Here’s Why E-commerce Was Big in 2018 in Southeast Asia
Singapore as the 2018 Chairman of the ASEAN, is pushing for an agreement on e-commerce to assist small and big businesses scale across this profitable region by fostering greater digital connectivity, streamlined trade rules , and easing business barriers, to sell their services and products regionally with more ease and to establish safer modes of digital payments. Southeast Asia’s digital economy is right on schedule to meet the $240 billion mark by 2025, which is a staggering $40 billion more than what was previously forecasted, according to a joint report from Google/Temasek, which manages Singapore government’s assets and investments.
The internet economy spurt was attributed to the most active mobile internet across the globe, and also because of industries like online media, online travel, ride-sharing and e-commerce, which grew at fantastic rates. ASEAN’s internet economy is likely to cross the $72 billion mark for 2018, and has grown at twice the rate since 2015. The region’s investor confidence is booming as startups managed to raise $9.1 billion worth of capital in the first 6 months of 2018, which equals the amount raised in 2017.
E-commerce trends in Southeast Asia
The trends which seem to have become popular for the masses are;
- COD or cash-on-delivery payment mode which still reigns as 73% of the population as it does not involve banks or any third party payment method. Because of this, two-thirds of all processed transactions are turning out to be COD orders. Despite other options available when it comes to financial technology, the regoin is a little behind in educating consumers about the convenience of making payments online which will eventually boost sales.
- Emerging markets in countries like Myanmar have seen a massive increase in the mobile phone marketing industry, which grows via older mobile phones, and more so via smartphones.
- There is huge untapped potential pertaining to conversion rate, or the number of people who visit a particuar website and buy any product or service from it, thereby resulting in revenue. Vietnamese websites have some of the highest conversion rates at 1.3%, trailing close behind is Singapore and Indonesia at 1.1% each.
- Small business/ start-up participation in e-commerceis easy with multiple platforms like Shoptiq, providing tools to create, grow and build online business. Shoptiq’s partners provide services such as customization of store design, product photography, copywriting, and and allow SMEs to reach out to and sell via online marketplaces like Facebook and Lazada.
- Larger online purchases are seen to be made on desktops instead of on mobile platforms during office hours across the Philippines, Indonesia, Vietnam, Malaysia, and Thailand. Online activity and sales seem to be peaking at 10:00 pm in Singapore. Mobile ecommerce transactions account for 72% of all online e-commerce traffic and is growing at almost 19% over 2017.
- Chinese internet marketers Alibaba and Tencentare aggressively investing in Southeast Asian e-commerce platforms with both firms expected to absorb more local companies across the region’s e-commerce market.
The E-commerce boom
As a result of this boom, 20 million shopped from this region; browsed and purchased the most on November 11 with the most sales recorded by makeup companies like L’Oréal Paris and Maybelline as did the smartphone brand RealMe and the baby formula brand Enfa. Alibaba said that it’s share of investments made in Lazada underscores confidence in Southeast Asian growth prospects, which is key to its pan-global growth. With high mobile penetration, a young population, and only 3% of the retail sales in the region being currently conducted online, Southeast Asian economic growth is assured. These younger consumers and growing number of mobile devices signal the booming ASEAN regional economy.
With e-commerce adoption still low, there’s room for growth as challenges in logistics and digital payments are being overcome. Various governments have started interventions to boost commerce as in Malaysia, where the government seeks to increase ecommerce and in Thailand, where their government has introduced a money exchange service called PromptPay. The Prime Minister of Vietnam announced a plan to boost e-commerce by 2020. But logistics and infrastructural challenges still remain unsolved. Singapore shoppers can choose between Amazon, Lazada, and an online marketplace called Qoo10, but e-commerce is not fully developed in Cambodia, Brunei, Timor-Leste, Laos, and Myanmar. E- Commerce is growing in Cambodia due to the large consumer population under 35, and in Myanmar, with 40 million consumers using smartphones to make mobile payments.
The Southeast Asian region’s internet economy has been growing at a massive rate and industry experts predict it to generate more than $200 billion by 2025 as high mobile penetration driving e-commerce transactions and growth which exceeded $10 billion in 2017. Singapore with the most recorded credit card usage among ASEAN countries, expects over 10% growth in the next 3 years. With these fabulous developments, small businesses must ride the e-commerce wave to boost sales and expand outreach. Platforms such as Shoptiq allow entrepreneurs to sell directly on marketplaces and on Facebook with ease, to grow customer bases, becoming regional giants by integrating with global delivery providers.
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