Spending on online shopping in Southeast Asia is forecast to grow exponentially in the coming years, especially for personal care and fashion items, as the number of consumers on commercial channels is now increasing.
A new report, released by management consulting firm Bain & Company and social networking company Facebook on October 18, predicts that the average spending of consumers in online communities in Southeast Asia will increase to US $ 390 per year by 2025, triple that of US $ 125 in 2018.
The report also stated that by 2025, the number of online shoppers in this region will increase to 310 million, an increase of 60 million compared to 2018. 70-80% of online shopping growth in Southeast Asia from an emerging middle class.
According to Bain & Company and Facebook reports, 70-80% of the growth in online shopping in Southeast Asia during 2019-2025 comes from the emerging middle class. Photo: Inside Retail
Information about online shopping in Southeast Asia
The report is based on the results of a survey of 12,965 online shoppers in Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam as well as interviews with 30 executives and venture capitalists in the area.
Praneeth Yendamuri, managing partner at Bain & Company, said that the penetration rate of e-commerce compared to retail operations in general in Southeast Asia is only 3%, much lower than the rate at 23% in China.
“If we look at China, where e-commerce revenue accounts for 23% of overall retail sales, we see that Southeast Asia e-commerce has an opportunity to grow exponentially,” he said.
“Most of the growth in e-commerce in Southeast Asia will come from fashion, personal care and beauty. These industries are expected to grow 25% per year,” said Yendamuri.
The total value of clothing, footwear and accessories in Southeast Asia is about $ 47 billion a year, but the penetration rate of e-commerce is only 9%. Beauty and personal care products in the region are worth $ 15 billion a year, but online shopping penetration is only 7%.
Most of the growth in e-commerce in Southeast Asia will come from fashion, personal care and beauty. These categories are expected to grow 25% per year.
But Yendamuri noted that the new food industry is a mystery that can create surprises. In Southeast Asia, the value of this industry reaches $ 350 billion per year but largely depends on direct shopping activities (through supermarkets, shops, markets …). The penetration rate of e-commerce for the food industry is very low at 0.3%.
A report by Bain & Company and Facebook found that the majority of online shoppers in Southeast Asia (67%) did not know exactly what they wanted to buy before going online. More than 50% say they capture information about new products and brands through social networking platforms.
Respondents to the survey said they enjoyed shopping on multiple e-commerce platforms and brands. In Singapore alone, up to 75% of people surveyed said they were willing to buy products from many different brands when shopping online. This ratio in the Philippines and Malaysia are 72% and 70% respectively.
According to the report, before making an online shopping decision, the average tech savvy consumer in Southeast Asia scanned 3.8 e-commerce platforms.
“No one does the same thing twice when they go for online shopping,” said Sandhya Devanathan, the National Director of Facebook in Singapore.
The leading e-commerce rivals in Southeast Asia do not have the same disparity in market share as in the United States and China, where the number one e-commerce company has a market share of 6.5 times larger and 4 times higher than rivals ranked second in their country.
“This means that all e-commerce companies, including those focused on specific categories of products, have a great opportunity to compete on a larger scale in Southeast Asia,” says Devanathan”.
The report says loyalty programs are a very useful tool for e-commerce platforms. It is reported that loyalty program participants are 45% more likely to promote products in all categories compared to non-loyal shoppers. They also have a 25% higher purchase rate for online items in all categories than regular customers.
Southeast Asian online shoppers love a multi-channel shopping experience. More than 80% of survey respondents in Bain & Company and Facebook research reports said that regional shoppers prefer to compare prices in online platforms and direct stores before making a buying decision.
Another point worth noting is that 33% of Southeast Asian shoppers say they prefer to see the product in the store directly before making an online purchase.
Khanh Lan (According to Business Times)
* Source: Saigon Times