Southeast Asia’s ecommerce GMV hit $128.4 billion in 2024 — but growth has slowed to 12%, down from 15% the year before. Why did it slow down? Should industry players still be optimistic? 

In this episode, Sabrina and Weihan, the author of our 3rd Ecommerce in Southeast Asia report break down the key findings.

Tune in as we explore:

Also available on Spotify and Apple Podcast

Featured materials: 

Ecommerce in Southeast Asia report, Momentum Works 

Transforming ecommerce with AI: Sell smarter, shop better

How AI is unlocking $131B in SEA Ecommerce | Impulso E125

[AI-generated Transcript]

Sabrina: [00:00:00] Hi everyone and welcome to the Impulso Podcast by Momentum Works. On today’s episode, we have a special guest joining us, Weihan, who leads our insights so we just launched the third edition of our e-commerce in Southeast Asia report, which Weihan wrote. Yes, yes.

Sabrina: So if you guys are interested in the report, um. It’ll be linked down in the show notes below so you can check it out. So in the report we mentioned that the 2024 GMV for Southeast Asia was 128.4 billion US dollars.

Sabrina: That’s a 12% growth. Growth as compared to the previous year. Right. So this is much slower than the previous year’s growth and all. The previous year was about 15%. In the report you mentioned that the reason for this could be because the platforms are moving towards a more rational and sustainable trajectory, right? Mm-hmm. Why do you say that?

Weihan: Mm. I think the platforms are at a stage where they, they know how competitive this area is and they know how unsustainable it is to keep on burning money to just to get [00:01:00] more users.

Weihan: So now they’re just trying to be more strategic in terms of what they wanna do, how they wanna grow in the near future, and then just go with it. I’m pretty sure they all found like kind of like their footing on where they’re strong at and where they want to go for next. Yeah.

Sabrina: So the whole regional growth is about 12% year on year. And most countries actually grew about double digit in double digits, right? So obviously Thailand and Malaysia are the fastest growing.

Weihan: So I think what we’ve uncovered this year is that, Thailand is currently the fastest growing at 21.7% and followed by Malaysia at 19.5%. What do you think is something in common for the two of them?

Weihan: Just make a guess.

Sabrina: I was thinking as well when I was reading the report, why is it these two markets that are the fastest growing?

Weihan: Think about in terms of like. Uh, are they wealthy? Are they not?

Sabrina: Oh, are they wealthy? Wealthier markets in,

Weihan: yeah, I think in growing

Sabrina: in GDP

Weihan: Pakistan, yes. So I think Thailand and Malaysia are one of the more affluent markets here in Southeast [00:02:00] Asia.

Weihan: So this means that consumers generally are able to. Spend. So what happens next is that whether their infrastructure or the product offerings offered by the platforms are up to standard for them to be willing to part with this amount of money, which I think from our, our estimations, it, it obviously shows that they are, they’re willing to pay as long as there’s improvements.

Weihan: And these two countries also have relatively, um, mature infrastructure as compared to a region as a whole. So I think this is what. Drove quite a fair bit of growth for the, yeah. For GMB,

Sabrina: Actually, what stands out the most from this graph is Indonesia, because they’re the only country that didn’t have a double digit growth.

Sabrina: Right. So they actually grew by only 5%. Mm. But of course, I mean if you look at the base that they have, they are a much larger market. So that could be why their growth isn’t in the double digits. Right. Yeah.

Weihan: So for the record, I think Sabrina mentioned by base, right, they are at currently about 50. Six, 5.5 billion in terms of their GMV.

Weihan: So imagine if they grew double a [00:03:00] digit, I think they’ll be off the roof

Sabrina: for this. I mean, they already contribute almost how much as a percentage of the region. I think about Indonesia.

Weihan: 40. 40%. 40, 40 plus percent.

Sabrina: Oh, so we did a poll on our research channels after we launched this report, right? Asking generally what’s the sentiment that people have towards e-commerce in Southeast Asia?

Sabrina: And a surprising amount of them are actually very optimistic. So about 60% of them are optimistic, right? So 28% are optimistic, 23% are cautiously optimistic, and 24% are optimistic, but find it hard to make money. Why do you think this is the general sentiment?

Weihan: If you look at e-commerce penetration in Southeast Asia as a whole, it’s still quite small. I can’t remember the exact figures now, but um, yeah, so there’s still a lot of untapped potential for Southeast Asia as a region.

