The State Of ECommerce SEA
2017 has been a vital year for eCommerce in Southeast Asia, with Gross Merchandise Value (GMV) of first-hand goods surpassing $10B, up from $5.5B in 2015, with a stunning 41% Compound Annual Growth Rate (CAGR) over the past couple of years, as per Google-Temasek’s eConomy SEA Spotlight 2017 report.
Among other major events, 2017 in SEA eCommerce has seen Amazon’s long awaited entrance in one of SEA’s market, the fast rise of Shopee’s Mobile-First platform, the $250M record-breaking Sales by Lazada’s Online Revolution Campaign and the increasing capital deployed by Chinese’s bitter enemies Alibaba and Tencent, in an attempt to ‘win’ the market.
Behind these title-grabbing events and industry-shaping investments, there are thousands of eCommerce players of all shapes and sizes, operating across the region in very different market conditions.
Our aim, with the 2017 State of eCommerce report, is to shed light on some of the most important eCommerce metrics from the perspective of these thousands eCommerce operators, highlighting the differences and similarities among each markets.
Our research leverages iPrice’s proprietary data from over 1,000 eCommerce players operating in the 6 largest Southeast Asian markets (Indonesia, Malaysia, Singapore, Thailand, Philippines and Vietnam.)
The Mobile Revolution
SEA eCommerce is a mobile-first economy, leapfrogging all the Western economies when it comes to the importance of Mobile commerce in the traffic generated by each eCommerce operator.
The rise of Mobile in SEA’s eCommerce appears unstoppable. In the past 12 months, mobile has grown on average 19%, now accounting for 72% of the overall eCommerce web traffic.
Leading the pack is Indonesia, which now has a staggering 87% share of mobile traffic. In none of SEA’s country desktop traffic accounts for more than 30% of web traffic.
Among the most important metrics for any eCommerce operator is their conversion rate. Conversion rate reflects both the quality of a company’s marketing activities and the website’s effectiveness. In its simplest definition, conversion rate is the percentage of website visits that turn into a product purchase. Improving conversion rate can have a dramatic effect on the bottom line and profitability of a business.
How does this fundamental metric differ among merchants in the different Southeast Asia’s countries?
Using the average conversion rate in SEA as a reference (1x), Vietnam merchants are leading the way, with a conversion rate 30% higher than the average. Singapore displays the second highest conversion rate, closely tied with Indonesia.
The data shows the low level of correlation between conversion rate and the level of maturity of each eCommerce market.
Desktop is King in Conversion Rate
Despite the meteoric rise of mobile traffic in the region and the development of adhoc tools supporting mobile commerce, traffic on mobile still suffers a substantial gap with desktop when it comes to average conversion rate.
How big is that gap and is it consistent across countries?
Using the average mobile conversion rate in SEA as a reference (1x), Vietnam and Indonesia are above the average mobile conversion rate. Conversion rate for desktop is on average 1.7x times higher than the average mobile conversion rate.
Singapore Supremacy in Basket Size
Basket size is another key metric for any eCommerce operator, heavily impacting the unit economics profitability of the business. The metric measures the average total amount spent for every order made by customer over a defined period of time.
The basket size is structurally different among verticals and the market positioning of each merchant. Our large sample of merchants from a variety of verticals is mitigating such factors, thus making the basket size comparison among countries particularly interesting.
The Basket Size results to be closely correlated to the GDP per capita of each country.
Singapore has the highest GDP per capita ($90,530) while Vietnam has the lowest GDP per capita ($6,880). Relatively, Singapore’s merchants score highest with a basket size of $91, 3.7x higher than their Vietnamese counterparts, with an average basket size of $23.
Buy Bigger on Desktop
We have seen already the big gap between desktop and mobile’s conversion rate.
Is mobile also afflicted by a similar gap when it comes to basket size?
The average order value is consistently higher on desktop vs. mobile, recording a 8% to 20% in conversion rate ease by country.
We can interpret the data as an indication of consumers’ preference in finalizing larger purchases on desktop.
Time of Purchase
Work & Shop
At what time do Southeast Asia consumers shop the most and is the trend consistent across the region?
Considering the average number of order of the local country as reference (100%), the number of orders is highest between 9am and 5pm, when people are traditionally at work or school, with the exception of Singaporeans, who seem to enjoy evening shopping more than other countries, peaking at 10pm. Consistently across countries, there is a dip between 5pm and 7pm, were people typically commute and have dinner, before getting back into online shopping until 11pm.
The Wednesday Peak
In which days of the week are consumers shopping the most?
Is the weekend a good time for merchants to push out their Special Offers?
Considering Monday as a base value, eCommerce merchants suffer a dip of up to 30% of their conversion rate over the weekend, consistently across the region.
The main factor contributing to the dip in conversion rate on the weekend is, not surprisingly, the large increase in the percentage of mobile usage.
Another consistent trend, is the peak conversion rate on Wednesday, up on average between 4% and 15% from the average weekly conversion rate.
Mobile traffic over the weekends increase on average of 10%, with Indonesia once again proving the be the King of mobile, with a reliance of close to 90% on Saturdays and Sundays
COD and Bank Transfer to The Rescue
Which payment solutions are merchants offering to their consumers to complete their purchases, in each of SEA’s country?
Due to low credit card penetration in the region (with the exception of Singapore), eCommerce players in Southeast Asia have had to face unique challenges, unbeknownst to the western ecommerce markets. As a consequence of this structural shortcoming, a much more diverse range of payment solutions have proliferated in the region.
Each country displays very different patterns, which highlights the challenges that merchants face when expanding regionally with a one-size fits all approach.
Cash on Delivery is offered by more than 80% of the players in both Vietnam and Philippines
Bank transfer is another very popular payment method across SEA, with respectively 94%, 86% and 79% of merchants in Indonesia, Vietnam and Thailand offering it.
In Thailand and Vietnam, almost 50% of merchants offer offline point of sales (ie. 7/11)
Payment by installments proves to be very popular (and increasingly so) in both Vietnam (47% of merchants) and Indonesia (42%)
As the affiliate platform of choice for more than 1,000 eCommerce merchants across SEA, iPrice Group has a customer base ranges from the biggest eCommerce names in the region such as Lazada, Zalora, Expedia and hundreds of ecommerce merchants with less than $1 million in annual revenues.
This report is based on the analysis of the anonymized data of all these companies in the period July 2016 to June 2017, for the following markets: Indonesia, Malaysia, Singapore, Thailand, Philippines and Vietnam
In order to provide the most insightful and representative metrics, all our conversion and average order value metrics, adopt a merchant based weighting (vs. order based weighting), to avoid skewing the data for the largest players.