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ASEAN E-commerce: Beyond the Pandemic

HKTDC RESEARCH

The spread of Covid-19 has compelled ASEAN leaders to impose social distancing measures and lock down cities from time‑to‑time, since the beginning of the outbreak in early 2020. It has put strain on traditional retail given the widespread closures of physical stores and diminishing consumer demand. While the pandemic has led to a period of extreme upheaval for brick‑and‑mortar stores, it has driven a dramatic uptake of digital adoption across ASEAN countries, accelerating the shift towards online retail channels that was already underway.

Bricks-and-mortar Takes the Hit

Store‑based retail sales plunged and remained weak over the last year in major ASEAN consumer markets. Retail sales in Singapore and Indonesia dropped the most at around 18%, mainly due to the almost two‑month long “circuit breaker” measures adopted in the island‑nation and the citywide lockdown in Indonesia, to steam the spread of the outbreak. In comparison, Vietnam’s effective control of the pandemic has led to its outperformance in brick‑and‑mortar retail sales among stores in the region, down only for less than 0.1% in 2020.

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The Accelerated Switch to Online

As the pandemic progressed, however, it has sped up digital transition and accelerated an expansion of e‑commerce. Consumers are provided with access to a significant variety of products from the convenience and safety of their homes, while retailers scramble to bolster their online channels to minimize impacts from social distancing measures or contact restrictions.

There was a dramatic uptake of digital technologies across key economies 1 in Southeast Asia, with 40 million people came online for the first time in 2020 alone, bringing the total number of internet users to 400 million, up from 250 million in 2015. 2 More than three out of five people in these economies are now online and since the pandemic began they have been spending more time on the internet. Time spent online per day rose by an average of one hour across ASEAN countries, with the highest spike in the Philippines, where consumers spent more than five hours a day online.

2-4.png3-3.pngThe use of e‑commerce has also surged since the start of the pandemic, with the strongest uptake in Indonesia, followed by the Philippines and Malaysia. 3 As consumers increasingly embrace the benefits of safety and convenience over e‑commerce, the shift to online shopping is expected to stay post‑pandemic. Interestingly, many ASEAN countries have seen stronger e‑commerce adoption among internet users than the world average as well as many mature markets. Indonesia was found to have the highest e‑commerce adoption in the world last year, with 87% of its internet users having purchased online via an electronic device, followed by the U.K. (86%), Thailand (84%) and Malaysia (83%). 4 Adoption in other ASEAN countries, such as the Philippines, Singapore and Vietnam, has also outrun mainland China, which is considered one of the world’s largest e‑commerce market.

Being late adopters to the internet, most consumers in the region have never owned a desktop computer. Instead, with smartphones becoming increasingly more affordable and accessible, mobile devices have become the main means to stay connected and shop online. Indonesia emerged as the world’s most enthusiastic adopter of mobile e‑commerce last year, with about 79% of Indonesia’s internet users purchasing something online via a mobile device, followed by Thailand (74%) and the Philippines (70%). Meanwhile, mainland China ranked the sixth in mobile e‑commerce usage, with 64% of internet users having shopped online using a mobile phone.

E‑commerce was previously factored by many retailers in ASEAN as a good‑to‑have option rather than being an essential business strategy. As Covid-19 reshapes consumers’ behaviours and accelerates transition to online shopping in ASEAN, e‑commerce has become an effective channel for companies, including Hong Kong SMEs and exporters, to reach local consumers or grow their existing footprint in ASEAN markets.

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A Closer Look to E-commerce Landscape

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