Despite uncertainties due to the lingering pandemic, majority of online sellers in southeast Asia, including the Philippines, are optimistic about future growth, according to a survey.
A survey conducted Lazada, Southeast Asia’s leading eCommerce platform, showed that 70 percent of 750 online sellers across six markets in the region (Indonesia, Philippines, Thailand, Vietnam, Malaysia, and Singapore) surveyed in the first half of 2021 were confident about their prospects over the next three months, giving the Digital Commerce Confidence Index an overall score of 64.
The first-ever bi-annual Digital Commerce Confidence Index, released Tuesday, (August 3), is the first-of-its kind for the industry to gauge business sentiment and to map out the perspectives of online sellers in Southeast Asia about the digital commerce industry, while shedding light on the challenges and opportunities that lie ahead.
The report revealed that 52 percent of sellers experienced a high level of growth during H1 2021, with 70 percent expecting additional growth of more than 10 percent in the third quarter of 2021 (Q3 2021).
Out of the 70 percent, a third (33%) of sellers surveyed were extremely confident that their sales volume would increase by more than 30 percent in the same time period. As a result, the overall index achieved an “optimistic” score of 64, with 0 being “very pessimistic” and 100 being “very optimistic” on the spectrum.
According to the survey, fashion sellers demonstrated the biggest leap of faith. Even though 48 percent said their businesses improved in the first half of the year, 75 percent say they expect business to improve by more than 10 percent next quarter.
A key driver of sellers’ positive sentiment could be attributed to significant shifts in Southeast Asian consumers’ consumption habits with greater diversification between online and offline purchases.
With 47 percent of consumers reducing their offline purchases and 30 percent increasing their online spending in 2020, the report showed that COVID-19 pandemic has accelerated the expansion of digital commerce and made it a pivotal battleground for sellers looking to scale up their businesses.
While strong growth momentum was generally recorded across all retail categories, sellers from the electronics and fast-moving consumer goods (FMCG) categories appeared to be the biggest beneficiaries of a stay-at-home economy, with 53 percent reporting that their business recorded strong growth in H1 2021.
The report also uncovered interesting variations in how sellers felt about the future. For example, sellers from the fashion segment made the biggest leap of faith. Even though 48 percent say their businesses improved in the first half of the year, 75 percent said that they expect business to improve in Q3 2021, and almost 40 percent of them anticipated that their growth would exceed 30 percent in the same quarter.
Developing a unique and differentiated offering (52%), driving more user traffic (50%), and the ability to harness data insights (23%) were identified by sellers in the survey as key enablers of online business growth. In a highly saturated environment, competition among online sellers no longer occurs under a simplistic framework of price wars but has evolved to take on an additional dimension where technology driven customer engagement serves as a differentiating factor for many sellers.
“We are excited to launch the Digital Commerce Confidence Index, aiming to shed more light on forward looking indicators and sentiment among SMEs in Southeast Asia. Many SMEs have embraced new technology and acquired digital capabilities to transform and future proof their businesses. Despite the challenging health situation and ongoing challenges, our Index shows that sellers remain both resilient and optimistic about the future,” said Magnus Ekbom, Chief Strategy Officer of Lazada Group.
“Vaccination programs have had a significant effect and platforms have witnessed fashion bounce back with 70 percent + growth in Q2 from Q1 in some categories, mostly apparel,” said Roshan Raj, Partner of Redseer. “Live streaming has also been a big boost to many sellers, as it creates an interactive environment for consumers to shop in. The interactions between sellers and buyers are important drivers for fashion as the segment is C2C and requires a strong element of trust-building via interactions.”
However, with the recent surge of Covid-19 cases in Southeast Asia, Roshan also anticipated that “the expectations from fashion sellers might see some moderation in the near future.”