Positioning for emerging markets

With Blockchain taking over the world in a dot-com fashion in 2017, 2018 has been marked with a sobering correction in the crypto markets. The general opinion is that blockchain is real, 99% of cryptocurrency is worth nothing. Only time will tell which one of them are going to survive in a maturing market.

Speaking of maturing market, this article will shed light on South East Asia’s (SEA’s) emerging internet market. We will talk about the massive opportunity this means for entrepreneurs who are social-focused and give some stats of internet and smartphone penetration. It’s also worth exploring the demographic that makes up the next two billion coming online. The market potential is huge in terms of dollar amount. Lastly, it’s important to understand the context of usage and how to design for the next two billion.

We will conclude by introducing Oasis and how we are positioned to take a bite of this massive pie. We think that fintech will have the most impact on this group of internet newcomers, let’s dive in.

Social focused: more than just a handout

Through our research, most successful programs that help the poor lift themselves out of poverty always include giving them the knowledge, technology, and social support to get to the next level. Money by itself creates an illusion that things are better until they run out of money.

Take trickleup.org for example, they are a mainly women ran organization that teaches women financial literacy by helping them start a small business group and seed them with different assets. This is to help these women living in poverty have control over financial assets, learn how to run a small business and hopefully become financially independent. Trickledown has recently started their mobile program where support and information are distributed digitally.

This is just one of many cases where NGOs are leveraging the latest mobile technology to enhance their program delivery to the poor. As much as this is helping the poor, this organization reaches the donation limit each year.

On the corporate side, we are seeing tech giants such as Facebook offering free bandwidth for their basic services. This means when using Facebook, activities such as sending messages and viewing a basic profile is free. This strategy is used to acquire users in SEA, and it is working. Facebook and Whatsapp are the two most used applications in SEA.

Let’s take a deeper look at mobile internet usage in SEA in the next section.

Internet and smartphone penetration

SEA has the highest average mobile internet usage at 3.9 hours per day. This is higher than any other region in the world, and the users are still fairly new to the internet. With Indonisia leading the way at number four behind Brazil, India and US for facebook usage, we are seeing the rise of social media stars from that region since 2017.

The internet penetration is between 30% and 50% depending on the country. About 90% of these connections are through smartphones.

This means most of the new users are experiencing the internet through social media. Their smartphone is the only device that they have instead of the NA users behavior of owning a laptop or desktop and the phone is generally the second way of browsing the web.

Priced to scale: if 1GB is less than 2% of monthly income

Taking a look at Google’s Next Billion User, their focus is currently in India and SEA countries. Most of the population that are coming online are mostly smallholder farmers, feeding more than 70% of the world. These are the people that cultivate less than 2 hectare of land, mostly for subsistence and partially for profit.

Internet and low-cost smartphones are getting to the price point which is low enough to be affordable at scale for them. This price point is reached when 1GB of data is worth less than 2% of the monthly average income. At this level, the bottom 20% of the population in terms of income, are able to afford the internet.

Generally speaking, when people connect with others online, the first two things that are immediately useful are communications and payments. For businesses building out solutions and services for this group of people, there is the last mover advantage. This is where previous lessons and existing successes in other markets can be leveraged to better serve at reduced cost and increased scale.

These farmers could double their production output given some basic knowledge, access to proper farming inputs, and knowledge about the market. Meicai is a Chinese startup who seized this opportunity by helping restaurants source produce from farms. Leveraging payment services from Wechat and Alipay, they are currently valued at $7 billion.

The market potential

The size of digital economies in SEA countries is up to $72 billion dollars and predicted to increase to $240 billion in 2025. Putting this into perspective, the currently P/E ratio of tech companies vary widely with the average being 37 times. Assuming a conservative 10% profit margin, the total market cap of will be north of $600 billion for those companies who seize the market.

Besides Meicai, there are a few others that are positioned to take a chunk of this $600 market cap. The four biggest are Traveloka (Travel, $2b), Bukalapak (E-commerce, $1b), GO-JEK (Lifestyle, $4b), and Tokopedia (E-commerce, $1b).

However, designing applications for the next billion coming online will be a little different than current internet users. Let’s take a look at the best practices.

How to designed for these group

First-time internet and technology users behavedifferentlyifferent than those of us who have been using technology for the last 20 years. Coupled with literacy as a barrier, most of the applications out on the market do not cater to this group of users by default. They are more likely to be using a second-hand phone, the screen might be scratched or broken. They are also not aware of the abstract set of icons used on Android and iOS operating systems. They are data usage conscious and frequently have more than 2 sim cards for different mobile use. 95% of their plans are prepaid.

With the above in mind, here are the top 7 key considerations taken from Google’s Next Billion Users research:

• 4-inch screen size, most prevalent screen size. 480 by 800 pixels screen layout
• Minimize battery usage to the application
• Allow easy move application to SD card
• Build background compatibility for all the older operating systems
• Reduce download size of the app: 5 to 10mb
• Emerging markets don't update their apps
• Design for contrast in visual

The above comes from a user-centric approach. Arguably, with the information in this articles, the next generation of unicorn applications needs to be not only user-centric but also farmer and voice-centric. The applications needs to transcend languages, race and culture, making it a truly global phenomenon from day 1.

Oasis’ self-plug

I hope you have enjoyed a small piece of the research that Oasis have done in the last 6 months.

Oasis is a super app to onboard the next 2 billion to the digital world -, particularly in communications and payments services. Most of these 2 billion are smallholder farmers, who are often first-time tech users, illiterate and digitally excluded and unbanked.

Oasis is a visual and voice-centric, user-friendly app with content and features need by farmers such as easy-to-use voice chat with friends, family, suppliers and customers; farming/weather-related news and alerts; and previously unavailable financial services such as digital payments, micro-loans and crop insurance

Oasis is founded by a team of passionate and committed technologies and proven business builders from agtech, fintech, blockchain, marketing and operations. Oasis is headquartered in Toronto with customer trails ready to go in Thailand, India and Ghana.