Over the last three issues we have been looking at the potential for ecommerce across the AEC, trying to get an idea of whether the potential of this market has been largely underestimated by many economists.
Two key factors we looked at last time which suggest ecommerce will be far larger than some estimates of US$89 billion across the region were the lack of physical malls and the like outside the major cities across Southeast Asia, and this is notable even in Thailand and that this has led to a greater usage and acceptance of buying online, but mainly using cash-on-delivery rather than credit cards as the preferred mode of payment.
One inhibiting factor for ecommerce has been the high level of cross-border import duties and taxes. As the writer Sheji Ho notes, ‘This lack of a level global
playing field puts the pressure on developing a strong local ecommerce ecosystem…’
Ho suggests, ‘one of the most popular sources of “passive” income in Thailand… is buying merchandise from Taobao and AliExpress and reselling it for a margin on Facebook and Instagram…’
In an effort to work out where the AEC ecommerce market could be in a decade from now, Ho suggests looking at ecommerce Gross Merchandise Volume (GMV) per capita as a percentage of national GDP per capita. ‘This metric, ‘ he suggests, ‘should give us an idea of an individual’s ecommerce spending power relative to living standards…China’s ecommerce GMV per capita as percentage of national GDP per capita is 6 percent in 2016. Multiplying this with Thailand and Indonesia’s projected GDP per capita for 2016 we’ll get $711 and $533 ecommerce GMV per capita. Then applying this to the projected population count, we’ll get a $51 and $157 billion ecommerce market size for Thailand and
Indonesia, respectively.’
He continues, ‘Without adjusting for Singapore, Malaysia, Philippines and Vietnam (former two don’t follow the China model), we’ll get a total projected size of at least $238 billion. Indonesia’s re-adjusted ecommerce projection of $157 billion alone is bigger than the original $88 billion estimated for all six SEA markets combined. This revised projection does justice to the true potential of ecommerce in Southeast Asia and explains why everyone here is doubling down…’
Ho concludes, ‘Like in China ten years ago, those that invest in ecommerce early and take a long-term, strategic outlook will end up owning the biggest chunks of this $238 billion — not $88 billion — ecommerce goldmine in SEA.’
