Laos Embraces Online Shopping via Social Media, Cross-Border Innovation

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Laos Embraces Online Shopping via Social Media, Cross-Border Innovation
[FILE: this image is used only for representational purpose (photo: Pexels)

In Laos, where traditional retail infrastructure lags behind its Southeast Asian neighbors, online shopping has become a trend despite its limited e-commerce presence, largely driven by social media platforms and innovative cross-border shopping.

With a lack of established e-commerce platforms within the country, Lao citizens have adapted by leveraging social media, particularly Facebook and TikTok, as a virtual marketplace. Groups and pages dedicated to buying and selling everything from clothing to electronics have proliferated, creating an online shopping ecosystem.

Phiyada “Namfon” Ounthong, a 24-year-old employee, has been selling home appliances and clothes on her personal Facebook account since 2019 to make extra income. She explained that she opted for Facebook as her sales platform because it is the most widely used compared to others.

“Many people have started buying things online because of how convenient it is,” Namfon said. 

“Customers can select their preferred products and price, and then either collect them from a shipping company of their choice or have them delivered to their doorstep.”

Namfon added that she has her customers transfer money to her personal bank account and then deliver the products to a shipping company chosen by the customer.

Despite the slow emergence of e-commerce in Laos, some goods demanded by customers may not be available in-country. This situation forces Lao people to navigate the complexity of the problem by using middlemen to facilitate cross-border shipping. For instance, many buyers have found ways to purchase and receive products from Thai e-commerce platforms like Shopee and Lazada, which do not typically deliver to Laos.

Dokfa Malaythong, a 23-year-old resident of Vientiane Capital, often shops in Thailand and appreciates the diverse range of products available there compared to Laos.

“In Thailand, they have unique clothing styles that I like but can’t find in Laos,” Dokfa said. “One of my most unique purchases from Thailand was an LED clip-on reading light, something Laos doesn’t offer.”

She explained that some people in Laos even buy food and food-related products from Thailand, showing the diverse needs of Lao people that go beyond what their own country offers.

“I order and pay for the products on the official e-commerce website before paying the middleman to retrieve them for me,” Dokfa added. Without revealing the middleman’s identity, she mentioned that her products usually arrive at a storage room provided by the middleman, where she goes to retrieve them and complete her purchases.

E-commerce has become increasingly popular in Laos, especially amid the COVID-19 pandemic. This trend has led the Lao government to recognize the importance of establishing clear regulations to safeguard investors. The introduction of a new decree to support e-commerce growth has bolstered trust in digital transactions among both businesses and consumers.

Latthana Douangboupha, the deputy director general of the SMEs Promotion Department in the Lao Ministry of Industry and Commerce, highlighted the importance of e-commerce in empowering SMEs during a seminar in Vientiane on 15 September last year. The seminar aimed to develop e-commerce policies and strategies to strengthen SMEs in the digital era, with government officials and representatives from various Lao companies gathering to exchange knowledge and experiences in e-commerce and digital business. 

Despite the apparent success of online shopping in Laos, challenges remain. The reliance on social media and informal cross-border arrangements can be risky, with issues such as fraud and product quality concerns being raised. Furthermore, the lack of a formal e-commerce system within Laos limits the potential for growth and the establishment of consumer protections that are standard in more developed e-commerce markets.

Laos’ online shopping landscape presents a unique case study in the evolution of e-commerce in developing countries. As online shopping continues to grow in popularity, there is a pressing need to develop formal e-commerce regulations within Laos to ensure consumer protection and sustainable growth.