E-Commerce In SEA Study: Vietnam Leads In Conversion Rate; Singapore Is The Biggest Spender

E-Commerce In SEA Study: Vietnam Leads In Conversion Rate; Singapore Is The Biggest Spender

by March 13, 2018

E-commerce is on the rise in Southeast Asia with more than US$10 billion worth of goods being purchased online in 2017, almost the double of 2015’s Gross Merchandise Value (GMV) of US$5.5 billion.

According to a study by iPrice titled The State of eCommerce in Southeast Asia 2017, Vietnam leads in the total number of conversions when compared to other countries in the region, and Singapore is the biggest spender with an average basket size of nearly US$100 per order.

The paper, released last month, details the e-commerce habits of consumers from Malaysia, Singapore, Thailand, Vietnam, the Philippines and Indonesia. The findings are drawn from data provided by over a thousand e-commerce merchants in the region, including Lazada, Blibli, Galleon Shopee and Bukalapak.

According to the document, e-commerce has been growing at a stunning 41% Compound Annual Growth Rate in the past years, fueled by smartphone adoption.

In the past 12 months, mobile has grown on average 19%, now accounting for 72% of the overall e-commerce web traffic with Indonesia leading the pack at an 87% share of mobile traffic, followed by Thailand at nearly 79% and the Philippines at a little over 76%.

In terms of conversion rate, which refers to the percentage of website visits that turn into a product purchase, Vietnam is leading the way with a rate 30% higher than the average. It is followed by Singapore and Indonesia, both at about 10%.

While Southeast Asian consumers enjoy browsing e-commerce websites on their smartphones, the majority of purchases are made on desktop devices. Consequently, across the region, conversion rates are substantially higher for desktop computers than mobile phones.

Singaporeans are the biggest spenders, with an average amount spent for every order of US$91. They are followed by the Filipinos with an average of US$56, and the Malaysians at US$54. Vietnam is the last with a basket size of US$23.

The figures correlate with the GDP per capita of each country with Singapore ranked first with US$90,530 and Vietnam last with a GDP per capita of just US$6,880.

Southeast Asia consumers tend to shop between 9am and 5pm, when people are traditionally at work or school. Singaporeans are the exception and seem to enjoy evening shopping more than other countries.

During the week, e-commerce merchants suffer a dip of up to 30% of their conversion rate over the weekend, consistently across the region. The figure correlates with the large increase in the percentage of mobile usage during the weekend.

Another consistent trend is the peak conversion rate on Wednesday, which rises up on average between 4% and 15% from the average weekly conversion rate.

The low credit card penetration in Southeast Asia, with the exception of Singapore, means that e-commerce players have had to face unique challenges. This has led to the proliferation of a much more diverse range of payment solutions in the region.

Bank transfer is a popular payment method across Southeast Asia with respectively 94%, 86% and 79% of online merchants in Indonesia, Vietnam and Thailand accepting it.

Cash on delivery is offered by more than 80% of e-commerce players in Vietnam and Indonesia.

Credit card is accepted by more than 80% of online merchants in Singapore, Malaysia, the Philippines, Thailand and Indonesia. In Vietnam, however, only 60% accept the payment method.

Southeast Asia’s Internet economy has exceeded expectations in the past years, reaching US$50 billion in 2017 and outpacing earlier growth estimations by 35%, according to the e-Conomy Southeast Asia Spotlight 2017 report by Google and Temasek. By 2025, Southeast Asia’s Internet economy is predicted to reach US$200 billion with e-commerce weighting as much as US$88.1 billion.

With 330 million Internet users, Southeast Asia has the third largest number of Internet users in the world – bigger than the whole population of the US. Since 2015, the region has added no less than 70 million new Internet users, the report says.

Southeast Asians spend more time on the mobile Internet than anyone else on the planet. Thailand is top of the list with 4.2 hours per day, with Indonesia a close second at 3.9 hours per day. To compare, the US spends 2 hours per day, the UK 1.8 hours per day, and Japan 1 hour per day.