Many big sellers are about to explode in the new blue ocean

Outside of Europe and the United States, cross-border e-commerce companies are extending their reach into Southeast Asia.

From a global perspective, there are currently two new blue oceans for e-commerce: Latin America and Southeast Asia. For Chinese companies, Southeast Asia is geographically close to China, has cultural similarities and a high level of market maturity, and at the same time, has strong policy support.

The Southeast Asia Digital Economy Report 2024 jointly released by Google, Temasek and Bain & Company recently shows that the digital economy in Southeast Asia will grow by 15% year-on-year in 2024, reaching a total scale of US$263 billion. Among them, e-commerce is the pillar industry in Southeast Asia's digital economy, and its scale is expected to reach US$159 billion this year, a 15% increase over the previous year.

In this context, many Chinese companies are heading to Southeast Asia to seek greater development space in this new blue ocean full of potential. Zhongqiao Consulting has conducted a survey and found that 74% of Chinese companies going overseas already have business layouts in Southeast Asia. According to Adjust's "2023 Mobile Application Trend Report", 38.5% of Chinese cross-border e-commerce companies have entered the Southeast Asian market.

Many of these Chinese companies/brands that have made great progress in Southeast Asia have achieved outstanding results. Not long ago, the list of "Top 100 New Future Unicorns in Southeast Asia" released at the China-ASEAN Expo showcased a number of outstanding companies.

Since last year, domestic leading MCN agencies such as "Three Sheep Network" and "Xinxuan Group" have taken advantage of TikTok's popularity to develop overseas layouts, and their first stop is Southeast Asia.

It can be predicted that the Southeast Asian market will continue to attract more Chinese companies in the future, and at the same time, competition will become increasingly fierce.

Chinese cross-border brands are exploring new opportunities in Southeast Asia

Southeast Asia has a large young population base that is enthusiastic about new things. At the same time, the Internet and mobile device penetration rates in the region are extremely high. The two are intertwined, like fertile black soil, giving birth to unlimited vitality for the development of e-commerce.

In recent years, a large number of Chinese cross-border enterprises /brands have set up shop here and achieved rapid development. The list of "Top 100 New Southeast Asian Unicorns" is like a mirror, clearly reflecting the booming momentum of Chinese enterprises/brands in the Southeast Asian market.

The list introduces many outstanding Chinese cross-border companies /brands from six tracks, including "New Manufacturing Overseas", "Pan-Entertainment Overseas", "Digitalization Overseas", "E-commerce and Brand Retail Overseas", "Supply Chain and Financial Technology Overseas" and "Overseas Services".

This article will select five brands from the "e-commerce and brand retail overseas" track for focus.

Beauty brand YOU:

Southeast Asia is listed as a "future market" that the global cosmetics industry focuses on developing , and in recent years it has become a "hunting ground" for many domestic companies going overseas.

Y.OU is a brand under HEBE BEAUTY, incubated by Li Jie, the former CEO of OPPO Indonesia. It was launched in Indonesia at the end of 2018, and later gradually expanded to countries such as the Philippines, Malaysia, and Thailand. At the beginning of its establishment, the brand started with the cosmetics category, and then extended to the skin care category, achieving full brand category coverage.

Offline, YOU has a wide range of sales outlets, covering beauty stores, shopping malls, convenience stores and other channels. Online, it has also made layouts on Southeast Asian leading e-commerce platforms such as Lazada and Shopee.

In the process of laying out the Southeast Asian market, the brand pays great attention to online marketing, especially promotion on the TikTok platform. In early 2022, YOU took "all in TikTok" as its first-level corporate strategy. By cooperating with TikTok influencers and launching brand challenges, it successfully attracted the attention of a large number of consumers and gained a high degree of popularity on social media in Southeast Asia.

It was precisely because of this move that YOU’s monthly online GMV continued to grow at a rate of over 100% that year .

3C and trendy toy brand GravaStar:

GravaStar is a brand of Shenzhen Zhuoye Creative Co., Ltd., and its product line covers speakers, headphones, tabletop products, mobile power supplies, etc. Giving 3C products the attributes of trendy play is the key factor for it to stand out from the already dark ocean of 3C track.

