1. e-Commerce markets in ASEAN have seen strong growth in 2020

COVID induced demand for online shopping and services benefitted eCommerce and other digital sectors. Attributed to lockdown restrictions, eCommerce and eLogistics saw substantial growth during the period.

FoodTech staggered in Q1-Q2 during the initial COVID lockdown but saw a strong rebound – the shift in demand for FoodTech occurred in Q3 2020 when home-stricken population found food delivery as a refreshing change to cooking at home.

SEA GMV growth for Selected Sectors, 2019-2020

2. Consumers depicting high levels of stickiness on digital channels and Sellers/Brands are following

Online buying habit has formed for some of the late bloomers in digital channel like home & living, and essential categories. The increased awareness and usage of digital channels coupled with relative ease of online shopping will ensure customer stickiness post-COVID.

E-Commerce platforms will continue to thrive since consumers have had a taste of the convenience offered from shopping online.

Change in spend on online channels 6 months from now vs Pre COVID levels 2021P

Note: Figures, based on survey conducted early in 2021, n=600

Sellers find that allocating the necessary back-office and front-office resources can slow scale-up and divert time away from business objectives and e-Commerce platforms have been using value-added services to entice new users and create a high level of stickiness.

Sellers and brands started utilizing value-added services offered by e-Commerce platforms more during the pandemic, to scale up and improve process flow.

Also, marketplace and shop in shop models enable brands to sell online and remain in control of vital business decisions such as content, inventory, and pricing, in a time where a large part of their demand is moving online. This model has been seeing increased adoption in recent times.

Usage of eCommerce value added services – increase during COVID, % of sellers who said it increased

Note: Selected examples only

3. Given this step-change in the evolution of e-commerce, many companies are exploring IPO options as per media reports

The overall impact of the e-commerce boom has positioned a round of SEA companies gunning for an IPO.

Transportation, e-Commerce, and logistic sectors show the most potential in the short to medium-term IPO. Within the current year, we can expect a few local super-app players going the IPO route.

FinTech is also a key sector which has benefited from COVID with a high penetration of new users throughout SEA and could release a string of companies ready for IPO within the next 2 to 3 years.

SEA Potential IPO List,2021-2023

Author

  • Roshan is a Partner at Redseer Strategy Consultants and is focused on Southeast Asia. He was ranked highly by key long-only and long-short institutional investors. He has organized several conferences, corporate events, and non-deal-roadshows.

Author