SINGAPORE, Dec. 7, 2022 /PRNewswire/ — Cube Asia, a Singapore-based market intelligence firm for the online economy, today publishes its inaugural report on Southeast Asia’s booming social commerce market. Titled ‘Social Commerce in Southeast Asia 2022‘, the report claims that social experiences will directly influence US$42B of e-commerce sales in Southeast Asia by the end of 2022. Sponsored by Sprinklr, the unified customer experience management (Unified-CXM) platform for modern enterprises, estimates were compiled from multiple sources including online surveys with over 15,000 respondents across Singapore, Indonesia, Malaysia, Philippines, Thailand, and Vietnam. Additional sources also include web crawling to collect thousands of data points across public sources, primary research of company literature and financial reports, as well as interviews with industry experts and stakeholders.
While COVID significantly increased user time on social platforms, it has also developed longer-term opportunities in e-commerce. Instead of just passing high-quality traffic to e-commerce platforms through advertising, social platforms have matured and sought to capture a greater share of the economic value. Nearly 15% of Singapore’s e-commerce for example can be attributed to such commerce that happens on social platforms. At the same time, e-commerce platforms are also trying to introduce social features such as live shopping to make their own platforms more engaging, which is another form of social commerce that’s set to grow. These trends are making this space more complex, leading different brands to ask the same questions about social commerce, "How big is it? Is it a viable channel for our brand? Is it profitable? Which platforms can help us scale it up?"
To address these questions, Cube Asia undertook this research initiative by systematically dissecting the 4 different social elements in e-commerce that make up the social commerce market. The company also analyzed opportunity sizes for each of these elements, as well as the overlaps across them to estimate the overall Social Commerce market size in Southeast Asia. Key findings from the report are below.
1. E-commerce on social platforms to contribute US$34 billion to Southeast Asia in 2022. This is the largest contributor to social commerce and refers to any form of sales activity that occurs directly on social platforms and is influenced heavily by social aspects of human relationships such as real-time communication, authenticity, trust, and community. Although Facebook and Instagram had an early start for social platform commerce, they are now falling behind TikTok, which is now a rising star as its platform offers a number of distinctive features and solutions in this space.
Among more than 800 beauty brands from the Cube Asia Indonesia brand panel, 44% are present on TikTok Shops, where beauty is the most popular category with 63%. While the growth in brand shop fronts is certainly aided by TikTok’s strong underlying user growth, the companies’ relentless focus on delivering more engaging, social e-commerce experiences to their users is also part of the cause.
Having recognized this trend, TikTok has strengthened its e-commerce platform by offering free shipping and cashback for shopping events. They also have significantly more resources in teaching brands how to sell on its platform in comparison to Meta, with some estimates showing a ten-fold gap between the two tech giants in Southeast Asia alone. Those initiatives are pulling in buyers across the region. Nearly 30% of Singapore’s internet users surveyed by Cube Asia recently claim to have made a purchase on TikTok Shop this year.
2. Conversational Commerce directly contributes US$12 Billion in Southeast Asia, where customers select a product and pay directly on the messaging app. Conversational commerce is a ubiquitous form of social commerce that covers the entire e-commerce journey and improves customer experiences. It also provides buyers with a new way of seeking service and clarity while shopping online, thus encouraging more consumer-led transactions. This can include a customer messaging a baker to customise and buy a birthday cake for their friend on Instagram or confirming whether the product they’re looking for is in stock. Conversational commerce also indirectly transacts a much larger volume of US$50 Billion through web chat and US$200 Billion for online-to-offline transactions. This often means that customers begin with conversations over WhatsApp with store staff, after which they complete their purchases in the brick-and-mortar store.
This form of social commerce is one of the most promising and vibrant social commerce trends in Southeast Asia. Growing out of sheer organic demand from consumers, conversational commerce reached impressive penetration and usage rates despite limited platform and vendor tools. On one end of the spectrum, high luxury brands like Dior and Louis Vuitton have been using messaging apps for clienteling for years, and are now looking to embed that messaging experience into their primary user journeys. On the other hand, social micro-sellers, who were among the first to offer instant text-based purchases, are using easy-to-use plugin tools to offer e-commerce through messaging apps.
