This report was compiled by RedSeer.
E-commerce in ASEAN has come a long way since it began in the early 2010s. As we enter a new decade, the industry is poised for rapid growth in the region. The e-logistics market has followed a similar trend with new players emerging towards the latter half of the decade.
ASEAN countries have a healthy consumer digital funnel serving as a strong foundation for digital solutions to flourish
ASEAN has a huge online user base with more than 50% of consumers being active internet users. Online shopping has also taken off, with nearly 200m active online shoppers annually.
The average ASEAN consumer spends more than 3 hours a day on social media
Throughout ASEAN, the majority of those online are active social media users with a high average daily usage, making the market ripe for digital solutions to flourish.
The seller and SME eco-system is also highly digitized
The seller and SME ecosystem in ASEAN countries are highly active on social media platforms. They have been quick to adapt to channels like Facebook and Instagram to market and sell their products, resulting in a high share of social commerce across ASEAN markets.
Combined, these factors have catapulted formal e-commerce markets in ASEAN
Indonesia is the largest market with USD 23b gross merchandise value (GMV) in 2019, while Singapore is the most advanced market with highest per capita spend on e-commerce. Shopee and Lazada are regional powerhouses, with presence in all six countries and being among the top three platforms in all countries. While Shopee has followed a more C2C approach, Lazada has focused on a B2C model across countries.
Social commerce has also developed strong roots in the region, leveraging the strong social media footprint from both the seller’s and consumer’s side. Many new players have sprung up in the ecosystem and we have seen the entry of a few foreign names as well.
Social commerce is quite prominent across ASEAN, however more mature e-commerce markets with a higher GDP per capita have a relatively lower share
While social commerce share is relatively high across ASEAN countries, each exhibit varying trends based on two factors – national income level and maturity of online retail channels.
- Indonesia and Singapore with a relatively more mature formal e-commerce sector, see a lower share of social commerce in total shipments pie
- Vietnam and Thailand’s formal e-commerce markets are relatively nascent, which is reflected in the higher share of social commerce. These markets also have a strong demand for ‘fashion and beauty’ products, which are marketed heavily on social commerce channels.
- The relative socioeconomic class of the consumer in these markets is another factor that determines a country’s share of the social commerce landscape. Higher-income groups typically prefer formal channels, as evidenced by Singapore and Malaysia.
Online Retail penetration vs Social Commerce share
% penetration of retail market by Value, % Share of shipments
COVID has brought a lot of first-time sellers online – giving a new impetus to social commerce
Social commerce has seen an uptick in recent months owing to Covid-19. Lockdown measures have resulted in decreased store time and extremely low footfall in offline stores. Many sellers have shifted to online channels to expand their reach to more buyers and maintain their businesses. People who have lost jobs during this period are also trying to leverage social commerce as a way to generate some quick income.
Innovative models have been coming up in the space recently and they are seeing a lot of investor interest as well
Social commerce has seen new, innovative models arise, ranging from solutions with direct-selling (where platforms help in the ‘discovery’ stage) to end-to-end solutions that handle logistics and also provide marketing and analytics, to aid selling.
Redseer has also seen increased investor interest in e-commerce as of late. Indonesia leads this interest, with multiple players having raised funding, accompanied with entry of players such as Meesho. Players like Chilibeli and Super (both having raised funds recently) have noticed over 100% month-on-month growth in 2020. The space is one to watch.
Different emerging business models in social commerce
While direct-selling models offer few features, they are the most popular method due to ease of use for both sellers and consumers. ‘Backend enabler’ models provide a range of features to help both sellers and buyers. However, they must figure out how to monetize and increase operational efficiency.
Feature comparison across different business models
List of players who have raised funding recently
Key questions:
- Most formalised social commerce models have sprouted in the Indonesian market, while other ASEAN countries are also quite active on social media. Is there a supply gap waiting to be plugged in some of the other markets?
- Formal e-tailing has been gaining share over social commerce over the years, as buyers and sellers mature and start preferring formal channels for better product/service quality. Against this backdrop, what play in the social commerce space will help e-commerce models stay relevant and create a long-standing value proposition with its users?
