KUCHING: Lazada has released findings from its first-ever bi-annual Digital Commerce Confidence Index, which revealed that 70 per cent of Southeast Asia’s online sellers are optimistic about future growth.
The report, the first-of-its kind for the industry, is a business sentiment survey that seeks 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 Confidence Index surveyed 750 sellers across six markets in Southeast Asia (Indonesia, Philippines, Thailand, Vietnam, Malaysia and Singapore) in the first half of 2021 (1H21).
The report revealed that 52 per cent of sellers experienced a high level of growth during 1H21, with 70 per cent expecting additional growth of more than 10 per cent in the third quarter of 2021 (3Q21).
Out of the 70 per cent, a third (33 per cent) of sellers surveyed were extremely confident that their sales volume would increase by more than 30 per cent in the same time period.
As a result, the overall index achieved an “optimistic” score of 64, with zero being “very pessimistic” and 100 being “very optimistic” on the spectrum.
“We are excited to launch the Digital Commerce Confidence Index, aiming to shed more light on forward looking indicators and sentiment among small and medium enterprises (SMEs) in Southeast Asia,” Lazada Group chief strategy officer Magnus Ekbom said.
“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.”
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 per cent of consumers reducing their offline purchases and 30 per cent increasing their online spending in 2020, the 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 per cent reporting that their business recorded strong growth in 1H21.
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 per cent say their businesses improved in the first half of the year, 75 per cent say that they expect business to improve in 3Q21, and almost 40 per cent of them anticipated that their growth would exceed 30 per cent in the same quarter.
“Vaccination programs have had a significant effect and platforms have witnessed fashion bounce back with 70 per cent-plus growth in 2Q from 1Q in some categories, mostly apparel,” Redseer partner Roshan Raj said.
“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 customer to customer (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.”
Developing a unique and differentiated offering (52 per cent), driving more user traffic (50 per cent), and the ability to harness data insights (23 per cent) 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.