The table below shows the 3 most visited platforms in 6 ASEAN countries. They are mostly based in Singapore, and all of them operate almost exclusively in the ASEAN region.
How does e-commerce work in Southeast Asia?
There are numerous business models and combinations associated with e-commerce, and many hybrids, but we can distinguish four typologies: business-to-business (B2B), business-to-consumer (B2C), consumer-to-consumer (C2C) and business-to-government (B2G).
B2B and B2C are the most significant in terms of market value. The old-school B2B replicates the bricks and mortar, pre-Internet business model, in which the producer sells goods to a distributor (e-marketplaces) and the distributor sells them to the consumer for a premium price.
In B2C, we can distinguish at least two typologies.
- The first replicates the traditional shop, where the seller runs an e-store within the e-marketplace and sells directly to the consumer, managing stocks and delivery on its own. One example is the online store of the Italian fashion house Guccio Gucci SpA, part of the giant Kering
- In the second typology, the brand outsources warehousing and other activities such as store set-up, product listing, customer service and payment system directly to a third service provider, or to the distributor. These extra services come with a price. Platforms such as Alibaba and Lazada offer standard packages of online sales management, applying a commission on the sales and a monthly or annual fee.
So what is the best way to enter the ASEAN online market?
According to eTail Asia, cross-border e-commerce is expected to triple from 530 billion in 2018 to 1.5 trillion in 2022. However, as mentioned above, few enterprises can bear the cost of maintaining an inventory in each country, while the extra costs of logistics, diverse returns policies and the timing of distribution can strongly affect the customer experience (one of those is the Swiss Nescafé Dolce Gusto, by Nestlé Group, with coffee capsule and machine e-stores in six ASEAN countries).
Italian products such as food, wine, beauty products, fashion apparel and jewellery are becoming popular in the ASEAN e-market, but few Italian companies have the means to establish a local warehouse.
What’s next?
With millions of young people still off the grid and IT illiterate – but not for long – the Southeast Asian e-market is set to grow exponentially. […] ASEAN is looking at creating a free digital trade zone, which would de facto make ASEAN the biggest e-market after China and the USA.
Souce: “UNDERSTANDING ASEAN E-COMMERCE: TRENDS AND CHALLENGES” by Luca Sartorelli