These are the big trends driving SEA e-commerce in 2019

e-commerce
Image credit: aliaksei kruhlenia / Shutterstock.com

The e-commerce market of Southeast Asia is substantial, and still developing at a rapid pace. The number of internet users in the region hit 370 million in January this year, and the online economy is predicted to hit $200 billion by 2025. The flourishing level of business and the still-untapped potential are combining to make the area very exciting for online sellers.

As investors look to capitalize on the opportunities in the region, and dominant Western retailers attempt to swoop in, what can we expect from Southeast Asian e-commerce development in the near future? Let’s take a look at the trends you can expect to continue in 2019.

Local and international retail in heated competition

Seeing the money on the table, Amazon has been looking to gain a foothold in the Southeast Asian market in recent years, but is facing quite a challenge. Despite having launched in Singapore last July, it has struggled to gain ground. This has partially been attributed to the lack of a pressing need for next-day delivery, but is also a result of the competitive local retail scene that leaves consumers with plenty of viable options already.

What shot Amazon to dominance in other parts of the world was its class-leading distribution system and ability to surpass the convenience of its chief rivals. Despite the fact that e-commerce is growing quickly in Southeast Asia, it still makes up a relatively small portion of overall sales – that means local businesses that are willing to adapt will actually stand a chance of retaining their loyal customers (something that Amazon’s rivals in the Western world were too slow to manage).

Mobile buying stays on the rise

E-commerce in Southeast Asia only reached the mainstream after smartphones also went mainstream – and with smartphones being so accessible and important to consumers in the region, it’s no surprise that mobile devices account for the bulk of e-commerce traffic.

This is also true in other parts of the world, but in this regard Southeast Asia is actually ahead of the curve. This is after all a region where most people never owned desktops or laptops, but went straight to smartphones, and thus didn’t have to go through the adjustment period of slowly letting go of old technology habits to embrace new options. Particularly with Asia producing most of the world’s top smartphones, and 5G almost ready to enter the fray, expect the mobile share of e-commerce revenue to grow even larger in 2019.

The growing value of digital wallets

Typical payment methods differ by location, and the credit card payment methods so ubiquitous in countries such as the US and the UK never made much of a mark in Southeast Asia. Economies remained driven by cash for many years, with many citizens not even having bank accounts, so credit card adoption remained very low. When e-commerce arrived, this needed to be factored in.

While cash payment methods are still preferable for many, there’s clearly a lot of potential in the digital wallet system. People without credit cards or bank accounts for direct transfers can simply pay into the digital wallets of their phone or operator ecosystems, topping up their accounts as they would prepaid phone cards. With non-cash payments expected to reach 6% of all payments by 2022, digital wallets should soon become standard payment options.

Chatbot automation gets conversational

Part of the reason why smartphones reached major saturation in Southeast Asia so quickly is that the lack of general internet infrastructure made smartphones (and the social networks accessible through them) extremely useful for keeping in touch with friends and family members. Consequently, those chat systems have become culturally ingrained.

To take advantage of this, retailers trying to sell in the region are implementing sophisticated e-commerce chatbots capable of reaching into messaging conversions to promote products. Sellers can use dominant platforms such as Facebook Messenger or WhatsApp to reach their potential customers anywhere and at any time. And since merchants in countries such as the US are already using one-click buying integrations to make sales directly through chats, it’s just a matter of time before this becomes a common option in Southeast Asia.

How Southeast Asian retailers must adapt

Whether you currently sell in Southeast Asia or are looking to enter the region, you must be keenly aware of these trends to contend with the changes to come.

Take a mobile-first approach to all your web designs, cater to legacy payment options while also looking to the future, and be ready to implement cross-platform automation to reach as many people as possible.

If your online presence has been around for a while, you may need to conduct a top-to-bottom review, because older systems are far from guaranteed to be compatible with the types of add-on likely to be important for using new payment gateways and implementing chatbots (if you need to, you can buy an e-commerce site running on a modern CMS and adapt it – it limits your choices, but saves time and gives you the advantage of a settled domain name).

And although Amazon has a difficult task ahead of it, only a fool would bet against it (or other large international retailers) finding a way to squeeze local businesses, particularly once digital payments become more popular. Local businesses that want to hold on to their customers will need to stay flexible to survive.

VR in asiaWritten by Victoria Greene, an e-commerce marketing expert and freelance writer who’s curious to see how tech will continue to accelerate cultural development. You can read more of her work at her blog VictoriaEcommerce.

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