How to Dominate Southeast Asia’s Growing E-Commerce Landscape

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E-commerce has been a regular part of life in the United States but, in Southeast Asia, it is finally catching up.

The pandemic accelerated the growth of online shopping in the region. A recent report revealed that the year-per-year web traffic of internet retail platforms rose significantly in 2020 across most markets, especially in Singapore where there was a 35 percent surge. It was followed by the Philippines with 21 percent, Vietnam with 19 percent, Malaysia with 17 percent, Thailand with 15 percent, and Indonesia with 6 percent more online traffic compared to 2019.

In addition, the spending of Southeast Asian consumers on online shopping increased by 19 percent. Singapore and Malaysia have the biggest average basket size, with consumers from each country spending US$61 and US$41 on each checkout.

Previous research from Google, Temasek, and Bain predicts that the internet economy in the region will reach $300 billion by 2025. The growth will be driven by ride-hailing services as well as e-commerce platforms.

Southeast Asia is a promising market for e-retailers, but how can brands capture the attention of consumers and dominate the region?

It is a Completely Different Playing Field

The first thing you need to know about Southeast Asia: it is a vastly diverse market. You will notice it in their choice of payment method. In Singapore, a rich country, consumers use credit cards to shop online. Meanwhile, in Malaysia, internet banking dominates. However, in the Philippines, Indonesia, Thailand, and Vietnam, consumers still rely on the cash-on-delivery option.

There are also similarities. The overwhelming majority of online shoppers in the region access the internet with relatively low-cost smartphones. It is the most accessible, a number of purchases are made through social media platforms, specifically Facebook and Instagram. Transactions most of the time are small.

Data from iPrice also revealed that Southeast Asians spend most on electronics, accounting for 40 percent of all online orders in 2019. The average amount consumers spent on electronics products per day is US$37. The second and third most popular categories are fashion and home & living, making up 25 percent and 15 percent of all online purchases in the region respectively.

The e-commerce landscape in Southeast Asia is different compared to the U.S. and other countries in the West. Before entering the region, brands must first get to know consumers from each member state.

Be Ready to Adopt New Strategies

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Consumers in Southeast Asia have different and, perhaps, higher expectations of e-commerce platforms. They not only want a seamless online shopping experience, but they also want to be entertained, too.

Customers in the region spend a lot of time on online shopping platforms. Thailand, in particular, records an average of 12 minutes a day on e-commerce sites. Meanwhile, Indonesia and the Philippines are browsing online shopping platforms for an average of 11 and 10 minutes respectively per day. Vietnam spends the least time on e-commerce with only about 7 minutes daily.

That is because, for Southeast Asians, these shopping apps and websites also act as a way to kill boredom. Two of the most popular platforms in the region are Lazada and Shopee. Both have games and events that maintain the attention of consumers for longer. The more time people spend on e-commerce platforms, the more likely they are to eventually make purchases.

There are also now live streams that allow consumers to be able to see the products in action. It helps them make a decision to purchase and reduces the likelihood of returns.

There are Frequent Sales

Shopping holidays, or specific days when most brands offer discounted prices, happen very frequently in Southeast Asia. If the U.S. has Black Friday and Cyber Monday, Southeast Asia has monthly e-commerce sales events. Aside from 11.11 (Single’s Day), there is 12.12 which happens in December for Christmas shoppers, and, basically, every parallel digit dates from the beginning to the end of the year.

To say that Southeast Asian consumers love a bargain would be an understatement. But, during these shopping holidays, shoppers tend to spend more and make more purchases.

On 11.111, the average amount spent by shoppers across the region was US$47. That is 74 percent higher than normal. Filipinos, however, spend more during 12.12, paying an average of Php1,013 or about US$21 on holiday gifts.

The pandemic is still raging in the majority of the region, and e-commerce will continue to see its popularity maintained for a little more while. However, experts expect online shopping to become a part of daily life post-COVID.

As more people go online in the region, the number of online shoppers will increase. The adoption of digital payment and mobile wallet apps will also further drive the use of e-commerce.

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