Big Upsurge In E-Commerce Drives Southeast Asia’s Online Economy
On my first visit to Indonesia nine years ago, I had to pay for my outbound airline ticket using cash (rupiah) at a travel agency because local carriers didn’t accept online payments. In fact, at that time, most cafes wouldn’t accept credit cards and online purchases were non-existent. Fast forward to today, and there are digital wallets accepted everywhere, from airlines to warungs (street-food vendors).
Investors love Southeast Asia because it’s a region where traditional societies are modernizing rapidly. For example, although wireless coverage remains uneven in far-flung rural areas, about half of ASEAN users now have access to 4G networks. Venture funding, once a large concern for the region, has now become a core strength. Last year, ASEAN’s internet companies raised a record $11 billion, according to Cento Ventures’ SEA Tech Investment Report 2018.
As Southeast Asia’s internet economy builds momentum, we have found that the growth in e-commerce has been, and will continue to be, a driving force behind growing consumer trust in the region.
As KrAsia points out, in 2019, e-commerce will play an important role in driving the internet economy. More importantly, the surge in e-commerce is part of a broader transformation, beyond just transacting online, by helping fuel growth in a fragmented cross-border logistics network, allowing offline retailers to list and sell products, creating a secure medium for everyday digital payments and consequently building trust in the region’s internet economy.
The e-commerce industry’s widespread impact is driven by its large scale and fast growth. The numbers are remarkable. The e-conomy SEA report from Google-Temasek, to which our Singapore-based VC firm contributed estimates that the value of goods sold online across six ASEAN countries more than quadrupled from 2015 to 2018. The compounded annual growth rate was a whopping 62%. Last year, the GMV (gross merchandise volume) of e-commerce sales in these countries topped $23 billion. The report projects that by 2025, this number could exceed $100 billion.