With a population of about 640 million, a growing middle class and rising internet penetration, the ASEAN region is often considered a potential next ‘gold rush’ for e-commerce.
In a 2016 report released by Google and Temasek, the average annual growth rate of internet users in the ASEAN-6 countries for 2016-2020 was forecast at 14%, well above 4% for China and 1% for the US and EU.
In total, the ASEAN-6 countries will have approximately 483 million internet users by 2020. Indonesia ranked top with 215 million users, followed by the Philippines (93 million), Vietnam (82 million), Thailand (59 million), Malaysia (28 million) and Singapore (6 million).
The same report also forecast the combined size of online retail market in the ASEAN-6 to grow to US$88 billion by 2025, up more than 15-fold from US$5.5 billion in 2015.
Among the six countries, Indonesia will be the fastest growing market, with an astonishing 39% compound annual growth rate (CAGR) during the 10-year period, outpacing the ASEAN-6 average of 32%.
In absolute terms, Indonesia’s e-commerce is expected to grow into a US$46 billion market by 2025, from just US$1.7 billion in 2015. At the same time, Vietnam, the Philippines, Thailand and Malaysia will all become much better markets, ranging between US$8-11 billion. The fast e-commerce expansion in the ASEAN-6 will also drive online sales as a percentage of total retail sales to reach 6.4% by 2025, up from 0.8% in 2015.
Increasing Online Shopping
A survey by HKTDC Research revealed that ASEAN consumers have increasingly switched from shopping at physical stores to shopping online.
Apart from travel tickets and hotels, which most consumers are already accustomed to booking online, more and more people nowadays buy film tickets, clothes, electronics and other products online.
Some 40% of the surveyed interviewees said that they shop online at least once a week.
One of the most important factors driving growth in e-tailing is the growth of mobile devices with internet access and a change in consumer behaviour. Nowadays, ASEAN consumers look for devices that offer ease of use and convenience and are increasingly making informed purchase decisions by reading online reviews and comparing prices across websites to find the best deals.
Overall, the survey results showed that “convenience” is the top reason for consumers placing an order online, with 73% of the respondents citing “can shop anytime when I am free” as their primary motivation for online shopping.
Closely following this was “have easy price comparison” cited by 69% of respondents, reflecting that price remains a major consideration even among middle-income consumers. Indeed, nearly 60% of respondents also indicated that they shop online in looking for cheap deals. Greater product variety was also commonly identified as a decisive factor driving online shopping. It is noteworthy that more than half of respondents (55%) believe that online channels offer a greater variety of products than physical channels.
Shopping by Smartphones
Given fixed line infrastructure limitations, a large number of internet users in ASEAN markets have opted for smartphones as their choice of digital device. It is not uncommon to find respondents for whom smartphones are their only digital device. This, together with a host of technological advances and increased retail apps investment making it easier to shop via smartphones, has fuelled the use of mobile devices as the primary means of online shopping.
According to the survey, 77% and 62% of respondents cited that they use smartphones for browsing and placing order, overtaking laptop or desktop computers
While 56% of the respondents said they use tablets for browsing, only 36% have placed an order through these devices.
Shopping Journey of Middle Class ASEAN Consumers
The HKTDC Research survey findings show that the ‘path to purchase’ of most middle class ASEAN consumers has changed from a simple, linear path to a more circular journey, where consumers will move back and forth between online and offline channels before reaching the final purchase decision.
Although bricks and mortar shops remains a key linear retail channel, the path to purchase is now greatly affected by the internet, with many consumers now opting to do online research, looking up product information and checking on product reviews before making the ultimate purchase decision.
It is notable that information gathered online can be instrumental in making offline purchases, as reflected in the cases whereby respondents “browse at store, online compare, and buy at store”, as shown in the figure below. Examples include going to a movie theatre as opposed to subscribing to streaming packages and/or watching video-on-demand movies.
While online marketing is essential, there are many factors to encourage shoppers to make additional, unplanned purchases, such as the use of buzz words, convenience, price and design. In the survey, 58% of respondents said “special offer” is the top incentive for them to purchase additional items online. In addition to “special offer”, 49% listed “free shipping” as an incentive, followed by “bulk discount” at 46% and “coupons” at 43%. Nearly 40% of respondents also said sending them “you might also like” or “most popular items” messages could also prompt extra spending.
ASEAN Middle Class: Multi-channel Shoppers
As stated above, the shopping journeys of many middle class ASEAN consumers have changed profoundly due to the ease of making an informed purchase decision, thanks to advances in internet and social media. To this end, a multi-channel sales strategy is a necessity for retailers.
Online marketplaces help retailers create and accentuate brand awareness and enable them to understand consumer preferences with low marketing costs. Physical stores allow retailers to develop customer relationships more intimately and provide the spaces needed to showcase their products directly.
According to the survey, the top three online retail categories picked by the middle class ASEAN consumers were “Travel and Leisure”, “Fashion”, and “Entertainment”. Each of these categories had more than 70% of the responses from those who have made at least one purchase online in the past two years. While the rise of online travel agencies and fashion stores has stimulated e-commerce activities in these categories, digital media and streaming also make more consumers shop for online entertainment products.
