The online retail market in the leading ASEAN countries could grow by 25% a year in the short term according to a new study which also identifies five barriers that will first need to be overcome.

As the ten-nation Association of Southeast Asian Nations (ASEAN) prepares to transform into a single market by the end of this year, a report by consulting firm A.T. Kearney – Lifting the Barriers to E-Commerce in ASEAN – sees “considerable growth potential” for the six major markets of Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam.

Xmas time

“ASEAN 6 accounts for less than 1% of global online retail, even though it has 3% to 4% of global GDP and around 8% of the population,” pointed out Geir Olsen, head of A.T. Kearney’s Consumer Industries and Retail Practice in APAC and co-author of the study.

Achieving the projected growth figures, however, will not happen without to speed internet access and to improve security and payment options.

Just 29% of the ASEAN 6 population are online, compared to 46% in China and more than 90% in Japan. And while mobile broadband is spreading quickly, the report said that “limited fixed broadband connectivity is an issue”, adding that “state aid will be essential for improving the region’s access, especially in remote and poorer areas”.

Similarly, state action can help reassure online shoppers reluctant to divulge credit card details and remove the current need to make offline payment for online purhcases.

“The region would benefit greatly from shared cybersecurity and regulatory best practices and coordinated legislative frameworks,” said Olivier Gergele, principal with A.T. Kearney’s Consumer Industries and Retail Practice.

And ASEAN governments could also institute e-payment regulations that are coordinated region-wide.

Logistics are a particular challenge in some countries – the many islands in the Philippines and Indonesia, for example, complicate the delivery of products bought online and much of the cost can end up being passed on to the consumer.

The report also urged greater support for “local champions”, which are in danger of being outmuscled by foreign online players.

“In order to encourage local companies to participate in the online-trend, access to finance needs to be improved, the integration of digital talent needs to be fostered and the awareness of ecommerce marketplaces needs to be promoted”, said Gergele.


Leave a reply

Your email address will not be published. Required fields are marked *


Copyright © 2024 All rights reserved

Log in with your credentials

Forgot your details?