Weihan: So I think that’s a reason why many of them are still optimistic. But the thing about Southeast Asia, [00:04:00] is that generally as a region, even though we mentioned that Thailand and Malaysia, one of the more affluent ones as a region, we’re still pretty priced. Sensitive. Sensitive. So it’s very difficult for, let’s say if you’re a seller, you want to really make money out of this whole operations because you really need to be very efficient in terms of how you structure your cost I think.

Weihan: If you look at it as a whole, right? A lot of the platforms are raising costs.

Sabrina: You mean take rates?

Weihan: Yeah. Take rates. the product price itself is also in terms of manufacturing, in terms of labor costs, everything is going up. So how do they squeeze out the remaining margin for them to make a profit of it?

Weihan: So that that’s, that’s a big concern for a lot of the sellers.

Sabrina: If you guys are interested, you can read our eCommerce report. Mm-hmm. So find out more. We also have a report that we did in collaboration with Lazada about generative AI and how that can help sellers unlock a lot of value. So I also link that down in the show notes if you guys are interested to check it out.

Sabrina: One of the sections of the report, what we did was uncover four of the key trends mm-hmm.

Sabrina: That we [00:05:00] think we would see in e-commerce this year. So the first one definitely is of course, that live and video commerce are going to hit a critical mass in Southeast Asia.

Weihan: So I think what we did some calculation right to estimate roughly how big video commerce is as compared to like the overall marketplace.

Weihan: So what we found out that is that live commerce in Southeast Asia actually contributes about $17.6 billion and this represents up to about 14% of the overall platform, GMV. And this is. In comparison to what you see in terms of the videos, which is at about 6%.

Sabrina: This is different from what we see.

Sabrina: I was talking to some of our community members, and this was a slide that they found interesting as well, because they thought that. Generally it would follow a more similar trend where video commerce would lead, but it seems like live commerce is more effective in generating GMV.

Weihan: I think if you look at it in terms of the live commerce infrastructure we have here, I would say that it’s [00:06:00] relatively a lot more developed as compared to the US especially if you see countries like in Vietnam, I think in Thailand as well, where there are a lot of, let’s say MCNs. And there’s, there’s also a lot of influencers as well as content creators.

Weihan: So these are the people who are really driving this content. So I think a reason why we say that it hits a critical mass, because if you combine the two, they add up about 20% of overall platform, GMV, which is. Considered quite a big improvements as compared to back when, let’s say TikTok first started people only, or people, people really buy off video.

Weihan: Live commerce. Yeah. Bio video or live commerce. So now we have a lot of MCNs who are spearheading live production in terms of live selling. And we have a lot of very big live hosts.

Weihan: They know what the lay person like you and me like, and they’re very good at, um, selling this, like, for example, a lipstick or whatsoever to them.

Sabrina: So from a consumer’s perspective, consumer in Southeast Asia, [00:07:00] have you bought anything from live commerce, video commerce?

Weihan: I have not. Mainly because they don’t have the right discounts and the right products for me, but I like to watch live commerce.

Sabrina: So another trend that we mentioned, which I feel we’ve been talking about for a while, so we did an episode, I think almost a year back about shopping Express specifically, right. Is that we see logistics kind of consolidating as a whole.

Weihan: Yep. Sabrina Riley pointed about Shoppy Express.

Weihan: Actually the right term should SPX Express is by Brenda. Yeah, they br and it’s under Shoppy. So they have really invested quite a lot of their resources and, um, capital into developing their own logistics arm. And I think even though currently the main market leader is still j and t Express, but I think at some point in time like.

Weihan: Last year, H two or something, the amount of parcel volume that goes through SPXX, but actually overtook gent slightly. Yeah. So, um, I, I’m pretty sure Shoppy is very set on [00:08:00] wanting to have their own logistics because it makes things a lot. Easier

Sabrina: Since last year we’ve been doing a lot of trips to China and then logistics is one of the topics that we cover. And what was really interesting to me is the difference between who chooses the logistic players in China as compared to Southeast Asia.

Sabrina: So in Southeast Asia, the platforms are the ones that get to choose. Who are the logistic players that deliver? Right? So obviously this gives platform backed logistic players like SPXJ and T technically. ’cause they work very closely with TikTok shop and then even Lazada has their own logistics. These three players alone dominate about 60% about there of the passive volume already in Southeast Asia.

Sabrina: But it makes sense because if I’m an e-commerce platform and I have my own logistic players, why would I not give the parcel volume to that precise? Yeah. So then where does this leave third party logistic players?

Weihan: Mm, I think a lot of third party logistics players. What they’re trying to do now is really to find, number one, how to work with some of the other platforms.

