Quick Snapshot: What Companies Should Know Before Entering Southeast Asia’s Ecommerce Market

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Here’s a market overview of Southeast Asia’s online space that everyone in the industry understands so far:

  • The ecommerce market is expected to be worth 238 billion USD by 2025.
  • The region is still relatively young with only 1% of total retail GMV being generated online compared to 7.1% and 15.9% in the US and China.
  • There is a fast growing young & digital savvy population of 158 million who spend approximately 19.4 hours online per week.
  • Southeast Asia is the only truly ‘mobile-first’ region.

southeast asia ecommerce

  • The region is only a decade behind China’s booming online ecosystem because of the following:

Lack of offline retail infrastructure outside tier 1 cities

Surging domestic consumption spurred by growth in GDP/capita

Major capital investment into ecommerce businesses

Cash on delivery as a dominant payment method

Lack of cross-border ecommerce due to high import duties and taxes



So what do all of these numbers and comparisons mean? We take a deep dive into how these factors drive ecommerce forward in Southeast Asia and provide companies with a simple phased approach to consider before entering the market:

Almost Like China

The region is following China’s trajectory due to similar historical developments and ecosystem mentioned above. Southeast Asia is however more competitive due to it being an open market versus China’s closed one, making it easier for companies to enter.

Mobile Commerce

The leapfrog towards mobile is disrupting traditional desktop-first platforms and moving C2C ecommerce straight into mobile marketplaces such as Carousell and Garena-backed Shopee. The high smartphone penetration rate is also giving access to the rural and rapidly emerging consumer base as 85% and 79% of online shopping comes from outside of the major metro areas in Thailand and Indonesia. Thailands mobile growth exceeded developed countries like US and China within the first year 3G technology was launched with an average Thai user having 1.4 mobile phones.

Social Commerce

Browsing for items on social platforms and purchasing offline is a unique phenomenon in Southeast Asia where Lazada isn’t Thailand’s biggest ecommerce platform; Facebook and Instagram are.


An estimated one-third to half of total ecommerce GMV is happening on social platforms like Instagram, Facebook, and LINE in Thailand compared to 16% globally. Based on a survey done in Bangkok by ecommerceIQ, 48% of respondents indicated to have purchased something they found on  Facebook, Instagram, and/or LINE in the last three months. Page365, a startup that helps small retailers sell products via social media, estimated that social commerce is worth more than 500 million USD per year in Thailand alone.

Businesses have the opportunity to leverage the high popularity of social networks in the region to push ecommerce forward. Online transactions can be done via chat-apps and social media to reach out to Southeast Asians that prefer making ecommerce purchases through channels they’re already familiar with rather than a traditional website.


Disparate infrastructure and fickle government regulations make it hard for global brands to find a one-size-fits-all solution to enter the region.

High import duties are a barrier to cross-border ecommerce, which is why companies are recommended to operate locally or partner with a specialist with on-ground knowledge.

Singapore is an exception in Southeast Asia where cross-border businesses can thrive thanks to the high local demand for overseas goods and low custom duties.


The region’s consumers still rely heavily on cash on delivery (COD) with which 70% of online payments are made. Most C2C commerce happens via bank transfer as consumers are still reluctant to share their financial information online and less than 20% of the population (excluding Singapore) make online payments via debit or credit card.

Currently, there are no dominant payment platforms who have been able to create a solution that will replace COD in the region such as Alibaba’s alipay has been able to do in China.The region is making continuous efforts to raise awareness about e-payment to overcome this challenge not just with consumers but also businesses.

Knowing all of this, companies need to take a strategic approach if they are looking to leverage the next big opportunity for ecommerce in Southeast Asia. Sheji Ho, Group CMO of aCommerce shares a step by step phased approach that companies of any sector can follow.

A Step Approach to Enter Southeast Asia

1. Organic Demand from Overseas

If a company is getting organic inquiries about its business from Southeast Asia with no marketing push, it means they are receiving organic cross-border interest.Through those inquiries and additional research of the competitive landscape, the company should look into whether there is potential for its business to carve a niche and start in one country first as the fragmented market make it difficult to enter all markets at once.

The ECOMScape series details the current players in the following landscapes: Thailand, Malaysia, Indonesia, Singapore and the Philippines

2. Reaching The Local Consumer

Once demand has been identified, the company should begin testing ways to scale online initiatives to improve it.The best combination would be through local digital marketing and a local language website and landing page.

3. Local Entity & Fulfillment

Once businesses have proven that demand can scale, they are recommended to set up an entity nearby their target demographic for a more efficient local fulfillment and operations process, especially important for casodelivery cash reconciliation. If a company decides to operate outside its target market, the costs of high-custom duties would bleed them dry.

The only cases where it may succeed would be for  low custom duty markets within the region like Singapore and to a lesser extent Malaysia. But for companies based outside Southeast Asia, such as Taiwan, a local approach is required to tap into the growth markets like Thailand and Indonesia.

What Next?

In Southeast Asia, competition is welcome as it drives more innovation in the tech and ecommerce space. Although companies in the US such as Amazon have provided a glimpse of what business models could work, Southeast Asia is still an entirely new game that plays by its own set of rules.

Entrepreneurs aiming for this region cannot simply replicate the successful business models of the US.It may succeed in the short term but when the big players such as Amazon enter the market, they are going to wipe out competitors by offering a substantially better product as a result of technological, capital and human capital advantages.  

Looking towards China, the past decade of competition in the Chinese ecommerce space has resulted into arguably the most innovative market not just in retail but also in adjacent industries like finance and banking, with products such as Alipay Wallet and WeChat Pay.

In Thailand, the heavy competition between marketplaces like Lazada, Wemall and 11street will lead companies to avoid competing on economies of scale and price only and adopt a unique spin to its business model. We’ve noted a few well-known ecommerce players below and their progress since entering Southeast Asia.  

As ecommerce becomes more mainstream, the more traditional industries like banking, insurance and healthcare in Southeast Asia are also starting to adopt a digital strategy.

Competition will only increase as companies from across the globe look to leverage the urbanization and digitization of Southeast Asia. May the smartest, most swift ecommerce company win.  

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