By Kim Jae-kyoung
SINGAPORE ― The ASEAN region (The Association of Southeast Asian Nations) is emerging as one of the most promising e-commerce markets in the world to replace the saturated Chinese market.
Following the establishment of the ASEAN Economic Community (AEC) at the end of 2015, e-commerce is providing huge opportunities for Korean retailers seeking new customers abroad.
Most member states of ASEAN, including Indonesia, Thailand, Malaysia, Singapore, the Philippines and Vietnam, are experiencing an e-commerce boom.
The Internet-based retail market has been relatively underdeveloped in Southeast Asia due to low Internet penetration and lack of customers with purchasing power.
However, with the middle class growing and Internet penetration spreading, the number of online and mobile shoppers in the region is rising fast.
Still, it is fragmented and Internet users account for only around 40 percent of the total population of Southeast Asia, indicating that the region has much room to grow.
According to the 2016 report "E-Conomy SEA (Southeast Asia)" released jointly by Singapore's sovereign fund Temasek and Google, the average annual growth rate of Internet users in the region is forecast to reach approximately 14 percent by 2020, well above 4 percent for China and 1 percent for the United States.
Online shoppers, accordingly, are also on a sharp rise.
According to Bain & Company, the number of digital consumers, or those aged over 16 and using e-commerce, reached 150 million in 2015. Of them, around 100 million or 75 percent actually purchased goods online.
By nation, Indonesia ranked at the top with 51 million digital consumers, followed by Vietnam (31 million), the Philippines (28 million), Thailand (23 million), Malaysia (14 million) and Singapore (3 million).
"Chinese and global Internet companies should look at Southeast Asian e-commerce as their next potential gold rush," reported IT-specialized media TechCrunch in June, 2015.
In particular, ASEAN's e-commerce has a special feature that sets itself apart from other countries.
For example, the online retail market in the U.S. and Korea first grew with expansion of PC-based shopping. However, Southeast Asia experienced the e-commerce boom with more consumers accessing Internet via smartphones.
In 2015, e-commerce in the ASEAN is estimated at $5.5 billion (6.06 trillion won), and the amount is expected to rise to $8.78 billion by 2025, according to E-Conomy.
The portion of e-commerce to retail sales in the region stood at only 0.8 percent in 2015 but is forecast to jump to 6.4 percent by 2025.
Global players eye ASEAN
Against this backdrop, global players are making fast forays into the ASEAN e-commerce market.
In April, Alibaba, China's largest e-commerce company, purchased a controlling stake in Southeast Asian online retailer Lazada Group for $1 billion, its largest overseas investment.
Lazada was started by Germany's Rocket Internet in 2012 with headquarters in Singapore. It is operating in Malaysia, Indonesia, the Philippines, Thailand and Vietnam. It is the number one e-commerce player in Philippines, Malaysia, Thailand and Vietnam.
In June, U.S. retail giant Amazon also decided to invest $600 million to open an e-commerce platform in Indonesia, according to Daniel Tumiwa, chairman of the Ecommerce Association of Indonesia (IDEA).
Japanese SoftBank and Silicon Valley venture capitalist Sequoia Capital acquired a $100 million stake in Tokopedia, the biggest startup investment in Indonesia. eBay, another U.S. e-commerce giant, currently owns Qoo10, the online shopping mall based in Singapore.
Korean companies are also expanding their operations in the region to capitalize on the rising popularity of hallyu or the Korean Wave.
On Sept. 20, CJ Korea Express, South Korea's largest parcel delivery service company, signed an international delivery service contract with Lazada. Under the deal, CJ would deliver goods made in Korea purchased by customers via Lazada's website.
On the same day, KOTRA, Korea's trade-investment promotion agency, joined hands with Qoo10 to start an online support program and help Korean small firms export their goods to Southeast Asia. Qoo10 has a total of 300 million online members in Singapore, nearly 60 percent of its population.
SK Planet opened its online shopping mall, elevenia in Indonesia in 2014 and 11street in Malaysia in 2015.
Korea is now focusing on expanding exports of consumer goods to ASEAN as it has faced limitations to increase external shipments of parts and intermediary products.
"With more Korean firms entering the ASEAN e-commerce network, including Lazada, exports of Korean consumer goods, such as mobile phones, cosmetics, food and fashion items, are on a sharp rise," Roh In-ho, KOTRA's Asia Regional Director based in Singapore, told The Korea Times.
For sustainable growth, Korean firms need to make more effort to come up with localized strategies that meet demands from local customers.
"If diversifying marketing strategies, ASEAN e-commerce will offer good opportunities for small Korean exporters," Roh said. "It is very important to develop designs and products that locals would like."
