SEA is world’s fastest-growing online retail market: report

COVID-19 drove Southeast Asia’s consumers to online channels, helping marketplaces in the region to grow 53% in 2020 as all categories performed well, according to Forrester’s 2021 Online Retail Forecast, Southeast Asia, for 2020 to 2025.

Why it matters

The pandemic impacted offline retail in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam last year but offline retailers that moved online fared well, with the region emerging as the fastest-growing online retail market globally; grocery, in particular, experienced the sharpest-ever spurt in growth.

Key findings

• The region saw online retail penetration increasing by more than 50% from 2019 and taking a 7.6% share in 2020. By 2025, Forrester forecasts that online’s share of total retail sales will double to reach 15%.
• Notable factors that weighed on the SEA e-commerce market were country growth, category growth and buyer growth.
• Indonesia, the largest market in the region, accounts for about half of the total e-commerce market, growing by 50% in 2020.
• The Philippines grew fastest at 68%; its online retail growth paralleled Argentina’s growth – the fastest in Latin America.
  
• In 2020, all the categories in the region saw a sharp surge, with grocery registering the greatest growth at 97%.
• Consumer electronics, which includes smartphones, dominated overall spend with 31% of total online retail and 62% growth.
• Fashion, the second-largest category, grew 34% even as consumer spend moved toward non-discretionary items.

The big picture 

Offline retail in Southeast Asia contracted because of enforced store closures, but retailers and brands ramped up their digital presence to meet the shift in demand. New ways to engage with consumers emerged and marketplaces moved in aggressively to add categories that were underserved. The focus also shifted to improving delivery time, leading to significant investments in last-mile delivery startups.

Sourced from Forrester