Social Commerce Counts for 30% of Digital Sales in Southeast Asia
Facebook stands to benefit thanks to its strong market position and new services
Social networks have redoubled efforts to make their platforms a place where ecommerce transactions happen seamlessly, with several big players like Instagram and Pinterest adding click-to-buy features. While the jury is still out on the usefulness of “buy buttons,” social commerce appears to already be taking off in Southeast Asia. Consulting firm Bain & Co. estimates that roughly 30% of digital sales in the region took place via a social network this year, according to a report from the Wall Street Journal.
Total ecommerce sales in Southeast Asia are small at the moment. eMarketer estimates total retail ecommerce sales for six select markets in the region—Indonesia, Thailand, Singapore, Malaysia, Vietnam, Philippines—will barely top $14 billion this year. But eMarketer foresees healthy double-digit growth over the next four years, with the total for those markets more than doubling by 2020.
Southeast Asia is a region well-suited to social commerce. The region’s populace skews young, and users have been fast to adopt both smartphones and social networks.
But the most likely platforms to benefit from a surge in social commerce in the region may not be the ones you would expect. While WeChat is already leagues ahead of its Western competitors in terms of social commerce, there’s no evidence to indicate that the messaging app has a strong user base outside of China, in countries where people don’t speak Chinese.
In fact, it’s actually Facebook, along with its Instagram property, that may be best positioned to court small- and medium-sized businesses (SMBs) in Southeast Asia looking to move product online. While the firm faces threats from newcomers like Snapchat in the US, Facebook enjoys an almost unassailable market position in Southeast Asia. eMarketer estimates that at least 90% of social network users in Southeast Asia use Facebook.
In markets like Indonesia, users have relied on Facebook for years to facilitate consumer-to-consumer (C2C) ecommerce transactions by posting items for sale and soliciting offers from their friend network. Facebook has clearly taken note of these behaviors by creating tools to ease the execution of both C2C and business-to-consumer (B2C) transactions on its platform.
In June, the firm announced the launch of a new feature in Facebook Pages called “Shop” that gave businesses in Southeast Asia a suite of new services. Among them were the ability to showcase “featured products” on their pages, and capability of adding message buttons to products as a way of facilitating sale negotiations.
In Thailand, Facebook partnered with a digital payment service called Qwik on a trial basis, according to a June report from TechCrunch. The service works by giving a customer interested in making a purchase the bank account details of the vendor, then requiring them to go to an ATM and transfer the necessary funds. It’s a cumbersome process, to be sure, but Facebook’s goal is clearly to allow digital buyers to complete as many aspects of the purchase transaction as possible without ever leaving its walled garden. It also provides a payment method for consumers who might lack access to credit or debit cards.
Facebook also launched Facebook Marketplace in October, a service designed to compete with local C2C classifieds platforms like craigslist and OLX. The initial rollout of Marketplace was limited to the US, the UK, Australia and New Zealand. But the platform is perfectly suited to catch fire in Southeast Asia simply by allowing users to search for local inventory. For consumers lacking access to developed payment systems and robust shipping services, finding a seller who lives around the corner is an easy solution to both of those problems.