Weihan: For example, [00:09:00] TikTok shop, a lot of the parcels do goes to j and t, I’m pretty sure they do have, um, other smaller three pls. They are supporting them. So that’s one. And we are not sure whether TikTok will eventually build. Their logistic, their own logistics ’cause it’s pretty asset heavy.

Weihan: And the other ones, a lot of them are actually going into more B2B or more niche sectors, such as going into code chain, going into, um, maybe bulky items, delivery. Ah, because, if you look at it in terms of let’s say SPX, um, perspective is that this are just this. This niche categories only contribute to a very small percentage of what they want to sell.

Weihan: So it doesn’t make sense cost-wise for them to invest in it. So this leaves a gap for the three pls to actually go into

Sabrina: So the third trend that we looked at in the report, and this is something that we’ve seen a lot of people asking questions about, right? Essentially, is Chinese and local brands challenging global players?

Sabrina: And we see it not just in e-commerce brands, right? Yeah. But also in terms of Chinese FMB that’s going global, [00:10:00] which we do multiple podcasts about usually.

Sabrina: So how do you think this affects the landscape? Because. Branded. GMV is not a very big proportion of our current e-commerce market. Right? It’s maybe like less than 30%.

Weihan: Yeah. So I think for a lot of the brands now they’re also facing a dilemma. A lot of them are asking us like, so how exactly should we allocate our e-commerce budget?

Weihan: Because you can’t keep. Cutting prices. You can’t keep giving discounts in order to start sustain. And then now you have a bunch of new brands coming in and a lot of them are digital native.

Weihan: So they are born during the era where TikTok is common, e-commerce is common as compared to a lot of like the incumbents, uh, the global giants that we are familiar with. So a lot of the established brands are actually really trying to figure out what’s the next direction to go. Should they focus more in terms of, let’s say, even going offline, because that’s where they still have a lot of control over.

Sabrina: I think this is something that a lot of people are asking, so [00:11:00] we should probably do a separate podcast customer. So if you guys have any questions about Chinese brands going entering into Southeast Asia or going global, feel free to leave them down below or let us know. What are some of your favorite Chinese brands that you’ve been buying on e-commerce platforms?

Sabrina: And something new in our report this year that was hopefully quite fun for you to do, is that we made 12 predictions for the next 18 months of e-commerce.

Sabrina: Right. So obviously I’m not gonna let you guys know all 12 of the predictions here. Mm-hmm. If you wanna know, you can purchase our e-commerce report linked down below, but as the author, yeah. As the author of the report, what do you think was. The most interesting prediction for you?

Weihan: So I think this is our prediction number nine. Our prediction number nine actually says that e-commerce enablers will start competing with brands. For those who are not so familiar with, uh, enablers, what they do is they help brands manage a lot of the e-commerce stores.

Weihan: So what this gives them is that they have access to a lot of data. So [00:12:00] what product does well, what kind of, let’s say marketing. Campaigns work as well as which out when is the pick period. Uh, what do consumers like? So with all this data, right, a lot of them actually have the, the sort of like the necessary ammunition to want to start a brand.

Weihan: Actually a couple of, let’s say enablers or even MCNs. So those who helps with the live streaming, they’re actually venturing into brands per se, and they have incubated a couple of their own brands actually. And this is a reflection of how the wider ecosystem is actually evolving, such that all these skills that you need to run e-commerce, you need to not read data.

Weihan: You need to know how to run your own e-commerce stores. It’s spilling over to every single ecosystem player. So as this e-commerce, um, skills commoditize, more and more players actually have the abilities to actually create something themselves. So, and what we are seeing with a lot of the enablers is that they are going into brands [00:13:00] because.

Weihan: They are also trying to figure out how to stay afloat in this economy, you have the platforms increasing their take rate. Mm-hmm. You also have the brands trying to maintain their p and l. So what is left for the, the

Sabrina: enablers in the middle are kind of getting squeezed, squeezed by the players. Right. So

Weihan: building their own brands and become moving up the supply chain or moving upstream.

Weihan: It’s something that gives them a bit more leeway. So yeah, this is something that we foresee that might happen in the next couple of years. Shine more.

Sabrina: If you guys are curious to know more about e-commerce in Southeast Asia, like I mentioned, we just launched the third edition of our report, which of course includes um, key top line numbers as well as some of the trends and predictions of what we’re seeing of e-commerce in the region.

Sabrina: So. Thank you guys for tuning in to another episode of the Impulsive Podcast. We hope that you guys enjoyed today’s episode, and if you did, do like our videos as well as subscribe to our channel to stay up to date on the latest happenings and trends in [00:14:00] tech, new retail, and the broader digital economy.

Sabrina: Thank you, and bye-Bye bye.