Only one in four consumers in Southeast Asia have made an online purchase, despite widespread mobile use across the region. But as consumer demand grows, the market is rapidly approaching a tipping point. Sebastien Lamy, a partner in Bain's Consumer Products practice, discusses the logistics challenges retailers face, and how and where they should invest to win. Read the related Bain Brief: Can Southeast Asia Live Up to Its E-commerce Potential?
On the face of it, Southeast Asia would seem like an e-commerce wonderland. No place on Earth matches this region in digital adoption. The people in the Philippines send more texts than any other country. Jakarta is the world’s No. 1 city for tweets. Indeed, Southeast Asia’s population of 620 million may be diverse, but its inhabitants have one important thing in common: an eagerness to use mobile technology. The region is home to more than 250 million smartphone users. Then why is it that only one in four consumers over the age of 16 in the region has ever made an online purchase? And what will it take to help Southeast Asia reach its vast potential for digital commerce? To get a clear picture [...]
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When a fast-moving consumer goods executive was asked why he was so intent on pursuing future growth in a region with unsteady GDP, he quickly replied, “GDP doesn’t drink beer and use hair conditioner. People do.” Indeed, the smartest consumer goods companies are looking beyond the current headwinds that are buffeting many of Asia’s developing markets to two overwhelmingly positive signs: First, the region is home to nearly 50% of the world’s population; second, by any indication, most companies’ moves to capture this vast market are still in their infancy. There’s no question that the fundamentals for growth exist and that things are only going to get better throughout developing Asia. Growth rates have slowed from their dramatic recent highs, but they remain significantly above [...]