SE Asia e-commerce set to soar

High growth and consolidation is expected in Southeast Asia’s e-commerce market according to new projections.

Total revenues from B2C e-commerce in the six largest Southeast Asian countries (Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam) will grow at a compound annual growth rate of 37.6 per cent to $34.5 billion by 2018 from $7 billion in 2013, according to new research from Frost & Sullivan.

Singapore was still the largest e-commerce market in Southeast Asia in 2013 at $1.7 billion, but by 2018 growth in emerging economies will be substantial and Indonesia will be the largest Southeast Asian e-commerce market generating over 40 per cent of regional revenues.

Marc Einstein, industry principal, ICT practice, Asia Pacific at Frost & Sullivan, said there are several factors generating enthusiasm in the sector as a combination of economic growth, Internet adoption and foreign investment are all adding to growth in the e-commerce sector.

“Per capita income is rising in Southeast Asia and more consumers are using the Internet through PCs, smartphones and tablets. There is no dominant player in the regional market but foreign companies such as Amazon, Rakuten and Alibaba are all expanding in the region and there are several strong domestic companies hence the region is very competitive despite its infancy,” Einstein said.

The e-commerce market in Southeast Asia is not without its challenges, however, as there are several factors inhibiting growth. Credit card ownership is less than 10 per cent of the population in some Southeast Asian markets and upwards of 50 per cent of the population in some countries lack bank accounts making payment a major issue. Internet fraud is also very high is some countries such as Indonesia which further discourages e-commerce use, finds the study.

However, Einstein thinks that the market will continue to expand and will eventually consolidate.

Einstein said: “In Southeast Asia, there is no one company with the number one position in two markets, and there is no player with market power of companies like Amazon, Rakuten or Alibaba. Therefore the region is ripe for M&A activity and we expect to see market developments in the near future.”

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