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Southeast Asia’s online sellers are optimistic about their future growth

More than three quarters (76 percent) of Southeast Asia’s online sellers say that they are optimistic about their future growth despite a challenging operating environment, according to Lazada’s latest Digital Commerce Confidence Index (DCCI) report.

The findings indicated that businesses are looking to ramp up their inventories and staff levels as they gear up for the year-end online shopping festivals, namely 11.11 and 12.12.

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The number is also up from the 70 percent reporting growth optimism in first half of the year when Lazada first released the results of its first DCCI study in August. The study is the first of its kind that seeks to map out the trends in digital commerce, by indexing the sentiments and confidence levels of Southeast Asian online sellers.

“We are delighted to see the continued positive momentum and resilience among Southeast Asia online sellers, despite economy uncertainties. Driven by the strong optimism, online sellers are actively looking to hire more staff in Q4. It is very encouraging to see from our study that the growing digital commerce industry is acting as a powerful catalyst to open up opportunities for job creation, propelling the recovery of local economies,” said Magnus Ekbom, Chief Strategy Officer of Lazada Group.

Conducted at the end of the third quarter of 2021 with 900 sellers participating, the survey highlighted that 4 out of every 5 sellers (79 percent) surveyed revealed that they are increasing their inventory levels, with almost half of those surveyed (47 percent) looking to increase their headcount for this period as well. The boost in inventory levels and headcount is expected to have a positive impact on local economies in Southeast Asia at a time when many are seeking employment. Notably, the results point toward a gradual recovery of the retail industry with online sellers more optimistic about sales for this period (Q4) than they were about sales for Q3, when 73 percent said they were increasing inventory levels and 40 percent thinking about increasing staff levels.

This optimism follows a buoyant Q3 with 52 percent of sellers reporting that they saw strong growth in their online sales, despite the tightening of pandemic restrictions at various stages across the region. Likely due to tighter restrictions implemented to stem the Delta variant and the need for consumers to procure household goods online, FMCG sellers were amongst the categories of sellers who saw a strong performance in Q3, with 61 percent of sellers reporting an improvement of sales of over 10 percent, compared to the previous quarter when 53 percent of sellers said their sales increased by over 10 percent. Sellers in the electronics (76 percent) and general merchandise (79 percent) categories reported feeling more positive about future demand for their products than they were in Q3.

Raymond Yang, Chief Operating Officer of Lazada Group, said, “The findings highlight the importance of year-end mega sales and shopping events like 11.11, which takes place this week. For many brands and sellers, they are important milestones that set new baselines for growth. They are opportunities to re-engage loyal customers and gain new ones. While we have seen many monthly double-digit campaigns this past year, they do not replace such shopping festivals like 11.11, which are still welcomed by many merchants as a much-needed boost to drive sales before the year ends.”

By the end of 2021 it is estimated that over 350 million consumers in Southeast Asia will be digital consumers, a substantial growth compared to 280 million digital consumers prior to the pandemic in 2019. This presents a big opportunity for online sellers in Southeast Asia to capture the attention of these new digital consumers, and drive sales. Importantly, shopping festival season is a time for sellers to ramp up their brand-building efforts ahead of the new year, and the gradual recovery of retail as restrictions ease.

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The Digital Commerce Confidence Index (DCCI) measures business confidence based on surveys benchmarking the opinions of online sellers in Southeast Asia (Indonesia, Philippines, Thailand, Vietnam, Malaysia and Singapore). In the third quarter of 2021, Lazada surveyed 900 sellers on their current online sales performance and their expectations for their digital commerce business in the future. The index ranges from 0 to 100, with 0 being “very pessimistic” and 100 being “very optimistic” on the spectrum.