The e-commerce market in Southeast Asia has rapidly transitioned from physical retail to a multi-disciplinary shopping ecosystem spanning across channels, devices and store concepts. Evolving from the conventional brick-and-mortar format to dynamic avenues, online and offline retail businesses are redefining shopping trends, notably impacting consumer behaviour and purchase choices. Growing sharply in the post-pandemic era, the e-commerce sector in ASEAN region is expected to generate revenues of more than USD125-bn this year, and the industry is projected to grow at an annual rate of ∼11% from 2023-27, expanding the market volume to USD ∼200-bn in the next five years.
The growing scale and influence of e-commerce in the region is largely attributable to three keys factors. While these factors are relevant in other parts of the world too, they are particularly important in the ASEAN context.
FASTER, CHEAPER MOBILE CONNECTIVITY
Reported as the most engaged globally, SEA internet users are leading in mobile-first internet connectivity with 90 percent connecting to the internet through their smartphones. Adding to this remarkable growth is the increasing availability of affordable smartphones and rollout of faster, more reliable mobile telecommunication services across SEA markets. With internet charges in Southeast Asian countries ranging from USD0.38/GB (Thailand) to USD1.70/GB (Brunei), it is no surprise then that smartphones have become the main channel for consumers to shop online, thus fuelling the demand for any-time-purchases.
INCREASING IMPACT OF LEADING PLAYERS
The maturing and swift progress of the region’s leading e-commerce giants continues to play a critical role in the rise of digitisation and e-commerce. Southeast Asia’s top 3 platforms – Shopee, Lazada and Tokopedia – have recorded an unprecedented 7x growth in sales revenue since 2015 by offering millions of products over a wide range of product categories, best-in-class mobile and web experience, frequent sales promotions, and extensive distribution coverage. Benefitting from their large user and seller base, these platforms are consolidating and analysing consumers’ purchase preferences to intuitively forecast future e-commerce trends.
EVOLVING CONSUMER TRAJECTORY
As buyer preference moves from omni-channel approach to a more consolidated one, retailers are fast adapting to this change as well. With trends like “click and collect”, newer concepts have emerged, including offering in-store digital experiences to satisfy consumers’ needs for more information at the point of purchase. To buy products that are not available in stores specifically in underdeveloped retail trade channels that fall outside of major cities, many consumers are now more dependent on e-commerce channels for the same. Singapore and Thailand lead the way in offering experiential retail marketing, with some of the brands incorporating AR & VR in-store to augment their digital marketing efforts.
EMERGING TRENDS & EVOLVING LANDSCAPE
A mosaic of numerous economies at different stages of development, SEA’s e-commerce penetration rate is variable across countries. The largest economy of the region and the biggest driver of growth, Indonesia is touted as the market leader alongside Singapore, at approximately 30 percent. The Philippines, Thailand and Vietnam are a close second at 15 percent. An interesting emerging trend has been the diversification of distribution channels in SEA. While traditional e-commerce stores such as Shopee are still holding top position, social network platforms are all set to be the next big thing. Vietnam has begun to explore different social e-commerce platforms (online stores) that leverage users’ social network. In 2022, TikTok launched TikTok Shop in Vietnam to accelerate sales through live streams, becoming one of the top five e-commerce platforms of choice for Vietnamese customers.
Expectations are growing rapidly as customers discover more convenience on all levels – be it product customization, mobile-optimised search, quick checkout processes, or hassle-free delivery.
Poised for continued growth in the coming years, the e-commerce market in ASEAN region is offering enormous growth opportunities by way of digital adoption, rising consumer demand and favourable regulatory environment.
Jun De Dios is our EVP for Growth & Strategy and he is also our Country Manager for Philippines. Jun was the CEO for AkzoNobel in Vietnam from 2008-13, and then CEO in Indonesia, before being appointed Cluster Director for Indonesia, Malaysia, Thailand, Philippines, Papua New Guinea, Australia, New Zealand and Pacific Islands over the period 2013-2019.
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