Digital 2019 Spotlight: Ecommerce in Southeast Asia

Hundreds of millions of people across Southeast Asia are already shopping online, and the region enjoys some of the highest rates of ecommerce adoption in the world.

The latest trends also indicate that Southeast Asia will continue to enjoy double-digital growth in ecommerce spend well into the next decade, fuelled by increasing numbers of internet users, greater familiarity with online shopping, and improved consumer spending power.

To help you make sense of the increasingly attractive ecommerce opportunities in Southeast Asia, we’ll be sharing a series of articles here on DataReportal over the next few days that dig deeper into key numbers for the region, and explore where Southeast-Asian ecommerce trends are headed as we approach 2020.

Ecommerce Activities in Southeast Asia September 2019 DataReportal

In this first article, we’ll analyse Southeast Asia’s digital landscape and ecommerce market in a global context.

Upcoming articles will take a closer look at:

But before all of that, let’s take a look at Southeast Asia’s digital landscape in context.

Southeast Asia: a digital overview

Data from our latest Global Digital Reports show that more than 400 million people across Southeast Asia use the internet today, accounting for almost 10 percent of the world’s total internet user base.

Digital in Southeast Asia in July 2019 DataReportal

That number continues to grow, too. The number of internet users in Southeast Asia has grown by more than 10 percent over the past 12 months, with internet penetration across the region as a whole now well above 60 percent.

Much of this growth in internet users has come from Indonesia, which is also home to Southeast Asia’s largest population.

The latest data from the APJII suggests that the number of internet users in the country has grown by 20 percent over the past 2 years, equating to an increase of roughly 29 million new users.

Internet Penetration by Country in Southeast Asia August 2019 DataReportal

Cambodia and Timor-Leste have both seen a similar pace of growth, but both countries started from a much lower base.

Singapore and Brunei have seen smaller increases, but these mature economies already enjoyed relatively high rates of internet penetration, so had less room for growth.

The latest data suggest that the Philippines and Thailand have seen more sluggish growth, but this may be due to a lag in reporting, rather than because of any real slowdown in user growth.

Either way, with Southeast Asia already home to more internet users than either Northern America or Western Europe, it’s clear that digital represents a compelling opportunity across the region for brands hoping to reach a young – and increasingly affluent – audience.

It’s interesting to note that the number of mobile subscription in use across Southeast Asia has actually declined by more than 7 percent over the past 12 months.

This is partly a consequence of people across the region upgrading to internet-connected smartphone devices.

As people start to access to internet-powered messaging and calling services like WhatsApp, LINE, or Viber, they’re less likely to need multiple mobile subscriptions in order to benefit from intra-network calling or SMS deals.

As a consequence, people across the region have been consolidating their mobile activities into a single subscription plan. This has led many to cancel ‘additional’ plans which are now surplus to their needs, resulting in the reduction in total subscriptions that we see in the annual change data.

However, this reduction in subscriptions should not be interpreted as a decline in the number of individuals using mobile devices.

Indeed, the latest APAC report from GSMA Intelligence shows steady growth in the number of unique mobile users across Southeast Asia, although the company only makes detailed data available to its paying customers.

Southeast Asia leads in ecommerce adoption

Research from GlobalWebIndex shows that Southeast Asian countries have some of the highest levels of ecommerce adoption in the world, with Indonesian internet users reporting the highest rates of active online shopping of any nation in the company’s 46-country survey.

Ecommerce Use Amongst Internet Users Aged 16 to 64 by Country in Southeast Asia September 2019 DataReportal

Ecommerce use around the region has jumped even since we published our Digital 2019 reports back in January.

GlobalWebIndex reports that more than 9 in 10 Indonesian internet users between the ages of 16 and 64 now make online purchases each month, compared to a global average of 75 percent. 

Thailand, Malaysia, and Vietnam are all ahead of the global average too. The Philippines matches the global average at 75 percent, but Singapore comes in just below that average in GlobalWebIndex’s latest round of data, at 73 percent.

In the 12 months to the end of June 2019, the number of people in Southeast Asia who made online purchases grew by 17 percent, equating to tens of millions of new ecommerce shoppers across the region.

See also: Digital 2019 Global Digital Overview Report – all the data, trends, and insights you need to understand the global digital landscape in 2019.

When it comes to mobile commerce, internet users across Southeast Asia are even more active, with three countries in the region reaching the global top five.

Once again, Indonesia leads the way, with almost 80 percent of the country’s internet users aged between 16 and 64 reporting that they bought something online via a mobile device in the past month.

Thailand comes in second at 74 percent, while the Philippines and Malaysia both see mobile commerce adoption rates in excess of 60 percent.

At 58 percent, Vietnam is ahead of the global average of 52 percent, but Singapore comes in just below that average, at 51 percent.

