New York - Analysts at Forrester Consulting estimate in their latest report that online retail in South East Asia will grow at a compound annual growth rate (CAGR) of 23 percent, reaching a total valuation of 53 billion dollars over the next five years.
The unstoppable smartphone penetration and fast-growth economies are some of the key factors for investors looking at venturing in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, highlights Forrester.
Indonesia has become the region’s largest online retail market, accounting for 41 percent of online retail sales in Southeast Asia in 2018. Forrester expects the Indonesian online retail market to grow at a CAGR of 19.6 percent from 2018 to 2023, reaching 19 billion dollars in 2023.
Next up comes the Philippines, with most active social media users in the world, spending an average of 4 hours on social media per day in 2017, according to data published by ‘Enterprise Innovation’. Analysts at Forrester estimate the online retail market in the Philippines will continue to grow at 30.4 percent per year from 2018 to 2023 as more social media users start shopping online.
Fashion is the main driver of growth for Southeast Asian online retail
With 17 percent of the total online sales in Southeast Asia, the apparel and accessories category is the second largest one, just behind consumer electronics (24.2 percent.)
Fashion (including apparel, accessories, and footwear) accounts for 22.3 percent of total retail sales in Southeast Asia, being dubbed by Forrester as the key driver of the region’s online retail growth. The low penetration of organized offline retail in Southeast Asia along with the limited availability of fashion and cosmetics brands make these the fastest-growing categories from 2018 to 2023.
The analysis firm also anticipates fashion and cosmetics brands to follow into the steps of online fashion Zalora, which launched its own label online in this region back to 2013, and work closely with marketplaces to cater to customers’ growing needs. Conversely, marketplaces are expected to also launch private-label products in these categories.
Photo: Zalora, comercial web