The reason why GravaStar is so thoughtful about its appearance is closely related to its founder. It is reported that Huang Yong, the founder of GravaStar, has been engaged in the design industry for nearly 20 years and is one of the earliest industrial design practitioners in China.

The novel gameplay of trendy play + 3C has pushed the gross profit of its products to about 60%, which is one level higher than the vast majority of purely functional 3C products. At the same time, the repurchase rate has also reached an astonishing 20%.

GravaStar's products are mainly in the mecha sci-fi style, and the United States is one of the birthplaces of this style. Perhaps considering this factor, when it entered the overseas market, the first stop it chose was the US market.

Now that it’s on the list, it shows that its global expansion has reached Southeast Asia.

Maternal and infant brand MAKUKU:

Southeast Asia has a large population base and a high fertility rate, which leads to a strong demand for the maternal and infant market . MAKUKU entered the Southeast Asian market relatively early and has entered the Indonesian market since 2021. At that time, the local maternal and infant market was still in its early stages of development, so the initial landing speed was very fast.

However, MAKUKU's explosive growth in the later period can be attributed to TikTok. In 2022, in addition to entering traditional e-commerce platforms such as Lazada and Shopee, MAKUKU will also use TikTok as its main operating platform. In the early days, it mainly attracted user attention and participation by launching activities such as brand challenges, increasing brand awareness and boosting sales.

It is reported that from October 2022 to January 2023, MAKUKU's sales GMV on TikTok achieved a substantial growth of 500%. Not only that, TikTok's exposure has also spilled over to offline. According to its survey at the time, more than 20% of consumers who came to the store to shop said that they learned about them from the TikTok platform. After the great success of the early attempts, MAKUKU boldly explored new ways to bring goods through live streaming.

MAKUKU has opened multiple accounts on TikTok. As of November 14, the number of followers of the official account in Indonesia alone has reached 1.2 million, which shows its influence.

In the maternal and infant track, there is another brand that is also on the list, which is Hibobi. Hibobi's expansion in the Southeast Asian market also began in 2021. At present, Hibob has covered 35 countries and regions in the world, mainly concentrated in the Middle East, America, Southeast Asia and Europe. There are many online platforms that have settled in, including Amazon, AliExpress, Walmart, Meikeduo, noon, Shopee, Lazada and Tiktok.

Vetreska, a pet products brand :

In recent years, there has been a strong consumer boom for “furry babies”.

Vetreska was founded relatively early (2017). At the beginning of its establishment, the brand focused on pet snacks, and then continued to expand its product line to cover cat and dog supplies, health products and other peripheral products. It has created popular products such as soilless cat grass, cactus cat climbing frame, watermelon cat litter box, pet bubble box, etc., and is praised by the industry as a "popular product manufacturing machine."

In 2020, Vetreska began to expand overseas. During Amazon's Prime Day event that year, Vetreska made its debut and achieved sales of nearly $300,000 in a single day.

After two years of development, Vetreska took a key step in its overseas layout in 2022. This year, it established an overseas business center and brand center in Singapore, and founded a Singapore subsidiary "VETRESKA FUTURE PET FOOD", further improving its overseas business structure and laying a solid foundation for further expansion of the international market.

Over the years, Vetreska's overseas business (including Amazon flagship stores, self-built websites and other online self-operated businesses) has shown an impressive rapid development trend, with an annual growth rate of over 300%. In the key North American and Southeast Asian markets, its sales and brand influence have increased significantly.

Fashion personal care brand TYMO:

The brand's main products are hair styling tools such as hair straighteners, straightening combs, and hair dryers, and have also expanded to daily chemical products such as shampoo-free hair masks, anti-scald sprays, and shampoo-free dry hair sprays.

When it was founded in 2019, the US market was taken as the starting point. The US personal care market is huge, but the hair care track is polarized, and there is a gap in the mid-to-high-end market. TYMO accurately seized this opportunity and achieved explosive growth in revenue: in 2019, it achieved a revenue of nearly 20 million yuan, and in 2020, its revenue increased by more than 4 times.

