How Vonage is riding the e-commerce wave in Asia

Asia’s e-commerce boom has been a boon not only to online retailers but also companies in downstream and complementary industries such as logistics and financial services. After all, goods need to be delivered to consumers while banks may be roped in to help consumers fund more expensive purchases.

Vonage, a cloud-based communications platform provider, has benefited from the region’s e-commerce wave as well. Its services and application programming interfaces (APIs) are being used by e-commerce players and those in other industries to engage consumers through text messaging, voice and video, more so in recent months as more people shop online amid the Covid-19 coronavirus pandemic.

In an interview with Computer Weekly, Sunny Rao, senior vice-president and general manager for Asia-Pacific and Japan at Vonage, explains how e-commerce companies are tapping APIs and cloud communications services, and talks up the company’s growth in the region and its relationships with telcos.

Can you tell us more about Vonage and its footprint in Asia?

Sunny Rao: We make communications more flexible, intelligent and personal, and that’s really to help enterprises around the world stay ahead. We do so through our unified communications and contact centre suite, which are built on a stack with programmable communications APIs for text messaging, voice and video.

In Asia, we’ve had a presence for a while with a number of offices around the region, including in Tokyo, Seoul, Beijing, Shanghai, Shenzhen, Hong Kong, Singapore, Indonesia, as well as Sydney and Melbourne. We have a range of customers in e-commerce, logistics, fintech [financial technology], healthcare and education.

In China, we are a dominant player among Chinese enterprises, and we have a fairly substantial business in Singapore, Malaysia and Indonesia. We have rapidly scaled up in Japan over the past 18 months, followed by South Korea. In Australia, our API business is now growing following years of great business in the contact centre and unified communications space.

Overall, we’ve been growing upwards of 50% year over year in the region, and this has been consistent over the past four to five years.

What are some interesting use cases you’re seeing in Asia that might not be as prevalent elsewhere?

Rao: Businesses around the world are increasingly global, and ideas flow from one part of the world to another fairly rapidly. So, what I may say now is a snapshot in time.

A lot of our growth in Asia comes from e-commerce, mostly driven out of China and now in Southeast Asia. However, the e-commerce ecosystem in Asia is very different from that in the US, where e-commerce is also very prevalent. In Asia, companies started off as e-commerce marketplaces but there are increasingly more super apps that cater to a lot of needs from ride-hailing to food delivery.

One area in which Asia had been falling behind is remote learning, which for a long time was primarily driven around the need to learn languages, specifically English. What has happened now, though, is a significant growth in education services amid the Covid-19 pandemic, more so in Asia than elsewhere because of the significant emphasis on education. Governments and schools have gravitated to make sure that they can continue to enable learning with the least amount of disruption.

In healthcare, Asia is catching up with Europe and the US. We’re now seeing more healthcare use cases in Australia and India, and they are starting to seep into a few other countries such as South Korea and Japan.

Could you provide an example of how an e-commerce company might use your technology? Do they typically leverage your APIs as a gateway to tap the capabilities of your platform, or do they choose specific solutions, say, a contact centre offering?

Rao: In Asia, e-commerce companies have used us for a number of functions. The first is obviously the acquisition of consumers. When they do marketing, they use our SMS API capabilities to reach out to consumers to incentivise them to come onto their platform. Then, they will need to authenticate users, and we provide a range of capabilities in that area.

For example, if a user’s registered phone number is from Singapore, but his or her IP address is from the Philippines, then something is off. E-commerce companies will need to perform another level of checks, and they use our APIs to do that.

There’s also the process of authentication itself, which uses a two-factor code. That’s important during the sign-up process because e-commerce companies give a lot of incentives such as free coupons when you sign up, and they don’t want that to be misused by fraudulent users who use fake numbers.

Finally, e-commerce companies also use our capabilities to notify consumers in each stage of the purchase and delivery process through SMS or social chat, so you know if your purchase has been accepted and when it is going to turn up at your doorstep. This helps e-commerce companies reduce cost by preventing consumers from contacting their call centres to ask for the same information over and over again.

Then comes the important aspect of delivery, where the delivery cost can make or break e-commerce companies, which need to make sure you’re at home, or at your workplace to receive the goods. They are proactively doing that through different channels, whether that be SMS, social chat or voice calls.

