's really coming into its own stride. We've spoken about content creation, user-generated content, and influencers forever, but I think we have come to a time when content is meeting commerce. The way you or I buy certain categories is completely changed because we are discovering these brands first on a social channel where we're browsing mindlessly and spending time often. The consumer journey in certain categories has changed. You see that in the way beauty brands are created today. A lot of it is watching someone educate yourself on a product you didn't know you needed and an impulse click to buy. I do feel like content is translating to commerce much sooner today than we've ever seen before. Number two is one of those things we've talked about forever, but I think finally post-COVID, no one is having a debate. Everyone agrees that omnichannel is here to stay. It doesn't matter whether you shop online or offline. You mentioned earlier that people are going back offline. Honestly, where I sit, I feel that a lot of the traditional brands have realized that their customers are also going to come online, and here's an opportunity to increase spend per customer. They may still come twice a year to my store, but if I can get them to also shop once more online, I've already changed the game for my business. Number three is the world of AI and what it's doing to every business, not just commerce. I think at Shopify, it's a positive sum game. There's so much we're doing with AI to make sure our merchants are even more empowered as this becomes a game changer when it comes to technology. We recently announced something called Sidekick, which lives up to its name. It's meant to be a sidekick to our merchants who are sitting there every day figuring out how to grow faster or be more efficient. There's so much AI can do to empower that, and I think we've continued to see that transform the world of commerce.

I guess the one thing that's really close to my heart, Brian, is watching traditional brands grow up in this new digitally transformed world. I always say to traditional brands, you have so much power in your hands. As you embark on this journey, you're a brand that every household pretty much knows in your country. You've got this distributed stock footprint that is so accessible to consumers that you can use to ship fastest to your consumers. When you combine that with getting your technology right, getting your operations and organization right, because so much about this is mindset change versus the brass tacks of process and system, then when you unleash marketing on that, you really reach the next level of scale. I'd love to have conversations with traditional brands about what the next 10 years could look like for them when they make these choices on technology and operations. That's something close to my heart that I'd love to continue doing with each of them.

Thank you so much for having us, Brian.