Exploring the potential of E-commerce in Southeast Asia
The Southeast Asia diverse market consists of 11 countries, and with over 400 million mobile (internet) users, this ever-evolving market where consumer and merchant habits are changing is becoming a vibrant atmosphere for international communities to cater to more demographics. Additionally, Southeast Asia’s e-commerce growth is forecasted to reach 363 billion U.S. dollars by 2025, solidifying its position as a prominent player in the global digital market.
The challenges associated with this region are a hindrance for foreign businesses and investors looking to implement a cross-border e-commerce end-to-end service. Nevertheless, at GLOBAL ANGLE, we have worked with several e-commerce brands in helping them transition smoothly and offer tremendous support to ensure they are duly established.
Why should a business do cross-border e-commerce expansion in Southeast Asia?
It is not enough to only sell your products or services within your home country anymore with the numerous opportunities available for businesses that choose to expand into cross-border e-commerce in Southeast Asia.
- Cross-border trade helps break down international trade barriers and offers an incredible revenue stream for businesses, especially in the retail industry.
- Southeast Asia is a growing economy with all the catalysts for e-commerce growth, including a growing population of demographic, internet/mobile users and a dynamic landscape across different regions.
- It allows for an extensive choice of products, more than what is available in the local markets.
- Southeast Asia is one of the fastest-growing economic regions in the world. Despite the global economic hiccups, the area will enjoy a GDP growth of 4-5 percent and an increasing number of e-commerce users.
- The digital landscape is growing with the prospect of increasing internet penetration and mobile usage in many Southeast Asian countries, which is beneficial for the e-commerce industry.
- It is a booming population, with a young and digitally adept population mostly under 30, making it a profitable market for cross-border e-commerce investors.
- It is home to untapped markets with significant opportunities to grow. Additionally, it has various trade policies and agreements by the ASEAN government to boost cross-border trade and support cross-border e-commerce profitability. Furthermore, the increasing demand for international goods and brands is a potential no investor should ignore.
Overall, the Southeast Asia cross-border e-commerce market offers a lucrative atmosphere that combines stable economic growth potential, dynamic growing markets, and a consumer base with supportive trade regulations for expansion.
Top E-Commerce Platforms in Southeast Asia
Southeast Asia e-commerce has some of the most competitive environments, and their ability to leverage various tools that impact the market has set some brands apart. The top e-commerce platforms are:
Shopee
A top competitor in the Southeast Asia e-commerce space is Shopee, launched by Sea Group in 2015. The ability to leverage live streaming and social finance with a strong emphasis on localised marketing strategies has given this platform the edge over others. Today, they have a presence in Southeast Asia. Additionally, Shopee has used other features like social media integration and in-app games to capture the hearts of younger consumers, thereby achieving a higher market penetration and engagement.
Lazada
Founded in 2012 and operating in Vietnam, Singapore, Thailand, Malaysia, the Philippines, Indonesia, and Malaysia, Lazada is a household name in Southeast Asia with an extensive range of products for all demographics. Additionally, as a subsidiary of Ali Baba, it has leverage on its e-commerce infrastructure and innovation that caters to 560 million consumers and 100 million monthly visitors to their website.
Tokopedia
This Indonesian e-commerce powerhouse has existed since 2009 and is at the forefront of digitalising the e-commerce sector. Although, they are primarily focused on the Indonesian market, their extensive marketplace with a range of products, financial services, and strategic mergers has placed them as one of the largest e-commerce platforms in this region.
Overall, the Southeast Asia e-commerce landscape has incredible potential for investors as they are at the forefront of digital e-commerce transformation and possess unique transformative strengths, including leveraging advanced technology, market localisation, and adaptability.
Click here to read more on our Online Retail in Southeast Asia report.
Benefits/Trends of E-commerce in Southeast Asia
There are several trends shaping Southeast Asia’s e-commerce and boosting its growth. Some of these are:
Live Streaming and Social Commerce
This trend leverages the growing number of mobile users and internet penetration of the region to create engaging advertising content that is viewed on social media platforms and enables consumers to connect. The benefit of live streaming and social commerce is interactive shopping experiences that drive sales and increase leads. For example, TikTok and WeChat are two platforms many e-commerce brands are adopting this method to engage, promote, and cultivate consumer and brand loyalty.
Flexible Shopping Options
To satisfy the consumer, brands offer customers various choices to make online shopping effortless and more comfortable. An example is the BOPIS or ROPIS. These are acronyms for buy-online-pick-up-in-store or reserve online and pick-up in-store. This trend has immersed benefits as it allows brands to connect their online service to a physical store, which boosts their reputation and trust. On the other hand, it enables customers to interact with the brand and access more products and services not advertised online.
Innovative payment and checkout options
No sale is complete without an effective payment option. Additionally, it must be simple, enhance the customer’s shopping experience, and be varied. Today, despite the high use of cash, the e-commerce marketplace is increasing digital payment adoption, including e-wallets and mobile payments. Furthermore, the banking and financial sectors are improving immensely to facilitate faster payments and adopt digital methods.
These methods provide opportunities for foreign markets and also enhance the overall shopping experience for the consumer.
Challenges in e-commerce in Southeast Asia and how to overcome them
Diversifying into a new market while thinking of establishing a local presence for many businesses is hampered by several challenges, but the proper strategies can help overcome them.
Language Barrier
The language will always be a barrier for many businesses looking to penetrate Southeast Asia e-commerce as many individuals do not understand other dialects. While this can be a challenge for investors, the solutions are numerous and include:
- The use of an indigenous translator in advertising or when interacting with the local consumer
- Creating content in the localised language, adding pictures of products with bold writing
- Having a customer support system on the ground to listen to customers’ queries and provide the proper assistance
Cultural Nuances
SEA consists of different people whose cultures play a significant role in everything; hence, penetrating cross-border markets requires a thorough understanding to avoid indulging in any act that contradicts the customs and traditions.
To overcome this, retailers must employ trusted locals to work with and understand the complexities of culture and the market before doing any marketing campaign.
Battling with too many regulations
The regulatory landscape, including legalities and bureaucracy, varies as several countries occupy this region. For international companies, this can be language and culture barriers, poor understanding of the laws and guidelines about the market, and non-compliance in many instances that lead to huge fines.
Despite these challenges, there is help with GLOBAL ANGLE’s market and legal research services.
What can GLOBAL ANGLE do for companies looking to open their e-commerce stores in Southeast Asia?
Although Southeast Asia’s e-commerce is promising, challenges are lurking. However, GLOBAL ANGLE’s can help in cross-border operations to ensure that it is seamless and profitable.
GLOBAL ANGLE offers services such as e-commerce SEO, market research, and cross-border e-commerce setup to private and corporate clients looking to advance their business into Southeast Asia markets.
Furthermore, we help foreign businesses understand regulatory changes, local laws, and compliance regulations across the regions.
Using GLOBAL ANGLE’s expertise, you will get tailored research reports, invaluable insights, and solutions to ensure a smooth entry into Southeast Asia’s e-commerce market.
