Techblog
6 Southeast Asia e-commerce trends in 2018
With a population of over 600 million and an increasing number of new smartphone users, Southeast Asia's internet economy has reached a record high of $50 billion in 2017, according to a joint research report by Temasek Holdings and Google. Covering four key sectors—namely travel, media, ride-hailing, and e-commerce—the report said the region is on “a solid trajectory to exceed $200 billion by 2025.”
The bulk of e-commerce transactions surpassed $10 billion, up from $5.5 billion in 2015, based on iPrice Group's 2017 State of eCommerce report. Among the major events that led to the stunning growth rate are Lazada's record-breaking $250 million sales from its Online Revolution Campaign; Amazon's entry into Southeast Asia via Singapore; Shopee's expanding presence in seven markets in the region; and the aggressive investment of Chinese internet giants Alibaba and Tencent. In March 2018, Alibaba injected another $2 billion into Lazada in a bid to boost its regional expansion through Southeast Asia's leading online shopping firm.
More Singaporeans Shopping Online
Singapore, in particular, is seeing an e-commerce industry boom, with a study by online saving platform Flipit showing that three in five Singaporeans shop online, with market revenue per user reaching $1,022 last year. With at least 82% of the city-state's population online, Singapore's e-commerce market is projected to expand by 11.2% until 2021, making it on par with Canada and Australia in terms of e-commerce penetration.
SE Asian E-Commerce Agreement
As this year's chairman of the Association of Southeast Asian Nations, Singapore is also pushing for an e-commerce agreement to help big and small businesses alike expand across the region by streamlining trade rules, promoting greater digital connectivity, and lowering business barriers. Singapore's Minister for Trade and Industry Lim Hng Kiang says the agreement will allow aspiring entrepreneurs and small and medium enterprises to “market their products and services regionally with greater ease and make it safer to send and receive electronic payments”.
Here are 6 trends that will shape e-commerce in Southeast Asia:
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The cash-on-delivery (COD) payment method is still king. More than 73% of the region's population still does not transact business through banks. Because of this, COD makes up more than two-thirds of all processed transactions, data from ecommerceIQ show. Despite more available options in financial technology, it remains important to educate consumers on the convenience of online payment methods.
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Emerging markets such as Myanmar are recording a rapid increase in mobile phone marketing. “Myanmar is coming online via mobile, via smartphones,” says David Madden, founder of Phandeeyar, the country's first tech hub based in Yangon.
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In Southeast Asia, there is still much untapped potential when it comes to conversion rate, which is the percentage of website visits that turn into a product purchase. Vietnamese online merchants post the highest conversion rate at 1.3%, followed by Indonesia and Singapore at 1.1% each.
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Small businesses and startups will find it easier to participate in e-commerce with platforms such as Shoptiq, which provides all the tools one would need to create, build, and grow an online business. On this platform, creating an online store is fast and fuss-free with 60 free mobile-responsive templates and a wide range of payment methods that include PayPal, credit card, debit card, and COD. Shoptiq's partners also provide professional value-added services such as customisation of store design, product copywriting, and product photography. It also allows you SMEs to connect and sell through established online marketplaces like Lazada and even Facebook.
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Larger purchases are usually done on desktops than on mobile platforms according to the iPrice Group's report. Such purchases typically also happen between 9 a.m. and 5 p.m. across five of six Southeast Asian countries in the survey, namely Indonesia, Malaysia, Thailand, the Philippines and Vietnam. In Singapore, online purchases peak at 10 p.m. Still, mobile e-commerce transactions are demonstrating unstoppable growth, raking in 72% of all e-commerce traffic online and expanding at an average of 19% over 12 months last year.
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Chinese internet behemoths Alibaba and Tencent will continue to aggressively invest in Southeast Asian e-commerce platforms. Both firms are expected to “gobble up” more local companies across the region's e-commerce market.
With all these developments, small businesses would do well to ride the e-commerce wave to further bolster sales and expand their reach. Tapping on platforms such as Shoptiq will allow entrepreneurs to sell directly on marketplaces and even on Facebook with ease, grow their customer base, and go big regionally with integrated global delivery providers.
Summary:
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Southeast Asia's internet economy is growing at unprecedented rates and is expected to exceed $200 billion in 2025.
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High mobile penetration is driving growth for e-commerce transactions, which surpassed $10 billion in 2017.
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The e-commerce market in Singapore, which has the highest credit card penetration among its regional neighbours, is expected to grow by more than 10% in the next three years.
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Chinese internet giants Alibaba and Tencent will continue investing in regional e-commerce platforms.
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While there are several available payment options, including new financial technology solutions, cash-on-delivery still accounts for close to 80% of e-commerce transactions in Southeast Asia.
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Higher purchases are usually made on desktops rather than on mobile platforms, but mobile transactions account for two-thirds of all e-commerce traffic.
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Platforms such as Shoptiq will help startups and small businesses set up shop online with its full range of tools and value-added services that will help increase customer base and boost sales.
