Retail in Asia

In Trends

Southeast Asia’s e-commerce market to surpass US$25 bn by 2020

E commerce - Retail-in-Asia

Southeast Asia is poised to become one of the world’s fastest-growing regions for e-commerce revenues, exceeding US$25 billion by 2020.

In 2015, the market earned US$11 billion despite several acquisitions, market exits, and many online retailers struggling to achieve profitability. While significant challenges persist, Frost & Sullivan remains optimistic about the growth potential of e-commerce in Southeast Asia.

The report examines market trends and opportunities in 6 key Southeast Asian markets such as Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam with forecasts to 2020. Here are the key findings:

Rapid growth to continue as industry evolves

Total revenues from business-to-consumer (B2C) e-commerce in the 6 largest Southeast Asian countries will increase at a CAGR of 17.7%. Malaysia and Thailand were the largest e-commerce markets in Southeast Asia in 2015, generating revenues of US$2.3 billion and US$2.1 billion respectively.

SEE ALSO: China topples US to become the world’s largest retail market      

Nevertheless, by 2020, both of these markets are expected to be eclipsed by emerging economies in Southeast Asia including Vietnam and Indonesia.

Market challenges to remain

These include low credit card ownership that stands at less than 7% in all Southeast Asia markets except for Singapore and Malaysia. In some countries, more than 50% of the population does not have bank accounts, making payment the biggest challenge for e-commerce companies in the region.

Logistics is another issue hampering the growth of e-commerce in Southeast Asia, especially in areas with complex geographies such as Indonesia and the Philippines.