Insight – E-commerce in Southeast Asia: 5 factors for Australian exporters to consider

The COVID-19 pandemic has pushed consumers into buying an ever widening range of products online.

The rise of e-commerce is creating major new export opportunities for Australian companies. This applies especially to the agribusiness, food and beverages, health and beauty, and education sectors.

Trade and e-commerce

Up to 40%  percent of e-commerce transactions in Southeast Asia are now cross-border (Source: Modor Intelligence, Southeast Asia Cross-border E-commerce Market, 2021–2026, accessed September 2021, paid resource).

Digital trends were underway before the pandemic. However, multiple factors are now encouraging e-commerce across member countries of the Association of Southeast Asian Nations (ASEAN). These factors include:

  • an aspirational youthful consumer base
  • a growing middle class
  • improving digital infrastructure and logistics
  • a rising numbers of internet users across the region.

The value of e-commerce gross merchandise across ASEAN countries is projected to reach $233 billion by 2025 (Source: Bain & Company, E-Conomy SEA 2020, accessed September 2021).

Consumer preferences and groups

ASEAN isn’t a single e-commerce market. Different countries show different levels of digital and consumer development. Demographics vary a lot. So do consumer preferences.

Online platforms vary between markets. In some countries – the Philippines for example – digital payment is still in its infancy. Also, e-commerce markets in Southeast Asia have their own distinctive traits:

  • Indonesian shoppers want to ‘chat’ with sellers before they buy
  • Malaysians mostly shop online for foreign brands
  • Vietnamese online shoppers span a wide age group from post-millennials to baby boomers
  • Singapore’s e-commerce shoppers have a median age of 42 years, which is the oldest in ASEAN
  • The median age for e-shoppers in The Philippines is 24 (Source: the United National Population Fund, accessed September 2021).

Figure 1. Top e-commerce and social commerce platforms in Southeast Asia.


Markets


Top E-commerce and social commerce platforms


Top categories


 Mode of payments 

Indonesia

Shopee, Tokopedia, Youtube, Bukalapak, Instagram, Facebook, WhatsApp

Beauty and personal care, health, Fast Moving Consumer Goods (FMCG)

 
Mobile
Cash

Malaysia

Shopee, Lazada, Zalora, Youtube, Instagram, Facebook

Fashion and accessories,
mother and baby, health and beauty

Credit cards
Mobile

The Philippines

Shopee, Lazada, Zalora, Instagram, Facebook, Viber

Health and beauty, homeware, Food & beverage

Cash
Mobile


Singapore

Shopee, Lazada, Qoo10

Fashion, electronics, home, health

Credit cards
Mobile


Thailand

Shopee, Lazada, Facebook, Line

Health & beauty, FMCG, home care

Credit cards
Mobile


Vietnam

Shopee, Zolo, Tiki
Lazada, Facebook, Youtube, Instagram, Zolo

Health & personal care, fashion and beauty, electronics

Credit cards
Mobile

 

5 key factors to consider before plunging into ASEAN’s e-commerce market. 

1.      Target your strategy on a specific demographic in a specific country

Not everyone is a prospective customer. Health and beauty products are among the top three products bought online across the region. But demographics change with each market. This means there are challenges to navigate:

  • How do you tailor a strategy for Indonesia if online shoppers are mostly middle-class male millennials?
  • How do you tailor a strategy for Malaysia if the profile of online shoppers tends to be female millennials?
  • How do you set the right price point so that your products are affordable at varying income levels across the region?

Research is vital. Online market platforms can also help with this. You can ask them to share data on their customer base, emerging trends and fast-growing product categories.

2.      Stay on top of developments in e-commerce

So, stay on top of developments in e-commerce. Use the changing landscape to your advantage. Don’t ‘set and forget’. 

Change is rapid. For example, most e-commerce sales are transacted on a cash-on-delivery basis. This is changing though, with a multitude of e-payment systems now popping up.

Amazon is being joined by local marketplaces such as Grab, Shopee, Bukalapak, GoJek, Lazada, Sea Group and Tokopedia. These companies have deep pockets backed by international tech giants, and competition is intense (Source: ASEAN UP, The 6 Tech Unicorns of Southeast Asia, August 2020, accessed September 2021).

Facebook, Instagram, YouTube, Viber, WhatsApp and other social media have a strong role in ASEAN e-commerce — more so than in Australia. This is because ‘social commerce’ has enormous potential to communicate directly with customers and build brand loyalty (Source: Bloomberg, Facebook Chats Power a New $48 Billion Market in Social Commerce, accessed September 2021).

3.      Local partners are often essential

Having a local partner can make a huge difference. You can’t take full advantage of all that a market has to offer if you just list your products on local online marketplaces and then operate remotely from Australia.

Usually in Southeast Asia, you still need to register your products with the local food and drug authority. And you will need a local distributor just as you would to sell in bricks-and-mortar stores.

Importers, resellers, distributor and agents understand local competition and the regulatory environment. They can troubleshoot for you. Use them.

4.      Listing is only the beginning

Invest in marketing, brand recognition and relationship building. Win hearts and minds and build loyalty, just as you do in Australia.

Consumer markets in Asia are partial to country or event campaigns. So, it may pay to take part in campaigns to capitalise on exposure. These could be thematic such as:

  • Lunar New Year
  • Children’s Day
  • Christmas
  • Australia Day

Also, build on Australia’s strong brand reputation in multiple product categories.

And remember, Austrade can help.

5.      Don’t rule out bricks-and-mortar retail

Going to malls is a leisurely business in most ASEAN countries. Customers spend time with family, dine with friends and enjoy being entertained or educated. For many customers going to a mall means stepping into an aspirational surrounding.

The COVID-19 pandemic and the rise of e-commerce dealt a severe blow to traditional retail. But retail will evolve. Many shopping malls will devise new ways for customers to have an enjoyable and fulfilling experience.

You should have a strategy that includes traditional retail or be ready to pivot when the opportunity arises.

Promoters can help you introduce products to customers if you sell via retail outlets. These types of interactions are especially valuable if your product is new or requires regular exposure.

Finding the right balance between e-commerce and physical retail stores could deliver the outcome you’re looking for.

Austrade can help

If you need help to navigate Southeast Asia’s e-commerce environment, contact Austrade Advisory Services.