In contrast, bricks-and-mortar shopping is still preferable when shoppers need to touch, feel and try out items. Physical stores remain the preferred channel for categories such as “Cuisine and Catering” and “Home and Living”.
Lazada Dominates E-Commerce in ASEAN
At present, major regional players in the ASEAN e-commerce space include Singapore-based Lazada and Zalora, as well as global e-commerce operators like eBay. Hong Kong companies may consider selling their products via these platforms, taking advantage of the ease in setting up compared with a physical presence, and access to free traffic generated by the host marketplace.
As revealed by the survey results, Lazada is the leading e-commerce platform for the ASEAN middle-class. Majority-owned by Alibaba since 2016, Lazada is an online selling platform with extensive product offers in categories ranging from consumer electronics to household goods and fashion items. It is also the only online marketplace ranked among the top 10 choices across all five countries surveyed: Malaysia, Indonesia, the Philippines, Thailand and Vietnam.
One interesting feature of the e-commerce landscape in the ASEAN region is the large number of specialist players that operate either at a local country level (e.g. Thegioididong – a Vietnam-based e-commerce platform focused on selling consumer electronic devices) or are expanding their business at a regional level (e.g. 11street – a Korean-headquartered online marketplace with a presence in Malaysia and Thailand).
Indeed, content localisation seems to be a crucial factor in winning the hearts of the ASEAN consumers. While Lazada is a clear winner at the city level, sites with local language content also made their way to the top sites used by the ASEAN middle-class, as the Survey results show below.
 e-economy SEA: Unlocking the $200 billion Digital Opportunity in Southeast Asia
COVID-19 Vaccine Roll Outs in ASEAN Live Updates by Country
Thailand is currently expecting vaccines to be delivered in mid-2021. The doses would cover 13 million people in a population of about 69 million. Thailand’s National Vaccine Institute signed a non-refundable advance market commitment contract worth 2.38 billion baht (US$79 million) with AstraZeneca to reserve the supplies
ASEAN coronavirus Covid-19 live updates by country
Brunei has joined the global Covax scheme and is expecting to have the COVID-19 vaccine in Q1 2021, having sourced enough supplies to cover 50% of the population. Discussions are on-going with other suppliers.
- Brunei recorded one new case on May 8, bringing the total to 330 cases amid three deaths.
- Brunei saw one new case on May 7, taking the total to 229 cases amid three deaths.
- Brunei recorded one new case on May 4, taking the total to 228 amid three deaths.
Cambodia is expected to import vaccines from both China and Russia. China’s vaccines are still undergoing clinical trials while Russia has already commenced production. Australia has offered financial support to aid vaccine coverage in several southeast Asia countries including Cambodia.
- Cambodia recorded 538 new cases on May 8, bringing the total to 18,717 cases amid 114 deaths.
- Cambodia recorded 558 new cases on May 7, taking the total to 18,179 cases and 114 deaths.
- Cambodia reported 650 new cases and four deaths on May 6, bringing the tallies to 17,621 cases and 114 deaths.
Indonesia has commenced vaccinations with just over nine million doses being given to front line workers from last month. China’s Sinovac is in discussions with Indonesia to provide supplies, however, the Government faces difficulties with a large population of 268 million and price sensitivity at Sinovac’s estimated costs at 200,000 rupiah (US$20) a dose.
Indonesia’s Health Ministry’s Disease Control and Prevention Director-General Achmad Yurianto said that vaccinations would only be provided to citizens aged 18-59. The vaccine has also been required to pass halal certification prior to use and it is uncertain how the country can source enough vaccines to reach a sizeable part of its population. Australia has stated it will also provide financial support to solve these issues.
- Indonesia recorded 6,130 new cases and 179 deaths on May 8, bringing the totals to 1,709,762 cases and 46,842 deaths.
- Indonesia saw 6,327 new cases and 167 deaths on May 7, bringing the tallies to 1,703,632 cases and 46,663 deaths.
- Indonesia reported 5,647 new cases and 147 deaths on May 6, bringing the totals to 1,697,305 cases and 46,496 deaths.
Laos has been trialing the Russian Sputnik V vaccine and is also in discussions with China about acquiring supplies.
- Laos recorded 28 new cases on May 8, bringing the total to 1,233.
- Laos saw 28 new cases on May 7, taking the total to 1,205.
- Laos saw 105 new cases on May 6, taking the total to 1,177.
Malaysia is to provide vaccines free of charge to its nationals, but foreigners will need to pay for the treatment, according to the Malaysian Minister of Health, Tan Sri Muhyiddin Yassin, who has signed a deal with Pfizer for 12.8 million doses.
These will be administered in two stages of 6.4 million people each, with the program to commence in Q1 2021. The country aims to inoculate between 80-100% of its citizens.
- Malaysia reported 4,519 new cases and 25 deaths on May 8, taking the tallies to 436,944 cases and 1,657 deaths.
- Malaysia saw 4,498 new cases and 22 deaths on May 7, bringing the tallies to 432,425 cases and 1,632 deaths.
