Southeast Asia’s Retail E-Commerce Shot Up As Mobile And Internet Usage Increases
Southeast Asia (SEA) has all the qualities being a promising e-commerce market, especially with the mobile and internet penetration rate and a growing supply of digital platforms. eMarketer estimates that 67.5% Internet users, which is equivalent to 177 million people, will have a smartphone in 2016. However, multiple challenges are restricting e-commerce growth in the SEA region, as reflected in a recent eMarketer report.
The total retail sales in Southeast Asia, mainly Malaysia, Indonesia, Philippines, Thailand, Vietnam and Singapore, will hit $786.5 billion this year. This takes up 3.6% of worldwide sales. Indonesia, the country with the highest population in Southeast Asia, is also the largest retail market, with the sales reaching $245.9 billion. Thailand and Vietnam follow behind, with $190 billion and $161 billion respectively.
Population size and purchasing power play a huge role in the retail potential in Southeast Asia. According to the US Census Bureau, these 6 countries have a population of over 561 million people as of 2016. This number will rise, growing to approximately 583 million people by 2020. This means that an estimated 21.7 million new consumers will be added into the mix over the next 4 years.
Additionally, the e-commerce sector in Southeast Asia continues to grow rapidly. According to eMarketer, the digital retail market (including retail products that are purchased through mobile) will hit $14 billion in 2016, which is an increase of 33.6% year over year.
Despite the contribution of e-commerce to the retail sales market in Southeast Asia, it is still considered small. In the 6 countries mentioned earlier, the digital retail sales make up 1.8% of the total retail sales in 2016. The lowest e-commerce share is from the Philippines, which holds 0.9%, and the highest is from Singapore, which holds 4.5%. As compared to China (18.4%) and South Korea (12.1%), the more developed e-commerce markets, these numbers offer a huge contrast.
As the usage of mobile and internet shot up, the consumer spending increases too. This puts Southeast Asia on the tip of an e-commerce boom. More than 262 million Internet users live in the mentioned 6 countries, and out of these users, many are mobile first Internet users. This means that these people are consumers who use their mobile phones as the primary device for Internet.
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