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Regional Spotlight: Consumers and E-commerce in Southeast Asia

Regional Spotlight: Southeast Asia

All eyes are on Asia Pacific as the world’s fastest-growing e-commerce sector. In Q1 2017, 40% of the global e-commerce turnover took place in Asia Pacific, driven by the large, mature local markets including China and India. However, according to Google’s Mark Woo, head of e-commerce, travel and financial services, the next major boom market in the region is Southeast Asia.

Southeast Asia contains all the countries south of China, east of India, west of New Guinea and north of Australia, comprising the mainland states Vietnam, Laos, Cambodia, Thailand, Myanmar and Malaysia as well as the maritime states Indonesia, Singapore, Philippines, East Timor and Brunei. It is the third most populous region in the world (after its two neighbors, Southern Asia and Eastern Asia) and is experiencing a population growth rate above the global average. The key factors driving its importance as the next major market for e-commerce are the growth of internet penetration and the rapid expansion of the middle-class in the region.

Consumers in Southeast Asia

  • Total population: 620 million
  • Internet users: 200 million (30% penetration)
  • E-commerce sales: USD 10 billion (2017 estimate)
  • E-commerce annual growth rate: 32%

A 2016 study by investment firm Temasek Holdings in association with Google estimates that by 2025, internet penetration will have tripled to 600 million users and the size of the e-commerce market in the region will have grown to $88 billion. It is these estimates that are turning heads, attracting investors, brand manufacturers and retailers to the region with the intention of capitalizing on the approaching boom.

These investors include the world’s two biggest e-commerce marketplaces, Alibaba and Amazon. Alibaba has purchased major shares in two of the largest local e-commerce companies, Singapore’s Lazada and Indonesia’s Tokopedia. In late July, Amazon officially entered the Southeast Asian market by launching its Prime Now delivery service in Singapore. Offering the two-hour delivery service to all of Singapore’s 5 million residents from day one is an aggressive move – it shows just how seriously Amazon is taking the Southeast Asia market and puts the platform in direct competition with Lazada, of which Alibaba owns 83%. Lazada will be a tough competitor for Amazon, as they already offer grocery deliveries via Redmart and a Prime-like subscription service integrated with Uber and Netflix, to which Prime Video still pales in comparison.

Top Target Markets (2015) 

E-Commerce Market Size ($b) Share of Retail Sales
Indonesia 1.7 0.6%
Malaysia 1 1.1%
Singapore 1 2.1%
Thailand 0.9 0.8%
Philippines 0.5 0.5%
Vietnam 0.4 0.6%

Source: Maybank Kim Eng, Temasek Holdings, Google Inc.

It’s challenging to provide complete and accurate figures for the e-commerce market in Southeast Asia. With eleven countries and three territories, many of them small states, the data is inconsistently recorded and incomplete, if it even exists at all. Thailand, for example, is the only country in the region that breaks down retail sales into a separate online category, and is therefore the only country for which we have an accurate account of how e-commerce sales stack up against brick and mortar. For this reason, Thailand is useful as a guide for how e-commerce is likely to grow throughout the region.


Consumers and Thailand are adopting online shopping at a faster rate than anywhere else in Southeast Asia. E-commerce sales are growing by more than 100% annually, while traditional retail within the country is growing at only 10%. Faster internet speeds are driving more people online – according to local mobile provider TAC, Thais spend six hours a day on social media – while the success of retailers like Lazada attracts more consumers away from brick-and-mortar stores in favor of online shopping.


With the largest economy in Southeast Asia, Indonesia also has the region’s largest online retail market. Some of the credit for the relative maturity of the market goes to local e-commerce incumbent Tokopedia, an online marketplace which has just earned an investment of $1.1 billion from Alibaba. With an estimated annual growth rate of 50%, Indonesia is likely to remain the region’s largest e-commerce market region and has set a tone for the region as one of Asias foremost mobile-first nations. Over 70% of local internet traffic originates from smartphones, offering m-commerce retailers a unique opportunity to reach Southeast Asian consumers.


From a purely technological perspective, Singapore is the region’s most advanced e-commerce market with the largest share of total retail sales taking place online. As a city-state, Singapore’s population of 5 million people is 100% urban (one of the reasons why Amazon was able to offer the Prime Now service at launch), which helps to drive high internet penetration and connection speeds. The nation’s status as a global financial center with a wealthy and multicultural population has helped it to earn the designation as the most “tech-ready” nation by the World Economic Forum, making it a natural hub for the region’s e-commerce boom and an irresistible market for cross-border investment.

E-commerce in Southeast Asia is in on the verge of an explosion, following in the footsteps of its neighbor regions, Southern and Eastern Asia. The population is gaining widespread internet access and the economy is growing rapidly, driving much of the local populous into the middle-class. Now is the time for cross-border retailers to enter the market and get a foothold on a new population of digital consumers before the market floods and leaders begin to emerge.

For more information on specific domestic markets within Asia and around the world, keep an eye on our Country Spotlight section of the Payza Blog. Also be sure to subscribe to our blog and follow us on Facebook and Twitter for the latest news and information about how to scale up your e-commerce enterprise into an international success