After gaining a firm foothold in the US market, the brand began to do domestic business and gradually expanded to Asia. Currently, the brand's products are not only sold on mainstream e-commerce platforms in Southeast Asia such as Lazada and Shopee, but also in offline channels such as Watsons, Sephora, FamilyMart, and 7-11 in Southeast Asia, forming a good trend of coordinated development between online and offline.

Last year, TYMO's total revenue reached US$130 million (about RMB 942 million).

TikTok has played an important role in driving rapid revenue growth. Its founder Qi Miao said earlier that TYMO expects sales through the TikTok platform to significantly boost the company's growth this year, accounting for about 20% of the company's total revenue.

TikTok's e-commerce is developing rapidly in Southeast Asia and will further drive TYMO's revenue growth in the future.

BloomChic, a plus-size womenswear brand :

BloomChic is a fashion lifestyle DTC brand launched by Guangzhou Shenyi Information Technology Co., Ltd. It was established at the end of 2020. Its founder is Hu Zhoubin, the son of Zhou Chengjian, the founder of Metersbonwe.

Product types cover a variety of categories including dresses, tops, pants, home clothes, etc. Taking the traditional fast fashion route of low prices and large SKUs, the price range is between US$20 and US$30, which can be as low as single digits after discounts.

Similarweb data shows that in October this year, its independent website had 2.27 million global visits, of which 32.42% came from social media channels, which is relatively rare among independent website sellers. Obviously, social media is an important position for BloomChic to establish connections with users and attract traffic.

The number of plus-size people is increasing worldwide. According to statistics from The Lancet, the number of obese people in the world will reach more than 1 billion in 2022. When it comes to obese people, people tend to focus on Europe and the United States. In fact, in Southeast Asia, with the improvement of people's living standards and the change of concepts, the demand for plus-size clothing may also show an upward trend.

The Nanyang Fashion Week special released by Lazada shows that Southeast Asian women have an increasing demand for plus-size women's clothing, especially in the Thai market. The plus-size women's clothing trend has won the favor of slightly plump women with its loose fit and comfortable skin feel.

Although BloomChic's main market is still in North America, especially the US market, Southeast Asia will also be a potential gold mine for it, with huge development opportunities.

Social e-commerce is coming on strong, and domestic top MCN agencies are pouring in

According to the " 2021 Southeast Asia Digital Economy Report", there are more than 400 million Internet users in Southeast Asia, of which more than 60% are young people under the age of 30. Such a demographic structure undoubtedly provides fertile soil for the development of social e-commerce.

In terms of market size, the scale of the social e-commerce market in Southeast Asia has continued to expand in the past few years. In 2022, social e-commerce contributed approximately US$42 billion in transaction volume to the overall e-commerce market in Southeast Asia, accounting for nearly one-third. In the first half of 2021, the number of social e-commerce orders in Southeast Asia increased by 102% year-on-year, GMV increased by 91%, and the average revenue per order increased by 88%.

Some studies predict that the market share of social e-commerce will continue to increase in the next few years and may account for 60% - 80% of the total e-commerce market in Southeast Asia.

Judging from the development of social platforms, both international and local social platforms are actively contributing to the prosperity of social e-commerce in Southeast Asia.

From an external perspective, international social media such as TikTok, Facebook, Instagram, WhatsApp, and Twitter have a large number of users in Southeast Asia. These platforms have built or optimized e-commerce functions, providing merchants with advertising, store building and other services to facilitate users to shop directly on the platform.

From a local perspective, local social platforms in Southeast Asia are also developing. They understand the needs and cultural characteristics of local users better and can provide social e-commerce services that are more tailored to the local market. Some local social applications have launched e-commerce functions and cooperated with local merchants to promote the development of social e-commerce.

There is no doubt that social e-commerce in Southeast Asia is entering a golden period of vigorous development, and social e-commerce platforms represented by TikTok are a strong driving force.

According to TikTok's official data, as of mid-2023, TikTok's total number of monthly active users in Southeast Asia reached 325 million. This figure means that nearly half of the approximately 671.6 million people in Southeast Asia are active on the TikTok platform.

Different from shelf e-commerce, TikTok has created a new shopping experience by using short videos and live streaming. With the support of its massive user base, this new form of shopping has developed rapidly.

