In life, some personal milestones are memorable; others we pass barely noticing, unaware of their greater significance. Let’s imagine that last June, just outside Palembang in South Sumatra, a teacher made her first ever online purchase of groceries. Nothing remarkable in itself – and probably it’s not a date that will be commemorated in her diary. But when we consider she is roughly the 21 millionth person in Indonesia to have made their first online purchase since the start of the pandemic, with 72% of these new digital consumers living in non-metro areas, we begin to see what a massive shift is taking place in that economy and society – a change which is being reflected right across the myriad peninsulas and islands of South East Asia.
The e-Conomy 2021 Report (the sixth such, jointly published by Google, Temasek and Bain & Company) also provides clear evidence that it’s not the high number of brand-new digital consumers out there which is changing the landscape – it’s the fact that South East Asia’s netizens are increasing the number of digital services they use at a quicker rate than before: in 2020 they used two additional services on average, but this rate almost doubled to 3.7 new services per user in 2021. Furthermore, 90% who used a new digital service in 2020 continued to use it in 2021. In other words, we’re talking about growth here, not replacement. As the e-Conomy 2021 puts it, these consumers are “cruising into a new way of life”. By 2030, a staggering 50 percent of all retail spending in the SEA region will be online, up from around 10 percent in 2020, it predicts.
Having seen the rise to power of China’s so-called “super-apps” (WeChat, Meituan, etc), and also because the Chinese economy has such a pervading influence in the region, it’s no surprise that the race is now on to become the all-in-one on-demand lifestyle services app for the 274 million people who live in Indonesia, say, or the 110 million in the Philippines. Investment is piling in and, along with it, dynamic growth in fintech, logistics, delivery services, app design, customer services and more.
In terms of mall-style platforms, Lazada.com is now the largest ecommerce operator in South East Asia, both in terms of average monthly web visits and number of active buyers. Coming up for its tenth birthday next month, this Singapore-headquartered platform began by selling to customers from its own warehouses, but added a marketplace model in 2013 allowing third-party retailers to sell B2C direct, and this quickly became the major part of Lazada’s sales. Alibaba bought controlling stake in the business in 2016, and other investors including Tesco, Temasek, Rocket Internet and JP Morgan Chase.
Though naturally ecommerce covers a wide range of goods and services, it’s online grocery sales that have seen the most explosive growth in the last couple of years, driven by lifestyle changes accelerated by the Covid-19 pandemic. The potential for further growth in this area is huge: grocery accounts for 50% of all retail spend in South East Asia, but only 2% of online purchases (compare this with markets like China and the US, where the figure is closer to 10%, all according to e-Conomy 2021).
Though this region’s online landscape is developing and changing at breath-taking speed, one thing is for certain – there’s no turning back.
Melchers and ecommerce in SEA
To bring your products to new consumer in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, Melchers can sell your products through our own Lazada store. We can also establish a flagship store for your brand on one of the leading e-commerce marketplaces in South East Asia.
Book a meeting via our MMES Platform: Lazada - E-Commerce - Melchers Market Expension Services
Established in 1806, and with more than 150 years of experience in East Asia, Melchers is trusted by many international brands and producers to be their “feet on the ground” in this region’s diverse markets, drawing on deep local networks and knowledge, and combining them with dynamic business services and trade infrastructure, to create powerful synergies that deliver results for your business.
