With the world’s third largest population and a comparatively low, but growing, Internet connectivity, Southeast Asia is an upcoming market of interest for e-commerce. Still in its infancy, the ASEAN e-commerce market presents many growth opportunities for businesses ready to face its challenges.
Southeast Asia is currently a very attractive market for companies involved globally in the e-commerce sector and smaller local players. At a turning point in terms of Internet and mobile penetration, the population of Southeast Asia is quickly adapting its behaviors to take advantage of new opportunities available in purchasing products and services online.
The number of Internet users in Southeast Asia, and particularly in the 6 largest ASEAN countries, add up to create a large untapped market. Though the Singaporean e-commerce market is more mature, in Indonesia, Malaysia, Thailand, the Philippines and Vietnam, e-commerce is still at a very early stage and full of opportunities for retailers.
In some countries, consumers still face difficulties to reach traditional shops. Potential customers are therefore even more eager to buy online the goods they cannot obtain locally. These retailing challenges are however transferred to the sellers who need to find new solutions to collect payments and deliver products.
Despite these difficulties, big and small companies are rushing to move and sell online, as many analyst expect the market to boom in the coming years. With less than 1% of the total retail market currently happening online (except in Singapore), if it were to reach 5% of total retail, the Southeast Asian e-commerce market could be worth more than 20 Billion USD.
The following slide deck provides a general overview to the most interesting trends in e-commerce in Southeast Asia: a large, addressable and maturing market that is particularly well versed into the use of mobile devices and social media.
With details on the latest developments of start-ups, companies and investors until 2015, this presentation lists the key players of the region and how the business is evolving in the US and other more mature markets.
For a broader perspective on commerce, you might want to read about the retail and wholesale sector in Asia. For more information on the development of e-commerce in the fashion vertical, you might be interested in reading more on the rise of female consumers in Asia.
This second slideshow provides a lot of detailed information, facts and figures on e-commerce in Southeast Asia in general, as well as its major markets: Singapore, Thailand, Malaysia, Indonesia, the Philippines and Vietnam.
For a more comfortable reading, it is quite suggested to open the report in full screen!
See below for more details on the challenges of e-commerce in Southeast Asia.
For more information on e-commerce in Indonesia, check “Internet and social media in Indonesia“.
For more information on e-commerce in Malaysia, check the following resources:
For more information on e-commerce in Singapore, check “Digital behaviors and habits in Singapore“.
ATKearney has recently published a report to help understand the challenges faced by e-commerce companies in Southeast Asia and how to pass these obstacles. It is summarized in 5 key guidelines to help companies and authorities develop the e-commerce business in Southeast Asia.
Answering to Bloomberg TV Malaysia’s Sophie Kamaruddin, Olivier Gergele, Principal at ATKerney, explains how the offering of online shops is critical for success in the region while presenting the findings of the report. In this video, he also highlights the report’s main points and how the market could grow by 25% a year.
Zalora Group, a pioneering company in Southeast Asia’s online fashion retail, has been moving fast to grab a big portion of the fashion e-commerce market in ASEAN. Launched in late 2011 by the German startup incubator Rocket Internet, Zalora is based in Singapore and regroups more than 2000 staff across Southeast Asia and beyond.
Michele Ferrario, Zalora’s managing director, shares some insights and perspectives on growing an online fashion retailer across the region.
People in secondary cities of countries like Indonesia, the Philippines, Vietnam or Thailand do not have the same access to fashion as in the larger and more connected cities like Singapore.
Rocket Internet therefore seized the opportunity to develop Zalora and strengthen its position in e-commerce in Southeast Asia which is expected to skyrocket in the coming years.
However, Zalora faces fierce competition from global heavyweights like Amazon, ASOS, Alibaba and Rakuten. It also needs to address local infrastructure challenges for effective cash collection and merchandise delivery in each country.
Zalora has therefore developed its own infrastructure to satisfy its customers’ needs. They have created warehouses in each country and partnered with local delivery companies in every country to ensure fast delivery. Zalora focuses on delivering a great customer experience, while also learning about the local markets and habits and sharing global best practices.
To reach its present size, Zalora has moved very fast: they opened in six markets in the first six months, with warehouses in each country, and hired 1000 staff. The critical elements to conquering the Southeast Asian market have been scale, speed and customer satisfaction. To ensure customer satisfaction, Zalora has hired a dedicated team to implement best practices and learn from negative feedback.
Zalora’s core team was built in the first year of existence and it has stood together since then. They have hired new talents as the company developed later on, but the company does not face a big staff turnover problem, as Zalora employees share a common company culture.
Employees share the vision that they are involved in the same team with a similar lifestyle and work experience. It also helps that the average age of employees is below 30 years old, with many of these young people holding important responsibilities.
In order to cope with different fashion tastes across the region, Zalora customizes certain areas of its business while other parts are standardized. This creates important needs for sourcing and logistics management in a mixed supply chain: some products are sourced in each country from local manufacturers while global brands are managed by the Singapore team and dispatched across the region.
Presentations respectively from June 2015 by Dr. Adrian Vanzyl – published by Jared Polites – from March 2015 by Nittin Mittal. Youtube videos from September 2015 by Blomberg TV Malaysia and January 2015 by CNBC International