Data in 2021 shows that e-commerce in Southeast Asia only accounts for 9% of total retail sales, with a year-on-year growth rate of 85% in 2020. Compared to China's 35% e-commerce penetration rate, there is still a lot of room for improvement in the entire Southeast Asian e-commerce market.
In 2022, the growth rate of e-commerce in Southeast Asia will be even more significant. The Philippines, Indonesia, Vietnam, Malaysia and Thailand will occupy five seats in the top 10 countries with global e-commerce growth rates in 2022. $120 billion in 2021 grows to $234 billion.
The current Southeast Asian e-commerce market is still hot and contains unlimited business possibilities. It is such a market with huge potential that attracts Chinese companies going overseas to expand their business in Southeast Asia one after another.
At present, China's cross-border e-commerce has formed a complete ecology in the Southeast Asian market, and the "time machine effect" and "dimensionality reduction attack" that were 18 years ago no longer exist. The current Southeast Asian cross-border e-commerce market has entered a new stage of building product strength and refined operations.
In the future, if you want to gain a foothold in the Southeast Asian market, you need to accelerate localized operations and understand user characteristics and consumption habits in order to meet the needs of local users in both product selection and service.
Five Elements for Seizing Market Opportunities in Southeast Asia
1. Focus on young consumers
Southeast Asia is a typical market dominated by young people. Online shopping consumers are mainly young people. Online shoppers under the age of 35 account for more than half of the total online shoppers.
Young consumers in Southeast Asia have a large population base and are keen to accept new things. Therefore, various services in the Southeast Asian market must meet their consumption characteristics.
2. The rise of the independent station model
According to the survey, following the establishment of third-party e-commerce platforms such as Shopee and Lazada, the independent station model is also rapidly emerging in Southeast Asia. In a survey of independent website sellers in Southeast Asia, 84% of the respondents said that they used the sass website building tool to build their own website, and 16% of the respondents chose to build their own website.
Through independent stations, companies going overseas can be free from platform constraints, enjoy a high degree of autonomy and flexibility, master customer traffic and data independently, and enhance stickiness with customers through innovative management and meticulous services, thereby continuously accumulating brand reputation and improving Consumers' trust in the product.
3. Mobile shopping trends
The popularity of smartphones has also had a staggering impact on the development of e-commerce in Southeast Asia, with smartphone usage among overall internet users in Southeast Asia expected to increase from 88% to 90.1% between 2022 and 2026 (eMarketer, 2022).
Consumers will gradually become accustomed to using smartphones for e-commerce shopping, video, gaming, payment, ride-hailing and other services. For overseas merchants, it is imperative to attach importance to the function development of e-commerce mobile terminals and optimize the mobile shopping experience.
4. Social media influences buying decisions
The penetration rate of social network usage among Southeast Asian consumers ranks among the highest in the world, and the number of people who rely on social media to shop is increasing year by year. Overseas research institutions predict that in the next five years, the social e-commerce market will account for 60%-80% of the entire Southeast Asian e-commerce market, and the popularity of social media shopping has approached or even surpassed that of e-commerce platforms in the future.
5. Digital payment promotes the development of e-commerce
Consumer financial services in many Southeast Asian countries are not perfect, and the penetration rate of bank cards and credit cards is very low, which has brought great obstacles to the use of digital payments. Consumers are still accustomed to using cash to pay, resulting in Southeast Asia today still a "cash is king" society. Some overseas merchants are also using the COD (cash on delivery) model to collect payment from consumers, which not only limits the development of e-commerce, but also increases the operating costs of merchants.
Today, with the popularity of e-commerce in Southeast Asia and the improvement of digital payment infrastructure in Southeast Asian countries, consumers’ acceptance of digital payments has generally improved. It is estimated that by 2025, 91% of e-commerce transactions will be conducted through digital payments.