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Southeast Asia’s online retail market to reach $53b in 2023

Written by Tech Collective Published on   4 mins read

A Forrester report estimates that Southeast Asia’s e-commerce market will grow to $53b in five years.

Southeast Asia’s booming economic growth and investment potential have thrown the region into the global eye as of late, in particular in the field of e-commerce. According to a recent report released by research firm, Forrester Analytics, the online-retail sector is expected to increase almost three-fold across six key nations, from $19 billion USD in 2018 to $53 billion in 2023.

With internet penetration and the ‘smartphone phenomenon’ laying a solid foundation for driving consumer behaviour and spending habits, big players in the Chinese tech sector are looking to take advantage of Southeast Asia’s investment potential, according to Forrester. Further to this, major infrastructure investments in e-commerce ‘hotspot’, Indonesia, will continue to fuel the fire of the online-retail market over the coming years.

Let’s now take a look a look at the findings by Forrester Analytics in more detail and examine the driving forces behind the current online retail boom.

The key findings

In a report released by the ASEAN in 2018, 58% of the Southeast Asian population are internet users, with approximately 3.5 million users joining the online sphere each month. Taking into account these statistics, the feasibility of Forrester’s prediction of the online-retail market value jumping from $19 billion in 2018 to $53 billion USD in 2023 can truly be seen.

The report’s predictions took into account the Southeast Asian nation’s which are considered the driving forces of e-commerce, namely Singapore, Malaysia, the Philippines, Indonesia, Thailand, and Vietnam.

Consequently, the compound annual growth rate (CAGR) across these six nations is expected to sit at an average of 23% over the next five years. The Philippines, in particular, is expected to be at the forefront of this growth with CAGR of 30.4%.

Delving into the ‘Smartphone Phenomenon’

The overwhelming growth of internet use across Southeast Asia in a short period of time has been the subject of a wealth of research. Google & Temesak’s e-Conomy SEA Report 2018 reinforces Forrester’s growth propositions, stating that online-retail has been the fastest growing sector of the internet economy in Southeast Asia, and that smartphone use is the biggest driving force behind this.

Unlike the Western world, Southeast Asia is one of the first regions, globally, to be introduced to the internet through smartphones, primarily due to the increasing affordability of mobile internet. This has resulted in high levels of engagement, with users in Thailand spending an average of five hours per day online. Forrester’s prediction of high CAGR in the Philippines aligns with the phenomenon too, with the nation’s social media usage ranking the highest in the world. The report also notes that these engaged social media users are leading the use of online shopping platforms.

Spotlight on Indonesia

Despite Indonesia’s predicted CAGR sitting at 19.6%–the lowest out of the six Southeast Asian nation’s examined–this in no way means their retail market is trailing. Indonesia accounts for 41% of all online-retail transactions in Southeast Asia. By 2023, this sector is expected to peak at $19 billion USD, demonstrating huge potential, particularly in fashion retail. Leader’s in Indonesia’s fashion retail are Berrybenka, which offers over 10,000 brands and Hijup, an online marketplace with a unique focus on Islamic fashion.

Indonesia’s 2018 ASEAN briefing outlines an action plan that has already been implemented and addresses the region’s ongoing challenges for e-commerce, such as a sprawled geography and challenging infrastructure. As it stands, 25% of Indonesia’s GDP is spent on logistical costs associated with e-commerce–shipping, delivery, and transportation networks, which is the highest in the ASEAN.

China’s tech giants are coming

Southeast Asian’s online-retail market is already blossoming at a rate of 100% growth, year on year. Key players such as Shopee, Tokopedia, and Lazadaaccount for approximately 70% of purchases in the region. However, that dynamic is already changing as Forrester’s report states that digital titans Alibaba, DidiTencent, and Baidu have already invested at least $8 billion USD in company acquisitions, logistics, and payments sectors. One example is that Southeast Asian-marketplace giant Lazada has been pumped with a $4 billion USD capital injection from Alibaba over the last two years, showing that China is taking advantage of the region’s lucrative investment climate.

Ultimately, Forrester’s report on the online retail market is yet another example of the seemingly limitless potential of Southeast Asia’s burgeoning internet economy. Already, Southeast Asia has been identified as the best investment destination for 2019. This is complemented by Forrester’s growth predictions that are already projecting staggering growth right through until 2023. Taking into account the impact of the emergence of Chinese heavyweights in the region’s tech sector and commitments by the ASEAN to ensure infrastructural and regulatory challenges are faced head-on, it is likely that the online retail market will continue to exceed expectations and become a global leader in the e-commerce sphere.


This article first appeared on Tech Collective.


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