5 Trends Making SE Asia the Next Big e-Commerce Market

Southeast Asia is the world’s fastest growing internet region and is expected to grow in value to more than US$200 billion by 2025. The three key industries driving this growth: e-commerce, online advertising and gaming, and leisure travel.

Of these three sectors, e-commerce is the fastest growing at a whopping 32% annually. Taken from the research findings unveiled at this week’s e-conomy Southeast Asia conference, jointly hosted by Google and Temasek, here are e-commerce’s top five drivers:  

1. More Young Money

Southeast Asia has a young population, and it is growing fast. The Philippines has the region’s youngest population, with 44% of the population under the age of 19 and 75% under the age of 40. In Indonesia, 60% of the population is under the age of 30. “This is an important demographic as they spend a lot of their time on online and do much more with the internet,” says Rajan Anandan, Vice President & Managing Director of Google, Southeast Asia & India.


2. Faster is Better

By 2025, internet speeds in Southeast Asia are expected to increase from 3.5 megabits per second (mbps) to more than 10 mbps, with penetration to reach 70%. Singapore and Thailand are currently the region’s fastest, with download speeds of 122.4 mbps and 20 mbps respectively.

Despite these improvements, many still find it takes too long to download their favourite TV shows — with speeds well below the global average of 23 mbps. “In the Philippines, internet speeds are slower than even that of Pakistan and Myanmar. There is clearly an opportunity there,” says Rohit Sipahimalani, Joint Head, Portfolio Strategy & Risk Group Joint Head, India at Temasek.


3. The Connected Generation

As the number of Southeast Asians coming online increases exponentially, more and more will be able to shop online.

“With 260 million users already, Southeast Asia’s countries (Philippines, Indonesia, Singapore, Thailand, Malaysia and Vietnam) are beginning to have a critical mass of internet users,” says Anandan. “We’re seeing an additional 3.8 million new internet users every month. By 2020, Southeast Asia will have 480 million internet users, and that’s a very big number.”


4. Many Islands, No Roads

In Southeast Asia, besides Singapore and Malaysia, retail therapy can be hard to come by. “Access to organised retail in remote areas is limited; you simply don’t get access to products. This opens up a huge potential for e-commerce,” explains Anandan.

The Philippines has almost 7,000 islands, while Indonesia has more than 900 inhabited islands. This makes it difficult for organised retail chains to expand to far-flung areas and reach a dispersed consumer base.

In order for e-commerce to take full flight regionally however, practical logistical needs will need to be overcome.

“In Indonesia for example, logistics costs are one of the highest in Asia,” says Sipahimalani. 


5. A Newly Moneyed Middle Class

Southeast Asia is expected to be richer than ever before — and all that extra change may well translate into an online shopping bonanza.

Southeast Asia has a GDP of more than US$2.5 trillion, which is larger than India’s. In Indonesia, the number of people bringing home a paycheck could reach 280 million by 2030 ― up from 109 million in 2010. This is similar to China’s growth in 2009 and almost 1.5 times that of India. Malaysia’s GDP per capita of approximately US$11,307 makes the nation the second-highest in the region after Singapore and higher than that of China.

This increased wealth and prosperity will have an inevitable knock-on effect for the e-commerce sector. “With more disposable income, online consumption is expected to increase,” says Anandan.


See full research findings on Southeast Asia's potential $200 billion dollar internet 'e-conomy' below: