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E-commerce Set for Fast Growth

By on Mar 18, 2016 in Retail

E-Commerce in Southeast Asia is small compared with the size of the population and depth of smartphone penetration, but the market looks like growing rapidly in the years ahead, according to a report released yesterday.

Online retail represents a US$6-billion (Bt209 billion) market in Southeast Asia, but with online sales below 4 per cent of total retail, the region still lags well behind developed markets and even other developing markets.

These are the findings from a report by Bain & Company and Google, “Can Southeast Asia Live Up to Its E-commerce Potential?”, which includes a survey of more than 6,000 consumers across Thailand and five other countries – Singapore, Malaysia, Indonesia, the Philippines and Vietnam.

While this does not yet match the pace of China – now a more than $500-billion market – multinational retailers are finding it harder to ignore the region’s emerging influence.

Online retail sales across Southeast Asia could hit $70 billion by 2020.

“The growth of the Southeast Asian e-commerce market is slow but significant, particularly when you consider that it started from a very small base in 2012 and has doubled every year since,” said Sebastien Lamy, a Bain partner and co-author of the report.

“We believe this region is on the cusp of a digital boom that is beginning to transcend e-commerce and impact sectors from travel and tourism to financial services and payments.

“Those that recognise its early potential in spite of persistent complexities will reap the rewards.”

While 100 million consumers in Southeast Asia have made a digital purchase, a far larger group – 150 million – has taken the first big step of researching products or engaging with sellers.

Online retail penetration may be small, but consumers are highly influenced by digital content.

For example, penetration is a mere 1.2 per cent in the Philippines, but 34 per cent of those who have made a purchase online in that country reported they were influenced by online content prior to making their purchase.

Throughout the region, some categories are already starting to score big. Fully 24 per cent of all clothing and footwear and 18 per cent of all travel is now purchased online.

Challenges remain to support the e-commerce growth, due to constraints in Southeast Asia’s logistics and payments infrastructure.

The biggest hurdle for e-commerce success is the highly fragmented nature of the region.

Region-specific cultures, regulations, infrastructures and customer preferences make it difficult to establish a presence and build scale here, which is a deterrent for foreign-owned businesses. Southeast Asia is also different from other regions in payment channels.

In many other markets, the lion’s share of payments is made via non-cash methods such as credit cards. In this region, door delivery is preferred and Southeast Asians desire other methods for payment and delivery.

More than one-third of all consumers surveyed in top cities and outlying areas alike preferred the “cash on delivery” option.

Local and regional players are thriving simply by providing a highly tailored customer experience.

Looking for retail space for rent in Bangkok

Source: The Nation – 18 March 2016

Nora has been in the Corporate Communications arena for a number of years. Nora's role is to communicate all newsworthy items that are of a PR nature.

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