E-commerce in ASEAN outpaces the rest of APAC, will hit $132bn this year
E-commerce in ASEAN outpaces the rest of APAC amidst constant industry disruptions and exponentially increasing digital adoption rates.
As per Facebook’s 2021 Digital Consumer Report, the region is expected to hit $132 billion by 2021 and grow 14% each year to reach $254 billion by 2026. In addition, there is an expected 30 million increase in digital consumers, with the average consumer spending estimated at US$381 by the end of 2021.
The region’s big players are making significant and strategic strides. In a recent major development, Shopee founder Sea Ltd. sought to raise $6.3 billion for corporate purposes, investments, acquisitions, and further expand in Europe and India after company shares spiked to 72.72% during the pandemic.
Lazada, a significant competitor, is also carrying out a regional approach. Lazada eLogistics, a state-of-the-art logistics technology with modular infrastructure, claims to offer better shopping services for merchants and consumers across the region.
Other companies such as Tokopedia and Bukalapak in Indonesia have amassed nearly 200 million monthly active users combined, while Sendo in Vietnam gains 7.4 million average visits per month.
On top of increasing demand, strategic mobility amidst the pandemic and ongoing marketing campaigns continue to grow for major e-commerce companies. Gamified features, free shipping, and discount vouchers are further accelerating user purchases.
Big-ticket celebrity endorsements are also unlocking record sales. At the latest Shopee 9.9 promotion, Jackie Chan served as the newest endorser for the platform across the region. Lazada, meanwhile, hired Korean celebrity Hyun Bin to endorse its platform.
A region to watch out for
Compared to the rest of the world, ASEAN e-commerce takes a small share of the pie in the total global market. The United Nations Conference on Trade and Development reported that China led in online retail sales in 2020 with US$1.41 trillion, followed by the United States with US$791 billion, and the United Kingdom with US$130 billion.
Geographical logistics constraints in big markets like Indonesia and the Philippines present many challenges, on top of the region already being fragmented. However, this is far from saying that e-commerce in ASEAN is not profitable. Aggressive adoption and changing consumer behaviour boost the region’s e-commerce space, driving digital and fintech innovation to new heights.
In 2021, two out of three South-East Asians spent more time online compared to 2020. 72% of the users now allot time to browsing items, finding information on goods and services, making purchases, and making bookings and reservations.
Despite being late adopters to the internet, most South East Asians use mobile phones to shop online because they are handy and affordable. As per We Are Social’s Digital 2021 report, Indonesia leads with 79% of internet users purchasing online via mobile devices. Thailand (74%), the Philippines (70%), Malaysia (68%), Vietnam (61%), and Singapore (57%) have higher percentages compared to the global average (55%).
E-wallets have taken over cash, and more than a third of South East Asians now prefer e-wallets over other forms of payment. Preference for e-wallets also continues to increase, resulting in more investments in fintech. Xendit, an Indonesian payment firm, became the latest fintech unicorn with US$150 Series C funding following its breakthrough in the Philippines this September.
“What we see in China and the US is more of a channel shift from offline to online, whereas in ASEAN the growth in consumer spending and retail is driven by online channels. In the future, we will be talking about digitalized commerce instead of gross merchandise value and penetration, so businesses will need to focus on driving the most value out of the omnichannel purchase journey,” Magnus Ekbom Chief Strategy Officer, Lazada Group said.
For e-commerce players in the region, an omnichannel approach to retail can reduce overheads while increasing sales, allowing users to shift seamlessly from one channel to another. Moreover, this approach helps target consumers’ specific needs and gain more engagement, especially as ASEAN users spend time looking for the best deals available. Disruptive.Asia
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