After a two-year pandemic-fuelled boom, retail eCommerce companies across the world have experienced what researchers at Insider Intelligence and eMarketer characterise as “precipitous deceleration.”

Our article this month on ANZ eCommerce covered the slowdown across Australasia as consumers began to wander back down the High Street. Our research in ANZ is consistent with The Global Retail eCommerce Forecast, which predicts global eCommerce growth of 8.9 per cent this year, a result that remains well below the sector’s pre-pandemic performance.

To add insult to injury, the total share of retail captured by eCommerce flatlined in 2022, an outcome the report’s authors describe as unprecedented. “eCommerce has been gobbling up a share of the total retail pie ever since digital shopping was invented. That process hit a wall in 2022 but will resume — more slowly — in the coming years.”

Asia however is significantly more bullish. Throughout this diverse region eCommerce retailers are enjoying a more positive outlook, even though they are subject to the same macro pressures as their global peers — rising interest rates, escalating fuel costs and supply chain crunches. Asian eCommerce sales are forecast to grow faster than in all other regions. Indeed, the report reveals that 7 of the top 10 fastest-growing eCommerce markets are in Asia, including all of the top five.

Five APAC countries — China, Indonesia, South Korea, Singapore, and Japan made the list of the top 10 markets where eCommerce has the highest share of total retail spend.

It’s worth noting that China represents more than half of the world’s total retail eCommerce sales although its share of global retail eCommerce is also sliding, according to Inside Intelligence and eMarketer.

In the year before Covid, the country represented a little over 56 per cent of total retail eCommerce sales, which is set to drop to just over 51 per cent this year. But that still represents over $3tn in sales.

The analysis also reveals the extent to which China drags down overall global eCommerce growth. “China is pulling down the global average for eCommerce growth. Throughout the 2010s, China vastly outpaced the annual growth average worldwide, often by enormous margins. Now, however, China is underperforming compared with most countries. If not for China’s new normal (8.0% growth this year, 8.9% next year), eCommerce worldwide would have been in line for double-digit increases over the next several years.”

To get a deeper read on the status of eCommerce in the region we spoke with two expert Southeast Asian eCommerce Founder-CEOs — Paul Srivorakul from aCommerce (the market leading eCommerce enabler) and Fionn Hyndman (from fledgling Live Commerce platform, Stickler).  

aCommerce on eCommerce

aCommerce, which was founded in 2013, sees itself as the leading unified omnichannel platform and eCommerce enabler in Southeast Asia. It helps enterprise and mid-market brands establish and grow their online presence by providing them with end-to-end eCommerce solutions across Thailand, Indonesia, Singapore, Malaysia and the Philippines.

According to Srivorakul, “The situation in the SEA region has been relatively stable for eCommerce companies compared to Australia. While there have been challenges due to the pandemic — China’s supply chain, offline retail re-opening, and slowing consumer spending due to global uncertainty, we still see a significant increase in online shopping across the region.”

He told NRP, “In particular, we have seen strong growth in markets such as Indonesia, Malaysia, Philippines, and Thailand, where eCommerce is still in the early stages of development.”

And that growth comes from a broad set of categories including fashion, beauty and healthcare, where he says consumers are more likely to shop online.

But there has also been a softening in demand for high-ticket items in categories like electronics, appliances, and luxury brands.

“The one interesting trend we see that continues to grow is the older demographics, specifically GenX and baby boomers, who were forced to buy groceries online during the pandemic, but now continue to increase in frequency, basket size, across multiple categories as they see the benefits of convenience, price, and selection from online versus offline.”

While Srivorakul says he observed a slowdown in eCommerce sales from July to October, November, and December were much stronger, benefitting from the 11.11 and 12.12 campaigns, along with the holiday season promotions, and pent-up demand.

And he says the outlook has remained positive into the new year.

“January and February have also been positive for eCommerce, as consumers have experienced their 'revenge travel' and now go back to the comforts of online shopping.”

Srivorakul says consumer goods and groceries segment has been an especially happy hunting ground for aCommerce, having grown by 25 per cent while electronics decreased by 15 per cent in H2 last year.

Other categories like healthcare, fashion, and beauty continue to grow.

“Remember, we are starting from a fairly low base with eCommerce penetration still below 15 per cent in most countries. Overall, we are optimistic about the future in Southeast Asia and believe that the region's online market will continue to grow at a rapid pace in the coming years.”

A Stickler for Live Commerce

Hyndman’s Stickler operates in a parallel eCommerce universe called Live Commerce, which marries the world of live video and commerce.

Stickler’s new platform has been designed to enable eCommerce transactions to be executed on the same platform as the video that generates a sale. This may sound obvious — but the more usual Live Commerce process (outside China) is disjointed, with sales generated by a live video on one platform that directs users to transact on a different site. Stickler works with customers on eCommerce platforms that allow consumers to transact whilst a video is playing, in a more frictionless process.

According to Hyndman, this approach delivers conversion rates of more than 20 per cent — most eCommerce merchants can only dream of such metrics!

Live Commerce is already huge in China where the business model originated, accounting for approximately US$600bn in GMV.

Until now the mechanics of separate shows and transaction platforms outside of China have made the industry difficult to scale as live shows cannot be multicast across platforms. That is fine when you are doing one or two shows a week, but leading brands are now doing over 1,000 hours of Live Commerce per day.

Stickler is hoping to solve that problem, helping brands to scale Live across platforms, brands, hosts, and markets. “We're a new business and we don't have a long track record — but Live is starting to see some big, crazy results outside of China, and we aim to be part of it.”

Hyndman says that the pandemic created a new cohort of eCommerce buyers. “The trend to eCommerce will continue and the trend to in-person shopping via Live Commerce – will continue, and quite probably  at a faster pace.”

Shopping happens everywhere in Asia whether via social channels through video, through chat online, or WhatsApp, he says.

“Consumers want ultimate convenience and right now, the big driver is experiential, and that experience is being out of the house. As the trend goes back to the growth of eCommerce across lots of channels, the experience will be buying what you want, when you want it, however you want to buy it. And if that comes with a splash of convenience, a dash of entertainment, or a smidgen of instructional “how to” then social commerce is in a great place to add value and take share from "flat" eCommerce sites.”

Tik Tok – the Elephant in the Room

Tik Tok is many things to many people. To some, it’s dancing adolescents, car burnouts and cute pets – whatever algorithm floats your boat. For 26 percent of young adults in the US it is the primary source of news. But the real elephant in the room is eCommerce, where Tik Tok is the emerging rock star.

According to internal Tik Tok sources, the company has grown Live Commerce GMV (which is ~80% of total GMV) from zero to more than $1bn a month in Southeast Asia since the middle of 2022, and it’s apparently still growing at 20-30% per month.

Putting that into perspective, Google estimates that 2022 Indonesian eCommerce GMV was $59bn. By some estimates, TikTok will achieve Indonesian Live Commerce GMV of more than $13bn in GMV 2023 at current growth rates.

No-one has seen growth like that in ecommerce at that scale - and it’s unlocking Live Commerce along the way.

However, a word of caution – at least one prominent US tech investor is advocating that shareholders in this private business exit their shares as quickly as they can due to the heightened regulatory risk.

 

The Wrap

Let’s see how Southeast Asia treats our friends at aCommerce and Stickler in the Year of the Water Rabbit. And whether Tik Tok’s rise continues.