Mar, 2022
The Emergence of Direct-to-Consumers (D2C) Opportunity
Players have access to a mix of 3PL and captive logistics to meet their specific growth targets
1. The large number of online shoppers creates an attractive market for D2C players in the region
More than 70% of Southeast Asia’s 589 million people (2020) have access to internet penetration, and more than a third of them are already shopping online. This landscape provides multiple D2C opportunities in the region.
2. The infrastructure supporting D2C growth is now available for a wider variety of products and consumer needs
The D2C business model bypasses several pitstops prevalent in traditional B2B2C channels. D2C models connect the manufacturer directly with the end consumers and offer customers a seamless buying journey.
The continued improvements in access to the internet and financial/payment services and expanding reach of online marketplaces and logistics infrastructure provides suitable tailwinds for the growth of D2C models.
3. Players have access to a mix of 3PL and captive logistics to meet their specific growth targets
The reasonable logistic costs in Southeast Asia (average US$1.9 in 2020) allow D2C players to ship products directly to consumers. In areas of high demand density, players tend to deploy in-house logistics. Elsewhere, they rely on 3PLs.
Logistics Revenue per Parcels, 2020, In US$
4. D2C model has witnessed significant traction around the world in the recent years
Nike, Perfect Diary, and Kind Snacks are perfect demonstrations of how this business model promises a strong growth with many benefits within the implementation.
5. Investors are supportive of the D2C opportunities unfolding in Southeast Asia
Recent rounds of capital raises by various D2C players in the region suggest investors’ willingness to support this sector in Southeast Asia. Some of the planned use of capital by the D2C companies include product assortment, coverage expansion, and omnichannel distribution. Directionally, these should help to improve D2C penetration in the region.