But the journey’s not over. The consumer may want to return a damaged item, so the ability to take a photograph of the product and being able to contact customer care for a refund or replacement is key. And when customers reach out to the contact centre, agents need a flexible system that lets them serve customers from wherever they are, and across any communication channel.

From what you’ve described, it seems that the use case for e-commerce is primarily customer engagement using SMS as the main channel. Do most e-commerce companies already have their own contact centre solutions and are making use of your SMS APIs to extend that to their overall operations?

Rao: It starts with SMS, but as the communication becomes more critical it escalates to other channels. For example, you can’t facilitate the returns process over SMS. There’s no way you can take a photograph and send that over, so you may use a channel like voice to call a contact centre, or you may use a channel like WeChat or WhatsApp.

All of those channels can be powered by us. Even if you were to use WhatsApp to communicate with an e-commerce company, we’re the ones providing the APIs to connect your WhatsApp account to the customer care platform. Many e-commerce companies started with their own on-premise call centres, but as they move to the cloud, they start to use more of our APIs or in many cases, our hosted contact centre product. 

In the past few years, API security has been a concern as well. How is Vonage addressing any potential security concerns with the use of APIs, especially since they involve the movement of personal data in the case of e-commerce companies?

Rao: If you look at all the capabilities we bring, especially in a world where regulations like Europe’s GDPR [General Data Protection Regulation] are of paramount importance, we understand what personally identifiable information is and how it should be handled through our work with financial services and healthcare clients.

We provide a range of security options, even in accessing our APIs. We have also made significant investments in our own internal fraud and machine learning systems, which identify fraudulent patterns in the use of our APIs.

We also provide APIs to enterprises that allow them to either redact sections of the communication immediately, or to completely redact everything from cloud systems. These are very powerful features, and enterprises that really care a lot about security can be assured that none of the data is being accessed by anyone else but themselves. 

How ready are enterprises – especially in emerging markets where the traditional thinking has been to use SMS gateways on-premise – when it comes to adopting cloud-based solutions like yours?

Rao: I think Asia has really evolved a lot in that aspect, primarily because companies here have been growing so rapidly. It is quite understandable that you may have started with a local SMS gateway or even a local voice gateway. But when you’re growing at 60%, or in some cases 100%, it’s just impractical for you to have either on-premise gateways, or to keep growing your IT teams because the focus is about serving the consumer, not building up a big IT team.

And so, they have been forced in a number of cases to adopt cloud communications because they want the ability to scale rapidly. In the past, people would buy and install video communications gateways on their premises and in their meeting rooms. But in the past few months, who would have thought that video traffic would be growing at the rate we’ve seen recently? Between February and March this year, we saw a 435% increase in video usage minutes alone. That’s not possible to sustain with on-premise gateways, so the adoption of cloud has really ramped up. 

The second thing that’s driving the move to cloud is the pricing model. We have a pure pay-per-use model, so you only pay as much as you use. There’s no upfront cost, and there’s no concept of the need to monetise capital expenditure investments. That helps companies that are growing rapidly, because they can create a revenue model that says this is how much I earn, and this is what it costs.

Can you talk about the infrastructure investments that Vonage has made to support growing usage during this period? How are you coping with increased demand? Are you hosted on third-party cloud platforms like AWS or does the infrastructure mix include your own datacentres?

Rao: Our infrastructure team is spread across the world and they play a pivotal role in ensuring that we keep maintaining the scale of growth. We have an architecture model that gives us the ability to scale very rapidly, so we can add capacity really quickly. In many cases, we’ve been adding capacity every 24 hours to cater to this unprecedented growth that we’ve been seeing in the past 30 to 45 days.

We have a range of datacentres around the world in numerous locations, and we are completely on the cloud. So yes, we do operate a mix of infrastructure on our own and from third parties because that improves redundancy for customers.

I presume you have existing engagements with telcos, perhaps some bulk messaging arrangements to address the surge in demand in times like these?

Rao: That is correct. We have a very active carrier operations team that is constantly in touch with our telecommunication partners on the consumption of capacities for SMS and PSTN [public switched telephone network] voice. That said, we also run IP voice and video which are not tied to any telecommunications provider, so we have scaling on both sides.

But one other aspect I’d like to highlight is we have a great relationship with our telecommunications partners. Not only do we buy from them, there are also many telecoms providers, even in Asia, that white-label us to serve their enterprise customers. We have a mutual engagement where we buy from them and we also sell them our platform capabilities, as well as our professional services, consulting and knowledge of industries that that we know.