E-commerce in Southeast Asia is Booming

04/02/2020

New middle class, local government support and high internet penetration. E-commerce is booming in SEA reagion. The market could be worth more than 20 $billion

 

Southeast Asia is an upcoming market of interest for e-commerce. With the world’s third-largest population and a comparatively low, but growing, Internet connectivity, the ASEAN e-commerce market presents many growth opportunities for businesses ready to face its challenges.

SEA is now a very attractive market for companies globally involved in the e-commerce field and smaller local players. At a turning point in terms of Internet and mobile penetration, the population of Southeast Asia is quickly adapting its behaviors to take advantage of new opportunities available in purchasing products and services online. For example, mobile payment are now becoming the normality in reality such as Vietnam or Thailand. 

 

 

According to data Singaporean e-commerce market is more mature but the Malaysian market is more dynamic, while in Indonesia, Thailand, the Philippines, and Vietnam, e-commerce is still at a very early stage but remains an important reservoir of growth for SEA e-commerce sector.

In  above mentioned countries,  the rapid development of technological infrastructures and growing levels of income ensure that the market’s expansion provides room for growth of existing players or newcomers, be they local or foreign companies. 

One of key factor to understand why SEA e-commerce sector is booming is the population. Southeast Asia’s population is mostly represented by young population, 67% under 35 years old and becoming richer, much faster than global average, consolidating the rise of new middle class. Moreover we’re facing a high internet penetration rate leaded by mobile phones and social media. By the way, SEA has very low e-commerce penetration, and the potential is huge. According to data, e-commerce shopping makes up just 3-4% of total retail sales in SEA, that’s why its market tenurial is massive. 

 

 

In some countries, consumers still face difficulties to reach traditional shops. Potential customers are therefore even more eager to buy online the goods they cannot obtain locally. These retailing challenges are however transferred to the sellers who need to find new solutions to collect payments and deliver products.

Despite these difficulties, big and small companies are rushing to move and sell online, as many analysts expect the market to boom in the coming years. With less than 1% of the total retail market currently happening online (except in Singapore), if it were to reach 5% of total retail, the Southeast Asian e-commerce market could be worth more than 20 $billion.

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