SINGAPORE ― The ASEAN region (The Association of Southeast Asian Nations) is emerging as one of the most promising e-commerce markets in the world to replace the saturated Chinese market.
Following the establishment of the ASEAN Economic Community (AEC) at the end of 2015, e-commerce is providing huge opportunities for Korean retailers seeking new customers abroad.
Most member states of ASEAN, including Indonesia, Thailand, Malaysia, Singapore, the Philippines and Vietnam, are experiencing an e-commerce boom.
The Internet-based retail market has been relatively underdeveloped in Southeast Asia due to low Internet penetration and lack of customers with purchasing power.
However, with the middle class growing and Internet penetration spreading, the number of online and mobile shoppers in the region is rising fast.
Still, it is fragmented and Internet users account for only around 40 percent of the total population of Southeast Asia, indicating that the region has much room to grow.
According to the 2016 report "E-Conomy SEA (Southeast Asia)" released jointly by Singapore's sovereign fund Temasek and Google, the average annual growth rate of Internet users in the region is forecast to reach approximately 14 percent by 2020, well above 4 percent for China and 1 percent for the United States.
Online shoppers, accordingly, are also on a sharp rise.
According to Bain & Company, the number of digital consumers, or those aged over 16 and using e-commerce, reached 150 million in 2015. Of them, around 100 million or 75 percent actually purchased goods online.
By nation, Indonesia ranked at the top with 51 million digital consumers, followed by Vietnam (31 million), the Philippines (28 million), Thailand (23 million), Malaysia (14 million) and Singapore (3 million).
"Chinese and global Internet companies should look at Southeast Asian e-commerce as their next potential gold rush," reported IT-specialized media TechCrunch in June, 2015.
In particular, ASEAN's e-commerce has a special feature that sets itself apart from other countries.
For example, the online retail market in the U.S. and Korea first grew with expansion of PC-based shopping. However, Southeast Asia experienced the e-commerce boom with more consumers accessing Internet via smartphones.
In 2015, e-commerce in the ASEAN is estimated at $5.5 billion (6.06 trillion won), and the amount is expected to rise to $8.78 billion by 2025, according to E-Conomy.
The portion of e-commerce to retail sales in the region stood at only 0.8 percent in 2015 but is forecast to jump to 6.4 percent by 2025.
Global players eye ASEAN
Against this backdrop, global players are making fast forays into the ASEAN e-commerce market.
In April, Alibaba, China's largest e-commerce company, purchased a controlling stake in Southeast Asian online retailer Lazada Group for $1 billion, its largest overseas investment.
Lazada was started by Germany's Rocket Internet in 2012 with headquarters in Singapore. It is operating in Malaysia, Indonesia, the Philippines, Thailand and Vietnam. It is the number one e-commerce player in Philippines, Malaysia, Thailand and Vietnam.
In June, U.S. retail giant Amazon also decided to invest $600 million to open an e-commerce platform in Indonesia, according to Daniel Tumiwa, chairman of the Ecommerce Association of Indonesia (IDEA).
Japanese SoftBank and Silicon Valley venture capitalist Sequoia Capital acquired a $100 million stake in Tokopedia, the biggest startup investment in Indonesia. eBay, another U.S. e-commerce giant, currently owns Qoo10, the online shopping mall based in Singapore.
Korean companies are also expanding their operations in the region to capitalize on the rising popularity of hallyu or the Korean Wave.
On Sept. 20, CJ Korea Express, South Korea's largest parcel delivery service company, signed an international delivery service contract with Lazada. Under the deal, CJ would deliver goods made in Korea purchased by customers via Lazada's website.
On the same day, KOTRA, Korea's trade-investment promotion agency, joined hands with Qoo10 to start an online support program and help Korean small firms export their goods to Southeast Asia. Qoo10 has a total of 300 million online members in Singapore, nearly 60 percent of its population.
SK Planet opened its online shopping mall, elevenia in Indonesia in 2014 and 11street in Malaysia in 2015.
Korea is now focusing on expanding exports of consumer goods to ASEAN as it has faced limitations to increase external shipments of parts and intermediary products.
"With more Korean firms entering the ASEAN e-commerce network, including Lazada, exports of Korean consumer goods, such as mobile phones, cosmetics, food and fashion items, are on a sharp rise," Roh In-ho, KOTRA's Asia Regional Director based in Singapore, told The Korea Times.
For sustainable growth, Korean firms need to make more effort to come up with localized strategies that meet demands from local customers.
"If diversifying marketing strategies, ASEAN e-commerce will offer good opportunities for small Korean exporters," Roh said. "It is very important to develop designs and products that locals would like."
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