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Emerging Markets Southeast Asia

The emerging economy of Southeast Asia with the addition of an evolving cross-border e-commerce ecosystem, has created an attractive opportunity for foreign brands to enter the market. Southeast Asia, as so called ASEAN, is home to some of the world’s fastest-growing economies, such as Malaysia, Singapore, Indonesia, Thailand, Vietnam and the Philippines.

Discover the emerging market

The emerging economy of Southeast Asia with the addition of an evolving cross-border e-commerce ecosystem, has created an attractive opportunity for foreign brands to enter the market. Southeast Asia, as so called ASEAN, is home to some of the world’s fastest-growing economies, such as Malaysia, Singapore, Indonesia, Thailand, Vietnam and the Philippines. According to Bain & Co, 50 million new consumers will join the ranks of the middle class in ASEAN countries by 2022, contributing to the region’s USD 300b (EUR 272.7b) middle-class disposable income. The middle class will expand to include approximately 350 million people. This group however, is also benefiting from increasing internet coverage, more smartphone users and tech-savvy populations.

According to the iPrice report from 2019 about the map of e-commerce, the e-commerce market in Southeast Asia has grown sevenfold since 2015, to USD 38b, equivalent to EUR 34.5b in 2019, surpassing any other internet-based sector in the region, and it is expected to hit over USD 100b (EUR 90.9b) level by 2025. Southeast Asia's e-commerce today has become a regular shopping experience with over five million transactions coming in on an average day. Numbers of active users of e-commerce were increasing, from initially only 49 million users in 2015 to triple the amount of 150 million users in 2019.

Whilst for Alibaba, China’s top ecommerce platform, Southeast Asia offers a golden opportunity to break out of the barrier of its domestic market and turn into a global business. As per today, Alibaba is the major player and has been successful at developing a cross-border business within China on its Taobao and Tmall platforms, with the focus on importing foreign brands for Chinese shoppers into China. Given this success experience, Alibaba would like to replicate its success from China into Southeast Asia. As a result, Alibaba acquisitioned Lazada as part of its Southeast Asia expansion plan in 2016. By 2018 itself, Lazada has become the largest e-commerce operator in Southeast Asia based on average monthly web visits, whilst Shopee, Singapore based e-commerce C2C marketplace has emerged as Lazada’s biggest competitor. Just like Shopee, Lazada is also headquartered in Singapore, they both have been staying in the top mobile app charts on a monthly basis and have been actively operating all across Southeast Asia.

Shopee became Southeast Asia’s most visited e-commerce platform in Q1 2019, with the website and app traffic rising by 5% continuously to 184.4 million visits, with Vietnam and Indonesia as its main markets, followed by Malaysia, the Philippines and Thailand. Nevertheless, Lazada remained ahead of Shopee when it comes to the number of unique visitors. Lazada has its main market in Singapore, Malaysia, Thailand and the Philippines, and was also still a significant player in Vietnam and Indonesia. The strongest selling point of Lazada are the tech innovations, which have helped to boost its popularity among users, turning the platform into ‘shoppertainment’, where users can play games and watch in-app live streaming in addition to purchasing items. Lazada with Alibaba as a backing, has matured its shoppertainment strategy, where Alibaba already implemented and holds a stake in the live-streaming site Bilibili in China.

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