You have probably already heard of Southeast Asia, the southeastern subregion of Asia, consisting of the countries that are geographically south of China, east of the Indian subcontinent and north-west of Australia. The largest economies in the region are Indonesia, Thailand, Malaysia, Singapore, the Philippines and Vietnam. Southeast Asia has a population of more than 655 million people (about 8.5% of the world's population), and the main cities in the region include Jakarta, Manila, Bangkok, Ho Chi Minh City, Kuala Lumpur, Bandung, Hanoi or the city-state of Singapore for example.
Before the COVID-19 pandemic, Southeast Asia was experiencing strong economic growth. While some countries like Indonesia, Malaysia, and the Philippines are still battling the effects of the pandemic and containment measures still persist in these places, the sub-region's GDP forecast for 2020 is indicating a 4.4% contraction, which is on a par with the International Monetary Fund’s projection for the global economy. However, Southeast Asia’s predicted contraction of 4.4% in 2020 is far better than other places like India (-10.2%), Mexico (-10.2%), the UK (-10.1%), the Euro area (-7.9%), Russia (-7.3%), Brazil (-6.5%) or Japan (-5.8%), according to the OECD.
Within the Southeast Asia region, there are also some disparities and some countries are doing really well. Vietnam for instance has minimized the economic damage from COVID-19 and is even on track for growth this year, with an economy that is expected to grow by 2.4% in 2020, according to latest figures from the International Monetary Fund.
According to the World Bank, the Southeast Asian economy is forecast to grow 5.9% in 2021 and will gain even more momentum in 2022, with growth projected at 6%.
The strength and robustness of the region has also been shown in its digital economy as the pandemic and related lockdowns accelerated the digital shift in consumption. As a result, the region has experienced a real ecommerce boom during the pandemic with the number of online shoppers in Southeast Asia hitting a new high. The significant spike in online traffic and ecommerce will continue from 2021 onwards.
According to China Daily, the Southeast Asia region has seen the Singles Day settling, the ecommerce average order value rising by 23%, new brands and sellers adopting an online retail approach and livestream commerce becoming an integral part of people's lifestyles.
According to a study conducted by Bain & Company, Southeast Asian digital population will spend $53 billion online and will hit 310 million people by the end of 2020, five years ahead of an earlier 2025 forecast. The region will clock a faster online spending growth than markets such as India, China, and the US. For example, in Vietnam, 76% of consumers said they had done more shopping online in recent months.
Within the Southeast Asia region, ecommerce is projected to grow to $300 billion by 2025. And, with a penetration rate of less than 5% of overall retail spend, there will be a lot of room for growth.
In conclusion, there will be huge opportunities for online companies with ecommerce markets in Southeast Asia booming in the next few years. However, in order to win in the region, online vendors will need to adapt to Southeast Asian online consumers, understand their preferences and cultural specifics as well as offering local payment methods.