Savills reports that Southeast Asia’s e-commerce sector is projected to develop at a compound annual growth rate (CAGR) of 34 percent to USD $102 billion by 2025, up from USD $5.5 billion in 2015. From 2016 to 2021, the total value of e-commerce sales in Southeast Asia grew fivefold annually and e-commerce’s share of all retail sales surged from five percent to 20 percent, according to McKinsey. The McKinsey analysis states that the average e-commerce penetration rate (excluding food and beverage) in Southeast Asia is 20 percent, whereas, by comparison, China’s penetration rate is 47 percent.

The growing trend of online shopping in Southeast Asia has resulted in retail sellers recording strong sales growth, according to Business Wire, which states that in December 2022, Shopee (one of the leading e-commerce marketplaces in Southeast Asia) announced that its sellers have recorded a sales growth of 25 percent in Malaysia. Indonesia, with a population of 278 million, is the region’s largest market for online purchasing with sales of $43.4 billion in 2021 and year-over-year growth of 32 percent, according to Practical Ecommerce (citing data from Statista’s ecommerceDB). Despite its large population (112.7 million), the Philippines has relatively low e-commerce engagement with 2021 online sales somewhere between $5.5 billion (Global Data) and $12 billion (Statista) and an internet penetration rate of 68 percent—the region’s lowest, according to the report. However, B2C (business-to-consumer) e-commerce in the Philippines is expected to grow steadily, recording a CAGR of 18.24 percent during 2022-2026, according to Research and Markets (reported in GlobeNewswire).

Investment activity in Southeast Asia’s industrial real estate sector appears vigorous. Manila’s warehouse sector registered the highest lease rate growth half-yearly in Southeast Asia at 15 percent, according to Knight Frank’s H2-2022 APAC Logistics Highlights (reported in RETalk Asia). Shopee, the e-commerce platform of Singaporean global consumer internet company Sea Ltd. intends to construct a 1.4 million square foot mega logistics warehouse in Klang, Malaysia, according to TechNode Global. Furthermore, Apple, in an effort to reduce reliance on China and diversify its supply chain, is moving production of MacBooks to Vietnam, with production slated to begin in the Southeast Asian country as early as May 2023, according to Forbes. CBRE analysis suggests that every USD $1 billion of additional e-commerce sales requires an additional one million square feet of logistics space.

Southeast Asia consists of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Timor-Leste and Vietnam.

Last Updated on February 25, 2023 by Ramin Seddiq