There are possibilities that arise with E-commerce that are so exciting that someone who lives a life, thinking 9-5 is the only way down can be lit up by them. Since the era of online entrepreneurship, freedom and fulfillment have never been so accessible. The E-commerce market has seen significant growth in the Southeast Asian region.
Despite companies capitalizing on the growth facing significant challenges, a boom in E-commerce sales in Southeast Asia over the next five years will continue. In a recent report by Google and Temasek, E-commerce sales in Southeast Asia are forecast to grow to US$240 billion by 2025.
The Southeast Asian E-commerce Landscape
According to the latest data from Statista, the countries in Southeast Asia are leading the way toward a profitable E-commerce ecosystem which includes Indonesia, Thailand, Vietnam, Malaysia, the Philippines, and Singapore. These countries have quickly established themselves in the global E-commerce landscape and represent a unique opportunity for foreign merchants. The revenue generated in the E-commerce market in Southeast Asia is projected to reach US$142.70bn in 2022. Revenue is expected to show an annual growth rate of 15.08% (2022-2025), resulting in a projected market volume of US$ 217.50bn by 2025. The total E-commerce sales in Southeast Asia will be $89.67 billion in 2022, an increase of $16.31 billion over last year, and is expected to reach the $100 billion mark in the year 2023 according to the source eMarketers.
The revenue growth by segment (2021) for Indonesia was 10.21% for Thailand at 8.47%, Vietnam at 5.67%, Malaysia at 14.97%, the Philippines at 14.75%, and Singapore it was 16.1%. According to marketers and the Department of Statistics Singapore the E-commerce GMV per capita for Singapore would be $789, for Indonesia $157 and for Thailand $155 in 2025.
Key players dominating the market
According to Statista, the key players in the Southeast Asian region grab the majority of the market share, it includes Shopee with the total visit per month of 197.8M in Southeast Asia, Lazada with 161.7M visits per month while Tokopedia with 72.4M visits, Bukalapak with 26.8M visits and Blibli 15.8M visits in Indonesia whereas, Tiki with 22.0M visits and Sendo with 11.4M visits in Vietnam.
Since the pandemic has damaged the economy in the past years, the three big E-commerce platforms have grown sales by offering regular sales promotions and extensive distribution coverage. The increasing role of these platforms is reflected in other engagement metrics, confirming a trend in consumers’ purchase preferences.
What has made the explosion of E-commerce in Southeast Asia?
Industrialization is an effective phenomenon in the Southeast Asian region that regulates its economy to the outer world. By establishing the AEC, ASEAN deepened its economic integration by becoming a region where goods, services, investments, skilled labor, and capital can move freely.
By harnessing the online trade potential of Southeast Asia, the region can better integrate into international value chains, expand its market access and improve commercial ties within the region as a whole. Every country has its own skill that enables the economy to grow. Singapore is one of the most capitalistic societies in the world, as it is the de-facto financial hub of Southeast Asia. The city-state is home to one out of every six millionaires and its stable banking system, low taxes and immigration policies have attracted investors and entrepreneurs alike. Thailand, Myanmar, and the Philippines have significant textile and clothing industries, while Thailand and Indonesia have significant chemical industries.
As the consuming class expands in ASEAN, the size of E-commerce will be doubled by 2030. A wide range of products at low rates and fast delivery are looked for. Most Southeast Asia mid-tier cities such as Davao in the Philippines, Surabaya in Indonesia, and Penang in Malaysia has largely remained out of the E-commerce boom but the pandemic has made the fastest growth in E-commerce in the region. In Southeast Asia, 3.5 hours are spent on social media on average each day which has contributed to accelerating the E-commerce platforms. Shadow markets in social media are becoming increasingly important for E-commerce transactions.
Increasing E-commerce volumes and reduced delivery costs will increase as ASEAN countries work to integrate a larger portion of their populations into the formal system.
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