Southeast Asia is an attractive market for Australian businesses. As a group, the Association of Southeast Asian Nations (ASEAN) is one of Australia’s top three trading partners. It represents around 15 per cent of the country’s total trade, according to a report prepared by Australia’s government.
With the rise of eCommerce, Australian businesses today have a new channel for entering this market. Research firm Forrester Analytics predicts that the region’s online retail sector will grow to US$52.6 billion by 2023 from US$18.7 billion in 2018.
A report by Google and Temasek shows similar optimism—it predicts that Southeast Asia’s internet economy will exceed $240 billion by 2025. Much of the growth will come from Indonesia, the region’s largest economy.
Given Southeast Asia’s robust eCommerce sector, even small and medium Australian businesses have the chance to build a significant following in the region.
It can be difficult to know where to start, though. That’s why we’ve developed this series on popular Australian product categories in Southeast Asia.
While there isn’t comprehensive information on which Australian brands are performing well in Southeast Asian eCommerce markets, specifically, you can consider these five things when deciding to market your products to this region:
On a list of global Australian brands that have gained popularity in the Philippines, the country’s embassy included apparel brands Cotton On and Rip Curl, as well as footwear label Hoster.
Nutrition and wellness brands Swisse, BioIsland, Blackmores, along with beauty product maker Eaoron, appear to be popular in some Southeast Asian countries as well. That’s based on the bestseller list of an Australian wholesale shop on Lazada Malaysia. The same brands also feature prominently on Airfrov, a Singaporean app that lets locals request products for travellers to bring home.
If you’re unfamiliar with the Southeast Asian market, it would be good to benchmark your products and eCommerce marketing strategies against these brands, and understand what makes them click in the region.
In the fashion segment of this series, we’ll discuss the features that make the aforementioned apparel and footwear brands popular in Southeast Asia, and what eCommerce businesses can learn from them. You can also read our deep-dive into the eCommerce opportunities for Australian health & beauty products in the region.
Southeast Asians, such as customers in the Philippines, generally have a good opinion of the ‘made in Australia’ label. They equate it with being “clean, green and safe”, especially when it comes to cosmetics and toiletries products.
Southeast Asians also share Australians’ preference for “basics along with fashionability”, according to Cotton On, one of the more popular Aussie fashion brands in the region. This is partly owing to similarities in climate and topography. Both places, for example, enjoy the sunshine for a large part of the year. Both also feature plenty of seaside cities and towns, giving rise to laid-back coastal lifestyles.
Through photos, videos, and text, you can educate your customers on what your own Australian brand means. This is called ‘rich content’, which Austrade defines as “high-definition pictures from multiple angles, in-depth product descriptions, and user reviews”. As we discussed in our article on Thai eCommerce consumers, L’Oreal Thailand applied this strategy to increase sales by 30 per cent.
Possible topics for rich content you could use may be about nature and sustainability, as is the case with Olive Oil Skin Care Co (see next point). It may be the appeal of the surfing lifestyle, as with Rip Curl.
You could also focus on quality and market expertise—characteristics that have propelled healthcare brand Blackmores to success in the region. The company, which sells vitamins and dietary supplements, claims at least a 40 per cent share in Thailand. It’s also performing well in Malaysia, Singapore, and Indonesia.
An Australian government report on ASEAN opportunities states: “ASEAN ‘urbanites’ of the future will be younger, with more discretionary spending power and a greater demand for premium products.”
Research by the Hong Kong Trade Development Council (HKTDC) supports this, noting that middle-class Southeast Asian consumers tend to be willing to pay more for products from brands they trust. This presents an opportunity for Australian eCommerce businesses to capitalize on the positive perceptions of the ‘made in Australia label’ by selling unique, authentic, and premium products.
This demand is fuelled by a growing middle class. In Indonesia, Malaysia, the Philippines, Thailand, and Vietnam, 50 million people will join the middle class by 2022, according to Bain & Company and Facebook, which collaborated in a study. These increasingly affluent consumers will contribute to Southeast Asia’s $300 billion middle-class disposable income.