Mcommerce Use Amongst Internet Users Aged 16 to 64 by Country in Southeast Asia September 2019 DataReportal

Ecommerce spend: a different story

The total value of ecommerce spend in Southeast Asia passed US$50 billion in 2018, growing by more than 20 percent compared to 2017 spending.

However, despite high levels of ecommerce adoption in the region, per-capita spend in Southeast Asia is still significantly lower than the global average, especially when it comes to purchases of consumer goods.

With the exception of Singapore, the typical shopper in Southeast Asia spends less than a quarter of the global average when it comes to online purchases of consumer goods, with the Philippines registering the lowest average of any country in Statista’s global Digital Market Outlook study in 2018, at just US$18 per person.

Ecommerce ARPU by Country January 2019 DataReportal

Even if we allow for differences in GDP per capita, Southeast Asia’s online shoppers still trail the global average when it comes to the share of their retail spend that they allocate to online purchases of consumer goods, with the Philippines once again coming in at the bottom of the global rankings.

Ecommerce ARPU vs GDP Per Capita by Country January 2019 DataReportal

Analysts take quite different views on the size of Southeast Asia’s ecommerce market though, which is reflective of the challenges associated with gathering and reporting timely data in the region’s fast-evolving markets. 

So, rather than settle on just one perspective, the sections below present a range of different values and viewpoints from some of the more credible reports we’ve seen as part of our ongoing research.

Note: the following sections may include different numbers for what appear to be the same metrics. However, these ‘contradictions’ are intentional, and are designed to help readers understand a variety of perspectives on the size of Southeast Asia’s ecommerce market.

Statista’s Digital Market Outlook survey

Statista’s Digital Market Outlook (DMO) survey shows that Southeast Asians spent more than US$50 billion online in 2018, with more than half of that spend attributable to travel-related purchases.

Southeast-Asian Consumer Ecommerce Spend by Category January 2019 DataReportal

However, the company’s research also shows that shoppers across Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam spent a combined US$23.7 billion on online consumer goods purchases in 2018, representing a 27 percent year-on-year increase.

Statista’s DMO data also show that these six Southeast-Asian nations are all in the top ten countries worldwide by annual growth in total online consumer spend, with the region accounting for all of the top four places. 

Annual Growth in Total Online Consumer Spend (All Categories) January 2019 DataReportal

We’ll take a closer look at Statista’s DMO data broken down by country and by category in future articles in this series, so be sure to check back over the coming days for those.

Temasek and Google: e-Conomy SEA report

For the past few years, Google has teamed up with investment firm Temasek to publish an in-depth report on the internet economy across Southeast Asia.

We’re expecting them to publish a 2019 update in the coming weeks, but their report from last year already put the gross merchandise value (GMV) of the region’s internet economy at US$72 billion in 2018. 

The report also shows that GMV grew by over 40 percent year on year, increasing by more than $20 billion compared to the US$50 billion total market size that the companies reported for 2017. 

Within the 2018 GMV figure, retail ecommerce accounted for US$23 billion (just less than one-third of the total), while online travel spend contributed an additional US$30 billion (just over 40 percent of the total). 

Looking ahead, the companies’ latest forecasts indicate that the size of Southeast Asia’s internet economy will grow by more than three times between 2018 and 2023, to reach a total of US$240 billion just four years from now. 

Projected Value of the Online Economy in Southeast Asia Between 2018 and 2025 DataReportal

Interestingly, the US$240 billion GMV figure for 2025 reflects a significant upward revision versus the companies’ previous forecast from 2017, which put the figure at US$200 billion.

As the 2018 report’s authors note, Southeast Asia is experiencing “such drastic market acceleration” that they felt the need to increase their projections by a hefty 20 percent.

Of the US$240 billion total GMV forecast for 2023, the report states that more than US$100 billion will come from ecommerce. That values retail ecommerce more than 30 percent higher than the travel sector, which the companies predict will be worth US$78 billion by 2023.

Forrester: Southeast Asia Online Retail Forecast

Forrester recently published a report on ecommerce across Southeast Asia, which is packed with insights into the region’s online retail sector. Access to the full report is restricted to the firm’s paying customers, but an associated blog post makes some of the headline numbers available to the public.

The blog post reveals that 144 million people across Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam made online purchases in 2018, with a total retail value of US$18.7 billion.

The post’s author goes on to note that regional spend will grow by more than 20 percent per year over the coming years, to reach a total of US$52.6 billion in 2023 – almost three times the value that the firm projected for total 2018 spend. 

Click here to read all of our reports on Southeast Asia.

To put these findings in context, Forrester reports that the region’s total retail sector (online and offline) was worth US$590 billion in 2018, suggesting that online spend currently accounts for barely 3 percent of total retail spend.

