Online retail in SE Asia to reach $53 billion by 2023: Forrester

With high smartphone penetration and growing economies, the Southeast Asian nations of Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam are attractive markets for online retailers.

Research firm Forrester estimates online retail in the region will grow at a compound annual growth rate (CAGR) of 23% to reach $53 billion in 2023.

Other factors that are expected to contribute to online retail’s growth in the region include an undeveloped offline retail market, where logistics costs have resulted in Southeast Asia having one of the lowest levels of retail gross floor area and limited stock-keeping units (SKUs) and a young population. By 2020, nearly half of Southeast Asia’s population will be under the age of 30, with more than 55% of its working-age population being tech-savvy millennials.

Indonesia and the Philippines to lead growth

Indonesia accounted for 41% of online retail sales in Southeast Asia in 2018, making it the region’s largest online retail market. The country’s e-commerce landscape and telecom infrastructure are still developing. With mobile broadband penetration growing rapidly, resulting in a large number of mobile-only Internet users, Indonesia is attracting attention from online retailers, logistics companies and investors. Forrester expects the Indonesian online retail market to grow at a CAGR of 19.6% from 2018 to 2023, reaching $19 billion in 2023.

The Philippines, the second-largest country by population in the region, has the most active social media users in the world, spending an average of 4 hours on social media per day in 2017. Forrester expects the online retail market in the Philippines to grow at a CAGR of 30.4% from 2018 to 2023 as more social media users start shopping online.

Fashion and cosmetics to lead category growth

Consumer electronics will form the largest online retail category in Southeast Asia, accounting for 24.2% of total online retail sales in Southeast Asia. Apparel and accessories follows at 17% and computer hardware and software ranks third at 8.4%.

Fashion (including apparel, accessories, and footwear) accounts for 22.3% of total retail sales in Southeast Asia, and Forrester expects it to be the key driver of the region’s online retail growth. The low penetration of organized offline retail in Southeast Asia along with the limited availability of fashion and cosmetics brands make these the fastest-growing categories from 2018 to 2023.

Fashion and cosmetics brands will work closely with marketplaces to cater to customers’ growing needs, while marketplaces will also launch private-label products in these categories. Online fashion retailer Zalora launched its own label as early as 2013, and more marketplaces are expected to do the same to attract new buyers with entry-level products.

 

 

Source: https://www.enterpriseinnovation.net/article/online-retail-se-asia-reach-53-billion-2023-forrester-278073835

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