Mobile and Internet Usage Propels Southeast Asia’s Retail Ecommerce Sector
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Southeast Asia has all the ingredients for a promising ecommerce market—rising internet and mobile penetration, a growing middle class with greater discretionary spending, and an increasing supply of digital platforms. Still, many challenges continue to hamper ecommerce growth in the region, as explored in a new report, “Ad Fraud in the US: How More Sophisticated Methods Are Hurting Mobile, Video and Performance Measurement”
Retail sales in the six largest economies in Southeast Asia—Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam—will total $786.45 billion this year, representing 3.6% of worldwide sales. Indonesia, the most populated country in Southeast Asia, will also have the largest retail market, with $245.86 billion in sales. Thailand and Vietnam will follow, at roughly $190 billion and $161 billion, respectively.
Retail potential in Southeast Asia is determined in large part by population size and purchasing power. Collectively, these six nations benefit from having a population of over 561 million people as of 2016, according to estimates from the US Census Bureau. And that number will continue to expand, growing to nearly 583 million people in 2020, adding about 21.7 million new consumers over the next four years.
Robust economic growth in these markets is giving way to rising incomes and expanding middle classes. Data from the International Monetary Fund (IMF) shows that total GDP rose from $1.824 trillion in 2010 to $2.462 trillion in 2016. These figures, which account for inflation, are forecast to rise even further, topping $3.346 trillion by 2020.
Southeast Asia is also experiencing a boom in urbanization, which will also help drive further retail expansion across the region. Generally, retail players focus on urban areas because they have the greatest opportunity (i.e., large population sizes) and favorable conditions for development—such as developed transportation systems, supply chains and technology. Several of the most densely populated cities in Southeast Asia are also the ones growing quickly in population size and retail infrastructure.
“And that number will continue to expand, growing to nearly 583 million people in 2020, adding about 21.7 million new consumers over the next four years.”
Additionally, rapid ecommerce growth continues to increase in Southeast Asia. eMarketer estimates that the digital retail market—including retail products ordered online via mobile—will reach $14.04 billion in 2016, up from $10.50 billion in 2015, an increase of 33.6% year over year
Nonetheless, ecommerce’s contribution to retail sales in Southeast Asia is still relatively small. In the six countries tracked by eMarketer, digital retail sales will make up 1.8% of total retail sales in 2016, with the lowest ecommerce share in the Philippines (0.9%) and the highest in Singapore (4.5%). These figures stand in sharp contrast to the more developed ecommerce markets in China and South Korea, where digital retail will represent 18.4% and 12.1%, respectively.
Southeast Asia is on the cusp of an ecommerce boom, as fast-growing mobile and internet usage propels consumer spending. There are over 262 million internet users residing in these six markets. And many of these consumers are mobile-first internet users, or people who primarily access the web through their mobile phones. eMarketer estimates that about 177 million people—or 67.5% of internet users—will own and use a smartphone in 2016.
Questions & Answers
Q.What is the projected total retail sales figure for the six major Southeast Asian economies this year?
What is the projected total retail sales figure for the six major Southeast Asian economies this year?
Total retail sales in Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam are estimated to reach $786.45 billion this year. This represents 3.6% of worldwide sales.
Q.How do Southeast Asia's digital retail sales figures compare to more developed markets like China and South Korea?
How do Southeast Asia's digital retail sales figures compare to more developed markets like China and South Korea?
In 2016, digital retail sales in Southeast Asia made up 1.8% of total retail sales, with Singapore having the highest share at 4.5%. This is significantly lower than China's 18.4% and South Korea's 12.1%.
Q.Which country is expected to have the largest retail market in Southeast Asia this year?
Which country is expected to have the largest retail market in Southeast Asia this year?
Indonesia, the most populated country in Southeast Asia, is projected to have the largest retail market this year. Its sales are expected to reach $245.86 billion.
Q.How many internet users in these six Southeast Asian markets are estimated to be smartphone owners in 2016?
How many internet users in these six Southeast Asian markets are estimated to be smartphone owners in 2016?
Approximately 177 million people, or 67.5% of the internet users in these six markets, are estimated to own and use a smartphone in 2016.
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