Southeast Asian ecommerce grows to 70 bln by 2020 – report

With Alibaba`s USD 1 billion investment in Lazada in April 2016, JD.com and eBay setting up office in Indonesia, as well as Japan`s SoftBank, Sequoia Capital and SB Pan-Asia Fund investing USD 100 million in Tokopedia, Indonesia`s largest online marketplace, Southeast Asia appears to have become an ecommerce investment destination of choice, e-commercefacts.com reports.

Southeast Asia`s 620 million population use mobile technology. The region is home to more than 250 million smartphone users, 100 million of which currently engage in online transactions. This trend doesn’t match the pace of China (USD 500 billion market), but multinational retailers do not must ignore the region`s emerging influence, according to `Can Southeast Asia Live Up to Its E-Commerce Potential` report, issued by Bain & Co. and Google, the source cites.

The biggest challenge to greater ecommerce growth in Southeast Asia is the highly fragmented nature of the region, with region-specific cultures, infrastructures, customer preferences, and regulations. For example, Indonesian law doesn’t allow foreign direct investment in local retail ecommerce companies. There is also a persistent lack of trust in ecommerce platforms with concerns over the inability to find or touch-and-feel the products the customers want.

Southeast Asian consumers outside of tier-one cities have bypassed PCs, accessing digital platforms primarily through mobile phones. In Thailand, 85% of consumers not living in major metropolitan hubs use mobile devices for their online purchases. The regions consumers show limited retailer loyalty, making purchases from a wide range of platforms. As a result, search engines have become a leading source for product research and discovery, led by the use of video, especially in Indonesia and Thailand.

Social media is highly influential in building consumer trust around product quality and seller`s credibility. The survey found more than 80% of the region`s digital consumers used social media and OTT content to research products or otherwise connect with sellers. Unlike other regions where consumers venture online in search of the cheapest deal, more than 60% of survey respondents cited both experience and choice as a driver of loyalty. Another distinction of the market is the preference for cash-on-delivery rather than non-cash methods like credit cards in other markets.