Report predicts $25b in eCommerce revenues


(Source: Inside Retail Asia | 1 September 2016)

Southeast Asia eCommerce revenues are projected to exceed US$25 billion by 2020, according to new research by growth partnership company Frost & Sullivan.

Despite acquisitions, market exits and many online retailers struggling to achieve profitability, the market earned $11 billion last year, says the report, from its Telecommunications and Digital Services program, Analysis of the Southeast Asian E-commerce Market. The study examines market trends and opportunities in six key Southeast Asian markets – Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Key findings include continuing rapid growth as the industry evolves.

Total revenues from business-to-consumer (B2C) eCommerce in the six markets will increase at a compound annual growth rate of 17.7 per cent.

Malaysia and Thailand were the largest eCommerce markets in the region last year, generating revenues of $2.3 billion and $2.1 billion respectively. But by 2020, both these markets are expected to be eclipsed by such emerging economies as Indonesia and Vietnam.

“Despite being relatively young, the eCommerce market in Southeast Asia is developing quickly, thanks to an astounding rate of digital adoption,” says Frost & Sullivan Asia-Pacific lead consultant for eCommerce and digital transformation, Cris Duy Tran.

“However, companies pursuing an Amazon-style B2C mass-market business model are struggling to turn a profit, and there have been several mergers and acquisitions and market exits,” he says.

“With fewer players in the market, eCommerce players are beginning to compete beyond price points and logistics, and are moving into new areas such as Online-to-Offline (O2O) eCommerce and loyalty programs.”

Although the mass-marketing approach has not worked so far in Southeast Asia, he says there are many exciting opportunities in specialized eCommerce and peer-to-peer (P2P) eCommerce. Services such as Carousell, Shopee and Tokopedia are aggressively pursuing a “mobile first” strategy, and Frost & Sullivan expects to see more sector-specific services in areas such as travel, food delivery and luxury goods.


While the opportunities for growth are immense, says the report, the eCommerce market in Southeast Asia is not without challenges.

Several key factors that inhibit growth have been identified, including low credit-card ownership – less than 7 per cent of the population in all Southeast Asian markets except for Malaysia and Singapore. In some countries, more than half of the population does not have a bank account, making payment the biggest challenge for eCommerce companies.

Logistics is another issue hampering eCommerce growth, especially in areas with complex geographies such as Indonesia and the Philippines. However, recent investments by regional logistics players such as aCommerce and SingPost have strengthened eCommerce logistics infrastructure in these markets.

China’s rapid expansion in eCommerce is providing further impetus for online retail growth in Southeast Asia, says the report.

“The eCommerce revenue in China represented 12.1 per cent of all retail sales last year, surpassing the US, Europe and Japan,” says Tran. “Given the massive adoption of eCommerce in China, Southeast Asia is set to follow a similar upward trajectory, even though eCommerce now represents less than 2.5 per cent of all retail sales.”

With more mergers and acquisitions likely during the forecast period, more exciting market developments can be expected in the near future, says Tran.


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