Research firm Forrester predicted that online retail in the six markets of Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam will grow at a compound annual growth rate (CAGR) of 23% over the next five years.
The Philippines, buoyed by its social media users taking to online shopping, is expected to lead the way with CAGR of 30.4% over the forecast period, followed by Vietnam (26.2%), Thailand (24.7%), Malaysia (22.9%), Singapore (22.8%) and Indonesia (19.6%).
And although Indonesia at first sight appears to lag behind the other five markets, the sheer size of its population and its rapid adoption of mobile broadband, means it already accounts for 41% of the region’s online retail.
Indonesia’s online retail market is also expected to reach $19bn by 2023, or the equivalent of the region’s entire current value, suggesting “great untapped potential for retailers”.
Forrester noted that the six nations analysed in its study have a combined economy of $2.6 trillion and an average growth rate of more than 5%, yet the retail market is worth $590bn and is still underdeveloped.
“This, combined with a young population and high internet and smartphone penetration, makes SEA a key target for global online retailers,” said Satish Meena, a senior forecast analyst at Forrester.
Yet it remains the case that Chinese e-commerce and tech giants are the ones making bold moves into the region through investments worth at least $8bn, while Amazon appears to be “taking its time”.
Apart from the launch of Amazon Prime in Singapore, it has been in “watch and wait mode” in the rest of the region, the report said, although the US retail giant is expected to shift focus to the region in 2019 by investing in Vietnam.
Sourced from Forrester; additional content by WARC staff