The Future Of Ecommerce In South East Asia

Author
Ian Haynes
Online Business

It’s safe to say that coronavirus has forever become a part of the business, economy, and history of 2020. This is because the pandemic not only influenced people’s lives but also upended business processes, people’s buying habits, and the way we live and interact with one another. 

From bulk-buying toilet papers to making online shopping a go-to service, people truly changed how they shopped for essentials when the coronavirus attacked. What’s exciting is that even though the world is slowly going back to normal again, consumers refuse to let go of some new shopping behaviors.

The Southeast Asian market is no different. Research shows that online spending grew by 60% and continues to grow in many regions. 

So, what does this mean for the Ecommerce future in South East Asia? 

Southeast Asian Customers Prefer Online Shopping

Although many countries in Southeast Asia are removing restrictions that came with the pandemic, retail shops are still seeing lesser sales. On the other hand, the E-commerce business in South East Asia continues to boom, as the search interest on e-commerce sites has never been higher. 

Customers all over Southeast Asia prefer digital mediums to satisfy their daily needs, which cover everything from grocery shopping to arranging travel plans. 

It is essential to look at statistics to create a retail plan for your e-commerce ventures in Southeast Asia. Whether you want to create an online store with Zaapi or expand your operations to include more diverse products, looking at the changing trends can help you profit from the changes in consumer habits. 

Let’s take an example of how studying fluctuating consumer behaviors can help you grow. Since customers prefer to shop online, you have the ultimate opportunity to create bundles and other attractive offers to boost sales. For instance, you can run buy-one-get-one-free campaigns to increase your store’s average spend rate.

The competition is increasing in the Southeast Asian market

Essentially, as customers shifted to online stores to meet their needs, digital stores have popped up all over Southeast Asia. Statistics show that the region has added over 70 million online shoppers since the start of the pandemic. Due to this, the e-commerce market in Southeast Asia has gotten a lot of attention  

Shopify, alone, witnessed a 62% boost in online stores on the platform between March 2020 and April 2020. 

Another factor contributing to the rise of e-commerce stores in the Southeast Asian market is the origination of e-commerce courses in the region. For instance, Shopee, Indonesia’s Tokopedia, and Lazada University from Singapore offer online courses explaining e-commerce marketing. 

Therefore, if you want to stand apart from the crowd of up-and-coming digital stores, it is vital to create a detailed digital marketing strategy to promote your brand. 

Consumers are investing in non-essential items 

As the pandemic introduced several restrictions that forced people to spend more time at home, consumers began to invest in purchases to improve their home life. The post-pandemic e-commerce marketing in Southeast Asia saw that non-essential items, such as smart home gadgets and cooking appliances, were catching consumers’ attention.

In fact, a report from Google Trends shows that the search interest for air fryers in Singapore increased by 190% between the first quarantine season in April and May 2020.  Similarly, the search interest in blenders grew by 68% in Vietnam, whereas the demand for coffee makers saw a 33% rise in the Philippines during that same time frame. 

The data from Google Trends further revealed a growing demand for smart home appliances. Thailand, alone, witnessed a 95% increase in the “home automation” search term during the peak quarantine period.  Meanwhile, in Malaysia, the search for “smart TV” using Google’s search engine increased by 39%. 

Getting a break from the daily hustle and bustle also encouraged people to focus on their physical wellbeing. According to Google Trends, the search interest for the term “vitamin” increased by 40% in 2020. The region that contributed most to this search was the Philippines, which was just above Indonesia. 

Moreover, the search for “Lutein,” vitamin for the eyes, was the highest in Singapore during the peak lockdown period. This is primarily attributed to the fact that most of the population in the country was working from home, which resulted in a lot of screen time. 

the future of ecommerce in southeast asia
Photo by cottonbro from Pexels

Challenges in the e-commerce industry in Southeast Asia

The e-commerce industry in Southeast Asia still has to face several challenges. Let’s take a look at some common problems that digital stores may encounter. 