According to information released by Singapore's Momentum Works, TikTok Shop's gross merchandise volume (GMV) in the Southeast Asian market reached US$16.3 billion in 2023, nearly three times the US$4.4 billion in 2022.

In 2023, the total merchandise transaction volume of e-commerce platforms in Southeast Asia reached US$114.6 billion, of which TikTok accounted for 14.2% (if the share of Tokopedia, the largest e-commerce platform in Indonesia, which it controls, is included, TikTok's e-commerce platform will become the second largest player in the ASEAN region).

In this context, domestic top anchors and MCN agencies have also accelerated their layout in Southeast Asia. At present, "Three Sheep Network", "Xinxuan Group", "Jiao Ge Pengyou" and "Mei ONE" have all entered the market.

From the timeline, "Jiao Ge Pengyou" was the first to make arrangements. As early as 2017, it incubated overseas companies in Indonesia and began to build a Southeast Asian KOL matrix in 2018.

Xinxuan Group followed closely behind. After launching its international business expansion plan in May 2023, it conducted its first live broadcast in Thailand.

 
In July of the same year , "Three Sheep" also took Southeast Asia as a pilot for its global layout, and carried out its first live broadcast sales in Singapore in January 2024.

The latest is Li Jiaqi's company "Mei ONE". In September this year, the agency established an international development department and recruited technical and operational talents who know Indonesian.

Giants are hunting in Southeast Asia, who will be the final winner?

In 2023, Southeast Asia's e-commerce growth rate ranked first in the world, making it the fastest growing region in the world for the third consecutive year.

Southeast Asia’s e-commerce market is expected to more than double in size over the next six years to $370 billion by 2030, according to a report by U.S. tech giant Google, Singapore’s sovereign wealth fund Temasek Holdings and consultancy Bain & Company.

Based on this, many Internet giants are competing here, including the shelf e-commerce platforms Shopee and Lazada that have been rooted here for a long time, and the social e-commerce platform TikTok Shop that has just emerged in recent years. In August last year, the "volume king" TEMU also joined the battle.

Overall, the current Southeast Asian e-commerce market presents a competitive landscape of "one super and many strong".

In 2023, Shopee will lead the Southeast Asian e-commerce GMV market with a market share of 48%. The second and third places are Lazada (16%) and TikTok Shop (14%). It is worth noting that if TikTok and Tokopedia are combined, TikTok's market share will reach 28%, surpassing Lazada.

You know, TikTok only started to develop its e-commerce business in Southeast Asia in 2021. However, in just two years, it has the strength to shake up the old e-commerce platforms, and its development speed is astonishing.

In addition to these platforms, TEMU is also an extremely unstable factor. In the US market, even the giant Amazon has a hard time dealing with it, so it may also be a new "troublemaker" in Southeast Asia in the future.

Under such circumstances, how long can this "one superpower and many strong countries" competition pattern last in the future? Who will win in the new competition pattern? It is too early to draw a conclusion.

However, for some sellers who are planning to enter the Southeast Asian market, some things are certain:

1. E-commerce is moving towards entertainment. By collaborating with influencers to produce product unboxing videos, online shopping becomes more interesting, which is also one of the growth drivers of major social platforms.

Second, omnichannel sales are very important. Brands with their own e-commerce platforms also need to adopt "omnichannel" sales to increase exposure and sales, take advantage of cross-selling opportunities on the platform and conquer consumers.

Currently, the digital economy in Southeast Asia is developing well, and the macro-economy is relatively resilient. With a stable GDP growth rate and gradually normalizing inflation rate, the public's economic confidence has begun to recover, providing a solid foundation for the development of e-commerce platforms.

However, sellers entering this market also face some challenges.

On the one hand, the local payment methods involved in Southeast Asia vary greatly, and sellers need to consider security, timeliness and cost. Otherwise, they may face fund security compliance issues, high handling fees and capital turnover difficulties. On the other hand, the fraud rate has increased, and online fraud will cause losses to merchants. Third, different countries provide different local payment methods, and it is more complicated to manage multiple payment methods. Fourth, small and medium-sized enterprises in some regions lack credit and have difficulty in financing.

Southeast Asia

YOU