Ecommerce Guide

Southeast Asia: The Next Frontier In Ecommerce Growth

Mark Woo, head of e­-commerce, travel and financial services at Google as this week declared that Southeast Asia is ripe for growth and will be the next major ecommerce boom market. The Asia-Pacific ecommerce region (APAC) accounted for 40 per cent of all ecommerce sales across the globe in the first quarter of 2017. However, the significant proportion of these sales went to the more mature markets in this region such as China, Japan, Australia, South Korea and India, which means that Southeast Asia is the next frontier for ecommerce growth in the region. Mark Woo said:

“China is at the peak at the moment, with the majority of sales happening through the mobile web and mobile applications,” said Woo. “India is hugely dominated by a couple of large players — Flipkart and Amazon. Japan and Australia are hugely mature markets, probably more mature than the UK and the US in terms of ecommerce penetration and e­commerce savviness by consumers. This really leaves us with Southeast Asia as the next frontier.”

Two main factors will be responsible for the growth of ecommerce in the Southeast Asia region over the next few years:

  • Growing middle class: According to figures from Nielsen, the middle class population of ASEAN, an association of 10 Southeast Asian nations will more than double between 2012 and 2020, going from 190 million in 2012 to over 400 million by 2020.
  • Running concurrently with the growing middle classes of Southeast Asia is the explosion of internet access that is taking place across the region. At the moment, about 200 million people in the SE Asia region have some form of access to the internet and this will triple to over 600 million by 2025 according to Woo.

“The top line is this: In less than 10 years, what we see is that internet users [in ASEAN] will triple to 600 million from the current 200 million,” said Woo. “And when it comes to the total size of this sector, what we have projected is that it will reach up to $88 billion in retail e­commerce gross national product.”

It’s not just Mark Woo at Google though however who think that the Southeast Asian region is ripe for an explosion in ecommerce activity. Recent research by the investment company Temasek Holdings indicates that ecommerce sales in the SE Asian region will grow at a 32 per cent rate from $5.5 billion in 2015 to nearly $90 billion by 2025 when they will make up 6 per cent of all retail sales.

Other activity in the region includes the recent strengthening of the trading relationship between Malaysia and China which has seen Malaysia Digital Economy Corporation (MDEC) signing an agreement with the Alibaba Company Ltd and Hangzhou Municipal Government.

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Scott Bretton

Scott Bretton

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