5 eCommerce trends that will rule in Southeast Asia

March 16, 2018 | 6 MIN READ

Southeast Asia has seen unprecedented growth in 2017, an economy where users spend an average of 3.6 hours per day on the mobile internet. This is much more than the matured markets as mobile internet users spend an average of 1.8 hours in the UK, an average of 2 hours in the US. As per the study released by Google and Temasek in Dec 2017, Southeast Asia has emerged as a region with solid growth in all sectors that includes online travel, online media, eCommerce, and ride-hailing. And it does not stop here, as Southeast Asian eCommerce market is expected to grow at a much faster pace in the coming years and might exceed US$25 billion by 2020.

Recently, Alibaba, a Chinese multinational e-commerce, retail, Internet, AI, and technology conglomerate doubled down its investment in Lazada by increasing its share from 51% to 83%. As per Lazada’s CEO – the investment shows the positive growth in Southeast Asia’s eCommerce market and huge potential in the region is foreseen by Alibaba. Also, Southeast Asia looks promising for an explosive growth as the research from Google and Temasek Holdings predicts that e-commerce sales in the region will grow at a 32% CAGR from $5.5 billion in 2015 to $88 billion in 2025.

3 Factors that are Unique to Southeast Asia driving its eCommerce growth

The young population that loves shopping – SEA has a burgeoning young population that makes up 70% of the total population which is under the age of 40.
Lack of big-box retail – People no longer want to shop in large stores with shelves stocked high in aisle after aisle. SEA has been focussing more on eCommerce as per the market’s needs.
Rapidly growing Middle Class – With the rise in earnings and a forecasted GDP of 5.3% over next 10 years, SEA has a huge potential to run parallel to leading eCommerce markets in the world.

SEA’s strong economy, rising international investments and advancing economic growth has laid a decent foundation for the region to become a leader in the online market. With that, here are some of the trends to modernize the eCommerce market in the SEA with more and more options becoming available to customers.

5 eCommerce trends in Southeast Asia that will rule the world in 2018

Capitalising on Mobile Commerce: Mobile commerce has been an important part of many developed countries in the Southeast Asia region. Mobile shopping plays an important role in promoting sales during online shopping events in countries like Singapore and Malaysia. Though outside these countries, mobile commerce has started showing its potential, but it is still a long way for them to penetrate the market. Few e-payments players have also entered the SEA from China because of the promising market on offer. Aimed mainly for tourists from China, these payment options are available with big hotels and restaurants.
Captivating on faster and same Day delivery options: Express or same day delivery has been a quintessential offering for many eCommerce giants. In Southeast Asia, Lazada has already launched Lazada express for Philippines and Singapore. However, this service is limited to few areas. Singapore has been the pick for such strategies due to their stronger infrastructure and transport. There are few e-tailers and online grocery stores, that do offer express or same day shipping, but these are yet to expand to larger cities and region.
Opting Omnichannel approach: Southeast Asia has truly witnessed some of the great innovations in 2017. Customers today are more omnichannel than omnivores. To stay ahead in the game, brands must engage with their customers on different channels. The adoption of Omnichannel play in Southeast Asia has been quite quick as retailers have successfully merged the online and offline channels. One of the most classic examples of the online to offline transition is the Matahari Mall in Indonesia. Ever since the brand has entered the market with the O2O concept, its adoption has become an interesting debate all over the country. Bringing the omnichannel experience to the customers is not an easy task, but with the right software in place, it does not have to be hard. To know more about how to go Omnichannel read: https://goo.gl/QALo57
Making Offline as a part of the eCommerce family: Outweighing increasing online customer acquisition costs and improving fulfillment options throughout the region is one of the major trends that organizations today need to focus on. To reach new customers, eCommerce players in the SEA might opt for “click-and-collect”, enabling customers to order online and try items in the store itself before accepting or rejecting the item. This will also bring down the logistics and delivery costs. Despite being projected as the next big eCommerce Market, online channels only contributes to 1-2% of the total retail. Big eCommerce brands need to step up the game in the SEA to grow rapidly and for this going offline can also be one of the strides put forward.
Evolution of Social Commerce: According to a study conducted by PWC in 2016, “Thailand is the world’s biggest social commerce market where 51% of online shoppers have purchased goods directly via a social media channel.” The fact clearly shows the adoption of social commerce in Southeast Asia. While Thailand is leading the way, other countries in the region like Malaysia and Indonesia are not far behind. Facebook and Instagram are the two most popular social sites in Southeast Asia. Many small brands have started leveraging social media and are using these platforms as storefronts. Majority of the communication begins on social media and ends on an instant messaging app like LINE. The main features of social commerce in the Southeast Asian countries are:
- Direct & personalized communication between the buyers and sellers
- More bargaining opportunity with the availability of a real marketplace
- Option to sell online & pay offline
Thus, the penetration of social commerce in the Southeast Asian countries have provided the opportunity to the small sellers to scale with ease.