E-commerce in Southeast Asia: Crushing Complexity, Cashing In and lifting boats


Southeast Asian e-commerce is worth $100 billion today. That number will triple in size by 2025 [1]. Unsurprisingly, the global pandemic and resulting lockdown has turbocharged digital payments growth in what was already a rapidly expanding e-commerce market.

A rising tide lifts all boats right? If you’re reading this with dollar signs in your eyes, wait one moment. Yes, this is a booming market with rich rewards for entrants, entrants who get things right. Southeast Asia is a diverse area, with consumer behaviour and payment cultures that vary widely from other regions – and even from country to country.

Any merchant or PSP which assumes it can transplant practices from another region onto Southeast Asia is in for a shock.

So, what are the trends shaping the Southeast Asian e-commerce market? What must new entrants into the market do to succeed and ensure they see a “lift” in the sales? Let’s dive in.

A year of upheaval for consumer loyalty

Unsurprisingly, the pandemic has massively accelerated the shift from brick-and-mortar stores to e-commerce. In Indonesia, 55% of shoppers say they buy more online now than they did at the start of the pandemic [2].

In Malaysia, online sales in some categories have grown by 800% in 2020 [3]. Almost 70% of Filipinos have switched to online shopping, for at least some of their groceries, since COVID hit the country in January [4]. Similar patterns are true across the region. And these changes in consumer buying patterns are sticky, they are here to stay. This means the loyalty stores have built with their consumers over years and in some cases decades is being challenged like never before.
This is despite the Southeast Asian economy having contracted by 3.8% this year [5]. That’s less of a contraction than other parts of the world are experiencing. Never-the-less, the e-commerce sector is experiencing rapid growth whilst the economy is shrinking. Unfortunately, in this case a rising tide may not lift ALL boats equally.

The implications of this become clear when you consider that in Singapore, for instance, over 80% of consumers have switched to cheaper grocery brands during the pandemic [6]. Merchants are faced with the task of wooing discerning consumers, in a competitive market, at a time when perceptions of value for money are more important than ever.

The global “alternative” is Southeast Asia’s norm

Another important thing to note about the Southeast Asian e-commerce market, is that payment preferences are hyper localized. In most of the countries in PPRO’s latest report (with Singapore as the notable exception) consumers pay for fewer than 30% of online purchases using a credit card. The rest they pay for with “alternative” or local payment methods, such as bank-transfer apps, e-wallets and even cash-payment services.

To win consumers’ trust, merchants must offer payment methods which those consumers know and trust. Failure to do so leads to needlessly increased cart abandonment rates; 25% of shoppers will simply abandon a purchase if they get to the checkout and discover that their preferred payment method is not available [7]. Merchants that offer the locally preferred payment methods at the checkout will see their SEA (South East Asia) boat rise faster than others.

How to enter and increase sales in Southeast Asia

The key to the successful navigation of the Southeast Asian highly competitive e-commerce waters is localization. And it’s more than just language; merchants must offer the right prices, the right promotions, and the local payment methods which consumers know and trust.

One of the best ways for newcomers to achieve success in the market is to work with an expert in-market partner. The right partner will have the local knowledge to offer guidance on consumer preferences and trends. But they will also be able to provide legal, technical and commercial advice and support to help payment providers and merchants access this fast-growing market. As Steve Jobs said “Great things in business are never done by one person” – partnerships are key

To find out more about e-commerce in Southeast Asia, click here.