With the astounding sales success presented by occasions such as Black Friday and Single’s Day, it comes as no surprise that online retail for Southeast Asia is expected to reach US$53 billion by 2023.
According to a report by Forrester, contributing to this is the high smartphone penetration and a growing economy. The report added that Southeast Asia markets such as Singapore, Malaysia, Indonesia, Thailand, Vietnam and Philippines, are currently at US$19 billion in 2018 for their total online retail earnings. With over 272 million online shoppers in these markets, Forrester predicts that e-commerce in the region will grow at a compound annual growth rate (CAGR) of 23% to reach US$53 billion in 2023.
The report also said that Indonesia is the largest market contributing to this growth, accounting for 41% of the online retail market in Southeast Asia. Forrester expects the Indonesian online retail market to grow at a CAGR of 19.6% from 2018 to 2023, reaching US$19 billion in 2023. However, its e-commerce environment and telecom infrastructure are still developing, suggesting great untapped potential for retailers as mobile broadband penetration continues to grow rapidly — leading to a large number of mobile-only internet users.
Meanwhile, fashion and cosmetics will category growth. Fashion (including apparel, accessories, and footwear) accounts for 22.3% of total retail sales in Southeast Asia. As such, the report expects it to be the key driver of the region’s online retail growth. The low penetration of organised offline retail in Southeast Asia along with the limited availability of fashion and cosmetics brands make these the fastest-growing categories from 2018 to 2023.
As for the war between the east and the west, the report added that Southeast Asia is a new battleground for Chinese tech giants, with Alibaba, Baidu, Didi, JD.com, and Tencent fighting it out for the region, investing more than US$8 billion in eCommerce, logistics, and payments in the area.
With increasing competition in India from Walmart after the acquisition of Flipkart and investment by Alibaba, Amazon is taking its time in Southeast Asia. Although it launched Prime services in Singapore in July 2017, it has been in watch-and-wait mode for the rest of the region.