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The growth of the digital economy has accelerated tremendously in Southeast Asia (SEA). A recent Google-Temasek study estimated that the eCommerce sector in SEA will surpass USD 100 billion by 2025. Adding to this, Forrester Research reported that more than 294 million consumers in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam were online in 2019 and more than 56 percent or 164 million from this total made online purchases.
While eCommerce formed the biggest growth segment, most retail sales in the region were still conducted offline. Fast-moving consumer goods (FMCG) brands must quickly get onboard as eCommerce presents an opportunity for businesses to not just acquire new customers but also to drive incremental sales and to stay relevant to existing customers.
Having observed recent development in the SEA markets, I believe that the three key trends driving this growth are: more affordable mobile smartphones along with faster and cheaper data plans, the maturation of the leading eCommerce platforms and shifting consumer behavior towards an omni-channel approach.
SEA internet users are the most engaged in the world. They lead the world in mobile-first internet connectivity with 90 percent of consumers connecting to the internet through their smartphones. The increasing availability of affordable smartphones and the rollout of faster, more reliable mobile telecommunication services across SEA markets further add to this phenomenal growth.
Consumers today have the freedom to find any information they want, whenever they want it, thanks to the rapid growth of connectivity. Users in the Philippines spend over five hours each day using mobile internet; this is more than any other country in the world.
The mobile phone has become the main channel for SEA consumers to shop online. In 2019, over 71 percent of all online retail sales in Thailand came from the mobile channel. Singapore came in at 54 percent while 58 percent of online shoppers in Malaysia used a mobile phone to make purchases.
However, the mobile phone is not only used for buying. It is also used frequently to research product information and find out more about services while they shop offline. For example, 25 percent of consumers research offline before purchasing online, and 32 percent of consumers in Singapore do research online before purchasing offline.
The maturation and rapid progress of SEA’s leading eCommerce companies continue to play a critical role in the rise of digitization and online commerce. By offering millions of products over a wide range of product categories, best in class mobile and web experience, frequent sales promotions and extensive distribution coverage, the Big Three - Lazada, Shoppe and Tokopedia - have grown sales revenue collectively by more than seven times since 2015.
The increasing role played by these three platforms is also evident through other important engagement metrics, confirming a trend that sees an increasing consolidation of consumers’ purchase preferences. With a large user base and seller base, these platforms have contributed to the rapidly increasing popularity of eCommerce.
The SEA consumers’ shopping journey is comprised of both online and offline touchpoints, known as the omni-channel shopping approach. As shopper behavior continues to blur the boundaries between online and offline, retailers are beginning to do the same.
This transition started with basic options like “click and collect”, where a shopper makes a purchase online but still needed to visit a physical location to pick up their items. However, this has changed significantly as many brick-and-mortar players are now offering in-store digital experiences to satisfy consumers’ needs for more information at the point of purchase.
Likewise, various eCommerce giants are setting up a physical presence that goes beyond a traditional retail experience as they strive to cater to users who prefer to “touch and feel” certain categories of products before purchasing them. An example is online retailer Pomelo who is opening brick-mortar stores to take advantage of this shifting consumer behavior.
Consumers are increasingly relying on eCommerce to buy products that are not available in stores especially with the underdeveloped retail trade channels outside of major cities. As such, brands must implement an omni-channel approach with consistent experiences across channels and platforms to provide the best service and take advantage of this latest consumer behavior.
To help businesses understand the role of digitization and how eCommerce can help to elevate a brand’s digital presence, it would be good to consider working with an experienced and proven business partner that will be able to help you get on the right path. DKSH’s omni-channel strategy ensures the availability of its clients’ products both off and online throughout the major Southeast Asian markets.
If you think that your business can benefit from having a similar eCommerce strategy and an expanded marketplace, do reach out to me here.
Nam Do is a Regional Director, DKSH eCommerce. He brings over 20 years of global experience in technology development, business strategy, digital marketing and performance media to drive business impact for clients.