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Emerging E-commerce Sector in Southeast Asia

Southeast Asia is one of the fastest growing e-commerce markets in the world with more than 250 million  smartphone users, increasing younger population and internet penetration. Philippines, Indonesia, Singapore, Thailand, Malaysia and Vietnam are the major markets in the region to fuel the growth of core sectors such as  e-commerce and travel. The e-commerce sector has been growing at 32 percent annually.


According to a report by Google and Temasek, the Singapore sovereign fund, the value of internet market is expected to cross $200 billion. It will have 480 million internet users by 2020.


With higher young population spending more time on the internet surfing, the region is set to support the growth of e-commerce and digital marketing. The two major countries in the region have highest young population – Philippines with 44 percent and Indonesia with 60 percent.


Entrepreneurs and venture capitals have been trying to reach the market to capitalize the growth prospects of e-commerce in the Southeast Asia, which is unlike the USA and China has time to learn from the mistakes of these two major e-commerce markets.


The Growth & E-commerce model in Southeast Asia


After the financial crisis and dot-com bubble burst in 1997, the e-commerce market was dominated by Business-to-Business (B2B) model as consumers lost in the internet and online purchases. The Business-to-Consumer (B2C) model was seen tough time initially after the mistrust of the consumer, but it revived after a decade. With no option left to retain the faith of consumers, e-commerce companies had to wait for a decade to see the growing B2C model in this region.


E-commerce re-established in the Southeast Asia after 2011 with the entry of many companies in the online shopping market through the Singapore. Of late, both the models of e-commerce – B2B and B2C are effective in the region in addition to other models such as Classifieds, C2C and B2B2C.


It is projected that the B2C E-commerce is likely to see a double-digit growth rate in the Southeast Asia. Singapore and Indonesia are the two potential markets for the B2C e-commerce sales, the number of internet users and online shopper penetration.


The digital commerce has been registering impressive growth in this region. More than 100 million consumers have made digital purchases through e-commerce sites, whereas more than 150 million users accessed the products online.  The preferences of digital consumers have been helping the companies to present their brands, according to the taste of the consumers. In this region digital consumers have internet enabled mobile phones, which they use to watch videos on the product they would like to purchase online using high-speed internet.


High-speed internet and penetration are the reasons that fueling the growth of e-commerce in this region. It is expected that the internet penetration is likely to cover 70 percent of the population by 2025 and the average speed of internet is likely to increase to 10 Mbps from 3 Mbps.


Potential Market for Entrepreneurs


Lots of changes have been recorded in the e-commerce market, but this could be a potential market for the entrepreneurs. It took nearly a decade to reestablish the confidence of digital consumers since the financial crisis and dot-com bubble burst.


Considering the growing internet penetration, mobile users and the growth of the younger population, there are better prospects for entrepreneurs, those wanting to try their luck in the Southeast Asian market.


All the statics are indicating a rapid growth sign in all the areas, which could drive the growth momentum further. The rapid growth of e-commerce in this region is going to attract the attention of new entrepreneurs and venture capitalists. Comparing to the markets of the USA and China the e-commerce space in the Southeast Asia is still relatively young.


The e-commerce sector in the Southeast Asia is expected to rise  rapidly making a significant contribution to the economy despite some challenges such as connecting the Islands and local legislation – FDI norms.