- Malaysia recorded 3,551 new cases and 19 deaths on May 6, taking the totals to 427,927 cases and 1,610 deaths.
Myanmar is seeking assistance from the Gavi and Covax programs to acquire vaccines, while Australia is also providing financial relief. At present, the Government aims to treat 20 percent of the ‘most at risk’ in the country with vaccines. The Government is struggling with finances and logistics and is also under US sanctions, while cases are surging. The Government has banned the celebration of Christmas and other seasonal celebrations.
- Myanmar recorded 31 new cases on May 8, taking the total to 142,934 amid 3,210 deaths.
- Myanmar saw 29 new cases on May 7, taking the total to 142,903 amid 3,210 deaths.
- Myanmar recorded 16 new cases and one death on May 5, bringing the total to 142,874 amid 3,210 deaths.
The Philippines aims to commence vaccinations from June 2021 and expects to inoculate about 25 million people (about 25 percent of its population) over the course of the year. The country has been badly affected by the virus and has the second-highest rate in Southeast Asia.
The business community has reacted, more than 30 local companies signed an agreement to purchase at least 2.6 million vaccine doses from AstraZeneca in the country’s first such deal to secure coronavirus vaccines, ten days ago. They plan to donate a large part of the doses to the government for its planned vaccination program and use the rest to inoculate their employees.
- The country saw 6,979 new cases and 170 deaths on May 8, taking the totals to 1,094,849 cases and 18,269 deaths.
- The Philippines reported 7,733 new cases and 108 deaths on May 7, bringing the tallies to 1,087,885 cases and 18,099 deaths.
- The Philippines saw 6,637 new cases and 191 deaths on May 6, bringing the totals to 1,080,172 cases and 17,991 deaths.
Singapore has been working on producing its own ‘Lunar’ vaccine, in a joint venture between the US company Arcturus together with the Duke-NUS medical school. It is a single dose, mRNA shot, developed from genetically engineering COVID-19 genes into an otherwise harmless virus. This technique is marginally safer than other vaccines which rely on dead Covid-19 material to provoke an immune response. The vaccine is expected to be available from Q1 2021. High-risk personnel will receive the vaccine first in a process to be determined by the government.
- Singapore recorded 20 new cases on May 8, taking the total to 61,331 cases amid 31 deaths.
- Singapore saw 25 new cases on May 7, taking the total to 61,311 cases amid 31 deaths.
- Singapore saw 18 new cases on May 6, bringing the total to 61,286 cases amid 31 deaths.
Thailand is currently expecting vaccines to be delivered in mid-2021. The doses would cover 13 million people in a population of about 69 million.
Thailand’s National Vaccine Institute signed a non-refundable advance market commitment contract worth 2.38 billion baht (US$79 million) with AstraZeneca to reserve the supplies. Discussions are also on-going with Oxford University in the UK to secure a vaccine that could be available in Q1 if trials are completed in time.
- Thailand reported 2,419 new cases and 19 deaths on May 8, taking the tallies to 81,274 cases and 382 deaths.
- Thailand recorded 2,044 new cases and 27 deaths on May 7, taking the totals to 78,855 cases and 363 deaths.
- Thailand reported 1,911 new cases and 18 deaths on May 6, taking the tallies to 76,811 cases and 336 deaths.
Vietnam’s National Institute of Hygiene and Epidemiology (NIHE), a division of Vietnam’s Ministry of Health, has signed an agreement with Medigen Vaccine, a Taipei, Taiwan-based vaccine company to secure the supply of 3 million to 10 million COVID-19 vaccine doses in 2021. Medigen is currently conducting Phase II studies of the vaccine, co-developed with the USA’s National Institutes of Health (NIH), in Taiwan and Vietnam with a view to a Q1 2021 rollout.
Vietnam is also working on producing its own vaccine, with the Institute of Vaccines and Medical Biologicals (IVAC) in Nha Trang City, partnering with New York City-based Icahn School of Medicine and the global health non-profit organization PATH. Phase 1 trials are already underway in Vietnam, while Phases 2 & 3 will be conducted at the beginning of 2021. The institute plans to submit documents for approval to the health ministry as early as April next year and claims to be capable of producing 30 million doses a year, expecting that a national vaccine could be distributed to the general population in October 2021.
- Vietnam saw 15 new cases on May 8, taking the total to 3,152 cases amid 35 deaths.
- As of May 7, 2021, Vietnam’s Ministry of Health confirmed a total of 3,091 cases of COVID-19. However, 2,560 of the affected patients have recovered and been discharged from hospitals. Vietnam has also recorded 35 deaths due to the pandemic. The latest community transmission cases have been reported from Hanoi, Vinh Phuc, Thai Binh, Bac Ninh, and Da Nang among others. 16 local cases are linked to the National Hospital of Tropical Diseases in Hanoi’s Dong Anh district.
- As of May 6, 2021, Vietnam’s Ministry of Health confirmed a total of 3,030 cases of COVID-19. However, 2,560 of the affected patients have recovered and been discharged from hospitals. Vietnam has also recorded 35 deaths due to the pandemic. The latest community transmission cases have been reported from Hanoi’s outskirts district of Dong Anh.
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