Financial challenges 

Although the pandemic had a positive impact on the e-commerce market, it also negatively affected the overall household incomes. According to a study conducted by the Global Web Index, 48% of Singaporeans and 87% of people in the Philippines stated that the coronavirus pandemic has a considerable impact on their household finances. 

This is why store owners must take the financial issues into account to attract more customers. For instance, you can create promotions and discounts that make your products affordable for the customers. However, in doing so, don’t forget to set a profit margin for yourself.

Providing deals and promotions will not only attract more customers to your store, but it can also increase your sales. In fact, the Global Web Index’s Corona Multi-Market Study (Wave 3) revealed that 55% of consumers in Singapore reported delaying their purchases while waiting for promotional offers. Similarly, 40% of consumers confirmed their willingness to go for a cheaper alternative if a promotion was not offered. 

Taking this data into account, you can design your e-commerce store to accommodate the consumer demand for affordable products. For example, let’s say your e-commerce store sells grocery products. Then, considering the customer’s budgets and needs, you can feature economical products from cheaper, local brands instead of presenting products from recognizable, high-priced brands in the market. 

Geographical challenges 

One of the biggest problems faced by e-commerce stores in Southeast Asia is the geographical location. Let’s take the example of Indonesia. The country is home to more than 273.5 million people, distributed over 6,000 separate inhabited islands. 

The Philippines is no different. It has a population of 109.6 million, which is dispersed over 2,000 inhabited islands. 

Due to this, e-commerce stores struggle to find means to deliver and manage product returns in these areas quickly. The challenge is even more significant for stores that sell unpreserved items, such as groceries. 

Online stores not only struggle with finding networks of delivery boats and vehicles, but they also race against the clock due to other infrastructural challenges. 

The geographical challenges are even greater in regions like Vietnam and Thailand, where the mountainous terrains make it even more difficult for e-commerce companies to make timely product deliveries.

Considering this issue, you need to devise a strategy to stay on top of late deliveries. For example, instead of promising your customers a swift delivery, you can provide a time frame, such as 5-10 business days, during which the customers can expect their delivery. 

Additionally, you can also choose products for your store after considering the location you are sending to. This way, even if the delivery takes longer than expected, the items will not expire.

Internet connectivity challenges 

The GSMA’s Mobile Connectivity Index reports that more than 97% of the population in Southeast Asia is connected to a mobile network, and 84% of this population resides in areas with a 4G connection. However, the challenge here is that while some of these individuals have access to the internet, they do not have smartphones. Moreover, if they do have smartphones, some people living in these areas do not subscribe to a data-enabled plan.

Fortunately, the number of people who have access to both the internet and smartphone devices has increased drastically in Southeast Asia. According to a report provided by Ericsson, two-thirds of Southeast Asia’s mobile subscriptions are paired with a functional smartphone device. 

Additionally, the data featured on the Global Web Index also shows that the consumers in this region are more likely to purchase products from their smartphones instead of a desktop. 

With this data at your disposal, you can design your e-commerce store to provide an optimal mobile-friendly experience for users. For example, if you use Zaapi to build your store, you only need to enter your details, add products, and go live with your brand new online store. In addition, the platform has built-in features to make your store perform spectacularly well on all smartphones and tablets.  

As Zaapi is dedicated to providing services in the Southeast Asian market, the platform understands the customer’s needs and requirements. Moreover, you can also connect your store to social platforms, such as Facebook, Instagram, Line, and WhatsApp, to keep them updated on the latest deals and promotions. Therefore, using this platform to create your online store would be a more beneficial option. 

Wrapping up 

The e-commerce industry in the Southeast Asian market is booming. The digital sector has seen significant growth, and it is not planning to slow down any time soon. As customers continue to rely on online stores to meet their shopping needs, the competition among digital storeowners rises alongside. 

This is why store owners need to build an attractive, mobile-optimized store for local customers. This way, you can stay ahead of the competition, overcome different challenges, and market your products effectively to local customers.  

 

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