Even with strong growth over the next few years, Forrester projects that online’s share of total retail spend will only reach 6.5 percent by 2023.

In their analysis of the full report, KrAsia states that Forrester forecasts a compound annual growth rate (CAGR) of more than 40 percent in the Philippines through to 2023, and a CAGR of almost 20 percent in Indonesia over the same period.

eMarketer: Global context

eMarketer reports that total retail sales around the world (offline and online) will top US$25 trillion in 2019, up by more than 4 percent – or more than US$1 trillion – compared to 2018 consumer spend.

eMarketer's Projections for Total Retail Spend Between 2017 and 2023 DataReportal

The company also estimates that roughly $1 in every $7 spent on retail around the world will be spent online in 2019, with global ecommerce spend totalling more than US$3.5 trillion for the year.

That figure represents year-on-year growth of more than 20 percent, compared to 2018 spend of just under US$3 trillion.

eMarketer's Projections for Retail Ecommerce Spend Between 2017 and 2023 DataReportal

eMarketer forecasts double-digit growth in ecommerce spend for the foreseeable future too, projecting total global ecommerce spend of more than US$6.5 trillion in 2023.

By that time, the company predicts that ecommerce purchases will account for 22 percent of total worldwide retail spend – that’s more than $1 in every $5 spent by the world’s consumers.

eMarketer’s latests public reports don’t break out ecommerce figures specifically for Southeast Asia, but they do project annual growth of 25 percent in ecommerce spend across the broader Asia-Pacific region.

That puts APAC at the top of the company’s global ecommerce growth rankings for 2019, despite the region already accounting for two-thirds of the world’s total ecommerce market.

eMarketer's Projections for Ecommerce Spend Growth by Region in 2019 DataReportal

Southeast Asia: the world’s fastest-growing ecommerce markets

Despite some differences across the estimates and forecasts detailed above, they all seem to agree on one thing: Southeast Asia’s ecommerce opportunity is growing rapidly.

What’s more, growth seems to be consistently strong in each of the individual country markets across the region.

Statista reports that Thailand’s ecommerce market is growing faster than any other country in its global DMO study, with total online consumer spend in the country up by 25 percent in just 12 months between 2017 and 2018.

Malaysia, Vietnam, Singapore, and Indonesia also enjoyed annual growth rates in excess of 20 percent, while the Philippines experienced year-on-year growth of 16 percent.

Annual Growth in Total Online Consumer Spend by Country January 2019 DataReportal

However, these growth figures are somewhat dampened by the travel sector, which currently dominates Southeast Asia’s ecommerce landscape, and is already relatively well established.

When we take a closer look at other online shopping categories, an even more compelling growth story starts to emerge.

Annual Growth in Ecommerce Spend in Southeast Asia by Category January 2019 DataReportal

For example, if we focus solely on online purchases of ‘consumer products’ – i.e. not including spend on travel or digital media – Singapore experienced the fastest growth in spend of any of the world’s larger economies in 2018.

Statista’s DMO data show that online shoppers in the city state spent more than US$4.1 billion on consumer goods last year, up by more than 35 percent versus 2017. 

Malaysia also saw the value of its residents’ online consumer goods purchases grow by more than 30 percent year on year, while Vietnam came a close third in the global growth rankings, with annual spend increasing by 29 percent versus 2017.

Annual Growth in Online Consumer Goods Spend January 2019 DataReportal

eMarketer takes a similar view to Statista, predicting that Southeast-Asian nations will enjoy strong growth in retail ecommerce spend this year.

The company ranks the Philippines, Malaysia, and Indonesia in its top 10 ecommerce growth markets for 2019, and forecasts an annual increase of more than 30 percent in the Philippines.

Note: the figures in the chart below are from a different source and cover a different time period compared to the figures in the growth charts above, so the data and trends are not directly comparable.

eMarketer's Projections for Retail Ecommerce Sales Growth by Country in 2019 DataReportal

Ecommerce outlook for Southeast Asia: strong growth, compelling prospects

With rapidly increasing numbers of internet users, and even faster growth in ecommerce spend, it’s clear that Southeast Asia represents one of the most compelling opportunities for retail brands anywhere in the world.

But how can brands take advantage of all this growth?

In the next article in this series, we’ll look at the kinds of products and services that people in the region are buying online, and which categories are seeing the fastest growth.

In future articles, we’ll go on to look at the region’s top ecommerce players and explore key opportunities and challenges, before breaking the opportunities down by country.

You can keep track of all the content in this series as we publish it by clicking here.

In the meantime, if you’d like to take a closer look at the broader digital landscape of each country in the region, click the links below to read our latest local digital reports:

About the authors
Click here to see all of Simon's articles, read his bio, and connect with him on social media.
Sarah Moey
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