In markets such as Singapore, the digital hub of Southeast Asia, 45% of internet users are shopping on messaging apps, with conversational commerce found to be most popular among users of WhatsApp and Facebook Messenger. "The pandemic changed consumer behaviour forever, accelerating the rapid adoption of digital products and services and boosting the importance of e-commerce across Southeast Asia," said Florian Zenner, Sprinklr SVP for APAC & Japan. "As Cube Asia’s research demonstrates, conversational commerce is set to play a growing role among the region’s retailers. The most successful businesses will seize the opportunity to harness technology such as AI chatbots or voice assistance to deliver customers experiences that are convenient and personalised."
3. Live Shopping sales in Southeast Asia grows more than tenfold to US$13 Billion in 2022. 44% of internet users in the region have participated in live shopping in the last 12 months, with the most active audiences in Vietnam and Thailand where 60% of respondents have made a purchase. Singapore lags behind in comparison with only about 35% of users shopping from live streams in 2022. Movement restrictions during COVID created a demand for similar face-to-face experiences on live video streaming on Facebook, Instagram and TikTok, including real-time visual engagement and product demonstrations. Live shopping today is a fragmented ecosystem with 3 categories of live sellers across independent sellers, influencers, as well as brands and retailers; and 3 types of platforms across social media, e-commerce, and native platforms.
Live Shopping is characterized by great deals and deep discounts between 20-40%, to create a reason for users to tune in and an urgency to buy. The costs of live selling for a brand depend greatly on how it is carried out. For example, whether the transactions are closed on an e-commerce platform like Shopee that takes a cut of sales, whether a famous influencer is hired to help drive traffic, and whether tech vendors and agencies are engaged to deliver a more interactive experience.
4. Community Group Buy is currently the smallest contributor to e-commerce, with a 2-3% market share in Southeast Asia. Inspired by Pinduoduo in China and Meesho in India, many new retail startups have tried to use community or group dynamics to drive e-commerce growth in Southeast Asia. While most cities in developing markets such as Indonesia, this model has also found footing in Singapore, with messaging apps like WhatsApp helping small neighbourhood communities aggregate demand to get better prices.
Community group buy models can be broadly segmented into two types, both influenced by the dynamics of small communities or groups. The first is a Price-Led model with people who come together organically to unlock a special deal, and the second is an Agent-Led model with a reseller who provides services or value adds to the group’s members.
Community Group Buying presents a different distribution channel for brands, new ways to buy products for consumers, and a new employment option for resellers in the agent-led model. It won’t entirely upend the region’s e-commerce landscape but will remain an exciting opportunity for emerging cost-conscious brands, or existing ones looking to break into new frontier markets.
Sponsored by Sprinklr, a leading global provider of enterprise software for Unified-CXM, Cube Asia’s Social Commerce 2022 report can be accessed on cube.asia/social-commerce-report. To find out more about Cube Asia or access the full report, the press kit is available here.
About the Authors
Sarab is Cube Asia’s Chief Executive Officer and Head of Data. He is a specialist in e-commerce and digital economy with extensive strategy, operations, and new business-building experience in Southeast Asia. His past experience includes 10 years at McKinsey & Company where he was the Head of e-commerce for Southeast Asia, as well as leadership roles as a former tech startup founder and interim Chief Executive Officer of two corporate ventures. For more information about Sarab, please click here.
Simon is Cube Asia’s Head of Growth and Client Service. Prior to founding Cube Asia, Simon spent nine years in Southeast Asia’s e-commerce industry. His past roles include Southeast Asia Head of Omnichannel and Thailand Marketing & E-commerce Director for Sephora, as well as External Advisor to McKinsey & Company where he was focused on e-commerce and omnichannel retail. For more information about Simon, please click here.
About Cube Asia
A market intelligence company for the online economy, Cube Asia helps consumer brands and retail companies grow profitably online through better data and insights, including detailed market data, competitive insights, and cost benchmarks. Their mission is to lead brands, retail companies, and institutional investors to make better decisions through better data, for strategic opportunity sizing, market share assessment, P&L benchmarking, pricing, campaign planning, and channel sales forecasting. Cube Asia’s MeterCube™ subscription to be launched in Q1 2023 provides access to granular data and insights across six markets in Southeast Asia and a growing number of e-commerce channels, including social commerce channels. For more information about Cube Asia, please visit cube.asia.
Sprinklr is a leading enterprise software company for all customer-facing functions. With advanced AI, Sprinklr’s unified customer experience management (Unified-CXM) platform helps companies deliver human experiences to every customer, every time, across any modern channel. Headquartered in New York City with employees around the world, Sprinklr works with more than 1,000 of the world’s most valuable enterprises — global brands like Microsoft, P&G, Samsung and more than 50% of the Fortune 100.