In today’s digital age, e-commerce serves as a vital platform for businesses globally, spanning local boutiques to multinational giants.
For many businesses, Southeast Asia is seen as a region of opportunity for those looking to take advantage of the change to global norms – writes Guillaume Tournand, VP of Growth at Worldline.
With a youthful population and governments accommodating digital cross-border payments, the region provides a promising arena for e-commerce.
Central to understanding the region’s online shopping environment is an appreciation of trends experienced today.
Therefore, e-commerce businesses seeking to invest in the region must know the region’s direction of travel to fully optimise their approach.
Technological Advancements
Southeast Asia’s digital payment landscape is undergoing a transformative shift, marking an era of rapid growth and innovation. This surge in digital transactions is primarily fuelled by a confluence of socio-economic factors unique to the region.
With a population that includes a largely young, more tech-savvy demographic than many parts of the world, there is a natural propensity towards adopting new technologies.
Smartphone proliferation and the expansion of internet infrastructure across urban and rural areas alike have made digital services more accessible than ever with adoption in Southeast Asia expected to reach 344.4 million by 2024 up 2.6% from 2023.
These technological advancements, coupled with a growing middle class, are setting the stage for a digital revolution in consumer behaviour and payment methods.
Rapid Growth of Digital Payments
Government initiatives across Southeast Asia have played a pivotal role in this digital shift, actively promoting financial inclusivity and digital literacy among their populations.
Digital payments are not just seen as a matter of convenience, but as a crucial component of broader economic development strategies within the region.
For example, the Indonesian government has pursued the unification of all QR-based transactions to facilitate easier digital payments.
A broad look at the core payment methods for the region are cards, domestic payments, cash and mobile payments.
Unlike the others cash is expected to stagnate, though it is still preferred by consumers in Thailand and Cambodia.
A major trend for Southeast Asia is social commerce with the major platform being TikTok.
Incorporating shopping functionality into an environment where users are already engaged has proven to be an effective method for e-commerce in the region to thrive.
Mobiles are also making an impact beyond social media, as through PromptPay users are able to make instant low-cost transfers to a mobile phone number.
This development is making an impact, as of mid 2022, Thailand and Singapore’s payment systems processed more than 65,000 cross-border transactions.
Thailand’s Digital Marketplace
A helpful case study to understand the region is Thailand, a leader in Southeast Asia’s digital economy. Thailand has the second-largest digital economy in the region, trailing only behind Indonesia, with an impressive e-commerce consumer base of approximately 43.5 million.
Its market is youthful, with 62% of e-commerce purchasers aged between 17-36, demonstrating the significant influence of the younger generation, and susceptibility to online shopping trends.
Cross-border transactions make up a substantial 30% of its market, with almost half of its online shoppers engaging in cross-border purchases.
Like other countries in the region, they prefer a variety of e-commerce platforms, with some of the biggest names including Shopee, Lazada and Jib.
Each platform boasts sophisticated logistics and delivery systems, underscoring the country’s advanced e-commerce infrastructure.
The move towards e-commerce has been further supported by the Thai government, which from 2017, has moved towards a cashless society through a national e-payment scheme, further propelling their digital economy forward.
PromptPay, as part of Thailand’s national e-payment initiative, is a government-backed service that allows users to transfer money and make payments using their mobile phone number or citizen ID as an identifier, aiming to reduce barriers on digital payments.
Southeast Asia is a vibrant and diverse region that offers immense potential for e-commerce businesses looking to expand globally.
With its youthful population, rapid technological advancements, and supportive government policies, the region presents a dynamic landscape ripe for exploration and innovation.
As Thailand’s thriving digital marketplace exemplifies, the region’s e-commerce sector is poised for significant growth in the coming years, making it an attractive destination for investment and expansion.
By staying informed of the region’s digital trends and tapping into its unique characteristics, businesses can position themselves to succeed in this exciting and evolving market.
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