Challenges of e-commerce in Cambodia

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As an agency specialising in web development for Cambodian businesses, we’re often asked about setting up online shops, both for clients that have an existing brick and mortar retail business, and those looking to start their venture purely online. Doing online business in this developing economy is not without obstacles, but increased revenue is on offer for companies willing to overcome the challenges of e-commerce in Cambodia.

There are countless industries just begging to be revolutionised by automated online sales. But even many of the largest companies are reluctant to embrace what seems like an obvious way forward. Most “sign up” forms on company websites simply generate an email enquiry, which is sent to sales representatives. They could be doing so much more. Online retail is thriving in the Asia-Pacific region, but in Cambodia it feels like the industry hasn’t even started.

 

 

Labour is relatively low cost

While developed economies are rapidly replacing their human labour with automation and robots, here in Cambodia human workers are often a lower cost than their electronic counterparts – at least initially. But with labour costs rising, electricity becoming more reliable, and internet becoming faster, it’s likely that companies will start to adopt automation.

A large office building full of employees is also quite a status symbol. Few are impressed by a lean and efficient online system compared to a vast office full of hundreds of people answering phones all day. We suggest forward-thinking businesses should try to do more with fewer staff and start really optimising their processes.

 

The unbanked

A term often used in financial services, particularly among mobile payment operators, the unbanked are people who don’t have a bank account. Without a bank account they obviously don’t have access to a debit or credit card, and therefore have no way to pay for things online even if they wanted to.

It may be an extreme example, but it illustrates how new and unfamiliar banking and credit/debit cards are here. Just 15 years ago there were no ATMs here and very few people in Cambodia would have had a bank account. This was well after the “dot com boom” in other parts of the world, a time when Amazon.com was already nearly a decade old. Financial technology and massive investment by international banking giants are helping Cambodia to catch up quickly. But we’re still a long way from plastic overtaking cold hard cash as Cambodia’s preferred payment method.

Without the card payments that e-commerce in Cambodia requires, we’re left with good old cash on delivery and offline transfers. These add manual processing and risk to an online business venture. The emergence of mobile payment operators such as PiPay is encouraging, but the system is still limited to retail POS sales – they don’t appear to have a product specifically designed for online use just yet.

 

Lack of a reliable postal service

When you order goods through an online retailer in developed countries, they typically turn up the next morning. That’s primarily a result of reliable postal services. But it would be difficult to call Cambodia’s postal system a ‘service’. Door-to-door delivery? Forget it! Compounding the problem further, often the street addresses are quite ambiguous. This makes it difficult, or sometimes impossible, for couriers to find you without giving you a call.

For long distance package delivery, the local practice is to write the recipient’s phone number on it and put the package on a bus. This actually turns out to be quite a reliable and efficient system and can often be faster than EMS. But there still aren’t many options for delivery within the same city except to jump on a motorbike. To combat the delivery problem, the large e-commerce stores that are opening up are supported by their own logistics division and organise their own fleet of delivery drivers. That’s all well and good for them but it’s hardly an option for a small shop.

 

Limited options for online payment gateways

Cambodia is never on the list of supported countries for popular payment gateways like Stripe, PayPal, 2Checkout, and other global favourites. Confusingly, PayPal does let you sign up, but only to send money as a consumer, not to receive it as a merchant. This leaves us with only payment gateways offered directly by a few of the local banks, namely ABA, Acleda, and Cathay United Bank. Of these three, ABA’s PayWay service stands out as the most user and developer friendly option, and we’ve recently successfully integrated it with WooCommerce for a client’s website.

The limited choice of payment gateways is made worse by the fact that only a fully registered company can use these services. There are simply no options for individual sellers getting a start if they operate from their bedroom or garage. This is surely putting a halt on what could be great small business opportunities for people all over the country. Countless online businesses have blossomed in most countries around the world, and e-commerce in Cambodia could provide the local economy with a significant boost.

 


Despite the challenges, there’s little we enjoy more than hearing the cheerful “ding” of a successful online order notification – both for ourselves and our clients. So if you’re determined to see your online shopping plans through to fruition then we’d love to discuss your e-commerce website design and development project.

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