The e-commerce market in Southeast Asia is growing at a significant rate. In particular, Singapore, Malaysia, Thailand, and Vietnam where demand for both e-commerce and m-commerce is on a huge growth trajectory and poised to be one of the fastest-growing markets in the world.
Even before the pandemic, Singapore alone was one of the fastest growing markets in the region and projected to make $10 billion in online sales in 2020. Across the Southeast Asia region as a whole, the market is expected to exceed $150 billion by 2025.
From an economic perspective, Singapore, Malaysia, Thailand, and Vietnam are part of the Association of Southeast Asian Nations, ASEAN, which focuses on socio-cultural and economic development across the region.
With a market size of $2.3 trillion and 600 million people, ASEAN aims to achieve a single integrated market through the process of regional economic integration. Already showing themselves as leaders in e-commerce and m-commerce adoption, various ASEAN initiatives are also in place to create world-class digital infrastructures.
Rapid adoption & market trends
So, what does all this mean for cross-border or international brands wishing to enter Southeast Asian market? This is a very e-commerce savvy and digitally advanced region. It is estimated there will be 350 million digital consumers across Southeast Asia by the end of 2021.
Since the start of the pandemic, almost a quarter (23%) of consumers now make cross-border purchases, with 22% increasingly shopping on sites outside of the region. Although consumers are open to purchasing from global brands and e-tailers, they do demand a great experience throughout the process, from user experience right through to purchasing and fulfilment.
From a local perspective, Thailand and Vietnam are fast becoming forces to be reckoned with. Vietnam is one of the fastest-growing e-commerce markets in the region, and, under the Thailand 4.0 scheme, tech innovation is key for economic development. These markets present real opportunities for cross-border brands.
Malaysia and Singapore are well-established digital economies and very e-commerce and mobile savvy. As a result, merchants need to be ahead of the curve when it comes to marketing and m-commerce.
For cross-border effectiveness, building brand loyalty is key. Consumers can cross up to 8 websites before making a purchase and cite value-for-money and sustainability as key decision-making factors.
Market snapshot: bank transfers make up 46% of the Malaysian market, whereas 75% of Singaporeans prefer card payments.
To help with evaluation and decision-making, social media is a key channel for product research, as well as e-commerce marketplaces. Video content, both on dedicated platforms and via social media, as well as word of mouth, also carries influence.
However, for businesses looking to test the market or establish a presence quickly and easily whilst minimising risk, online marketplaces such as Lazada and Shopee represent 80% of e-commerce revenue across Southeast Asia. With 100 million and 290 million monthly visits respectively, establishing a presence via these online giants can be a powerful way to drive sales.
Cash & Digital payments
Socio-economic and geographical factors across the region also means there is a need for merchants to offer multi-channel payment structures. For example, cash-on-delivery remains popular, but e-wallets, apps and cards are also commonly used.
According to Boston Consulting Group (BCG), South East Asia is leading a digital payment revolution. With mobile usage at around 90%, it’s no surprise that 49% in the region use e-wallets, and why the ‘unbanked’ population, predominantly in Vietnam, is set to show a 57% growth in digital payments by 2025.
Low acceptance of digital payments by merchants is seen as a stumbling block by 54% of consumers and can influence purchasing decisions
Consumer purchasing trends do change from nation to nation, so it’s important e-tailers address any payment barriers a consumer may face, as well as offer multi-channel payments and focus on developing app and m-commerce strategies.
Southeast Asia is one of the most exciting e-commerce growth markets in the world. Done right, establishing a cross-border presence can drive rapid growth for merchants, but meeting consumer demand will be critical for success.
We can help
At Asendia, not only do we have a deep understanding of Southeast Asian markets, but we can also help you meet customer demand through a range of services, including fulfilment and B2C distribution, as well as the logistics of cross-border e-commerce.
For more information, why not get in touch.