The study also found that demand for high-end products is growing in Southeast Asia. You’ll be glad to know their research also revealed that brands across the region have found greater success in fulfilling this demand by selling products online, more than when selling in brick-and-mortar outlets.
That means Australian businesses don’t necessarily need physical outlets in the region to capture the market for premium products.
Niche businesses selling unique, authentic, and premium items can learn a lesson from Sydney-based Olive Oil Skin Care Co, an all-natural skincare brand. When it launched a shopfront on Alibaba’s Tmall Global, it emphasized that its products were entirely made in Australia—from the olive grove where the main ingredient is sourced to the mixing and packaging. It leveraged the ‘made in Australia’ brand to highlight the sustainability and eco-friendliness of its methods. The high quality of the products also made it a hit.
With such characteristics, Olive Oil Skin Care Co also positioned itself as a premium skincare brand. That means targeting the affluent consumer class.
So don’t be afraid to sell your products at a premium if you can justify the price. This will mean targeting a narrower audience, not the mass market. You’ll need to emphasize the Australian journey that goes behind the making of your products, including the quality and source of the ingredients and the care that goes into the making of the items.
There are three Australian product categories that perform best among Southeast Asian eCommerce consumers:
Social media drives online sales of fashion products in Southeast Asia, according to YStats. This doesn’t come as a big surprise when you consider that the region’s social media penetration is at 55 per cent, compared to the global average of 42 per cent, according to HootSuite. The rate varies by country—it’s as high as 75 per cent in Malaysia and 83 per cent in Singapore.
Consumers in the region also frequently turn to social media to hunt for promos and deals. They follow influencers, and even micro-influencers, for fashion inspiration.
Meanwhile, Thailand was the world’s largest social commerce market in 2017, according to an eCommerceIQ report cited by Austrade. In Malaysia, one in three online shoppers uses social media. Almost a third (30 per cent) of eCommerce sales in Indonesia are made through social media, blog shops, and messaging apps.
With their focus on visuals and trending posts, social media sites like Instagram and Facebook are great platforms for posting product images and information.
They also come with private messaging features that allow buyers and sellers to converse and negotiate directly with each other.
Such features are important because conversational commerce plays a key role in eCommerce conversion in Southeast Asia. This is especially true in Thailand, which is said to be the top country in Asia Pacific where people send the most messages to businesses on Facebook Messenger.
Look beyond Facebook Messenger when choosing conversational commerce options, though. Hootsuite’s report shows that Line dominates in Thailand, while WhatsApp is preferred by Indonesians.
Meanwhile, if you’re selling health & beauty products, take a look at each SEA country’s population age instead of doing a collective sweep of the region. For instance, Thailand’s population is ageing, with a median age of 37.7 years. Compare this with Singapore’s 34.6 years, Malaysia’s 28.5 years, Indonesia’s 30.2 years, Vietnam’s 30.5 years, and the Philippines’ 23.5 years.
You can thus tap into a demand for anti-ageing products in Thailand and Singapore.
With four million births in the region per year, there’s also a growing ‘mom’ demographic among Southeast Asian online shoppers. Sales of products for babies and children are expected to reach US$280 million in Indonesia and US$141 million in Thailand by 2020, according to a Euromonitor report cited by eCommerceIQ.
Keep in mind that many moms in Southeast Asia obtain information and recommendations from websites and chat groups dedicated to parenting. It’s thus important to build credibility around your brand or your online store through various online channels. By doing so, you can gain consumers’ trust, even though you’re not a major player in the market.
HKTDC also notes a growing demand for natural and hypoallergenic baby products. This is another opportunity for you to leverage the ‘made in Australia’ brand of natural and safe ingredients.
As a new entrant into the Southeast Asian market, you can adopt a few strategies to help your online shop succeed.
Continue to do due diligence and reach out to your local trade bureaus for help with expanding into Southeast Asia. With enough preparation and the right regional partners, you can prepare your online shop for a successful launch in the Southeast Asian market.
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