There has been a great deal of industry discussion regarding the rapid growth of the consumer retail market in China in recent years. In fact, China is forecasted to become the world’s largest consumer economy by 2024 when it will reach $11 trillion in annual retail spending.
As China develops into a fully-matured consumer market though, growth will inevitably slow and stabilize. However, several other economies in the region are poised to show similarly dramatic growth in the next few years, and retailers should act now to position themselves in the right place at the right time.
Turning Attention to Fast-Growing Southeast Asia
Southeast Asia is forecast to be the home of the world’s next major economic boom, with increasingly-affluent consumers in the region delivering $278 billion in annual consumer spending by 2025. ASEAN—the Association of Southeast Asian Nations—is an organization designed to facilitate political and economic cooperation and access among its member states, including:
|• Brunei||• Myanmar|
|• Cambodia||• Singapore|
|• Indonesia||• Thailand|
|• Laos||• The Philippines|
|• Malaysia||• Vietnam|
Together, these nations represent nearly 650 million people, with the majority listed among the world’s fastest-growing economies. In fact, nearly all ASEAN member states are projected to show annual GDP growth between six and ten percent for the foreseeable future.
ASEAN Economies Grow with Mobile, Rather than Adapt to It
Not surprisingly, Singapore sets the high mark for the most technologically advanced of the ASEAN economies. Though the country has a population of less than six million, the per-capita GDP of roughly $85,000—more than 50% higher than that in the US—makes them the world’s six-wealthiest nation as of Fall 2016.
The Singaporean government wants their nation to be seen as a “smart nation” — a leader in global tech advancement. However, while Singapore may be highly-advanced, what makes other players in this region so interesting is that they are rising at a time of rapid and immense change in the retail payments sphere.
Unlike other advanced markets like those in Europe, North America and other parts of Asia, most ASEAN economies do not have to adjust to new technologies; rather, they’re growing up alongside them. Most consumers throughout this region who do not live in major metropolitan areas like Bangkok or Jakarta bypassed the phase of desktop and laptop shopping entirely. These consumers were largely introduced to the internet, and to eCommerce, through the arrival of mobile technology.
In Thailand, for example, mobile phones are the preferred online sales channel for 34% of consumers living in a major metropolitan area. Outside of the city, though, that percentage jumps up to an impressive 85%.
Social Media Could be a Powerful Tool
Data also revealed that 30% of all 2016 online sales in Southeast Asia are projected to take place through social networking sites like Facebook and Instagram. When examining how many consumers use social media to research potential purchases, the figure jumps to 80%. Both are significantly higher than in the U.S., where consumers involve social media in only 7% of purchases.
ASEAN consumers are much more open to the idea of social shopping, as well as buying. In response, sites like Facebook recently introduced several different features unique to the Southeast Asian market designed to facilitate social shopping.
Because eCommerce is still so new to many of these consumers, making online purchases “the traditional way” isn’t as deeply-engrained as it is in Western markets. To them, mobile is the only natural answer.
ASEAN Region’s FinTech Boom
In a region so compact—yet diverse in culture, affluence, and consumer demand—will merchants be able to rely on a consistent and overarching payments infrastructure?
Maybe not, but fortunately, there is a potential answer for ASEAN eCommerce as it’s developing in the mobile age—simply find an alternate route.
Just as with mobile shopping, the FinTech industry is now developing alongside emerging consumer preferences in this part of the world. Therefore, FinTech will be able to integrate seamlessly into the growing consumer market to fill the gaps left by traditional payments infrastructure.
Under the current system, retailers can find it difficult to navigate cross-border transactions, and regulation from one region or nation to the next places further impediments on sales. However, if they can manage to overcome their own regulatory hurdles and other barriers to entry. FinTech services will go far toward facilitating cross-border retail in the ASEAN markets.
Breaking into the ASEAN region’s eCommerce market will demand that merchants be open to FinTech disruptors from the beginning.
Merchants Go Where the Consumers Are
The increasingly-affluent consumer base in Southeast Asia is hungry for a wide range of products, and retailers should to be ready to address consumer demands.
If customers want to shop on mobile, then retailers need their sites to translate flawlessly across different devices. If customers engage in social shopping, retailers should be ready to capitalize on those social interactions that can translate into sales in a properly-leveraged micro-moment.
The only question that remains is: how will your business embrace the overwhelming earning potential of this region?
Monica Eaton-Cardone is the COO of Chargebacks911, the world’s leading risk mitigation and chargeback management firm. She specializes in helping online merchants optimize profitability with risk reduction, agile process design, and revenue recovery. Eaton-Cardone, a well-known author and speaker, is also a long-time member of the ERA who plays an active role in helping advance the organization’s mission. Connect with Monica Eaton-Cardone on Twitter or LinkedIn.