The COVID-19 pandemic has affected Southeast Asian economies that are traditionally highly dependent on industries such as exports and tourism. Meanwhile, cross-border e-commerce platforms with Chinese background continue to gain foothold in these markets amid the pandemic.
Shopee and Lazada, the largest online retailer duo in the region, announced their eye-catching order volume increase on November 11, commonly referred to as the Singles Day, a shopping festival created by Chinese e-commerce behemoth Alibaba, making it not only an all-time favorite for Chinese online shoppers, but also increasingly celebrated in Southeast Asia.
Shopee has set a new record this year with 200 million items sold within 24 hours, the Singapore-headquartered company announced last Thursday, a significant increase compared to last year's 70 million items sold.
Lazada, an Alibaba subsidiary, albeit not giving a finite number on sales volume, also said that it saw records being broken on the platform during Singles' Day. James Chang, CEO of the company's Singapore division, told CNBC that "we had 40 million customers come into our app and more than 400,000 sellers transacting that day." The company also claimed that it only took 35 minutes to achieve the same sales volume that took 2 hours last year. Participating brands and sellers also tripled.
It's worth noting that neither of both companies disclosed their gross merchandise volume. Given public information that's available, Shopee, operated by NYSE-listed Sea Group, appears to have presented a better result than its arch-rival in the region.
To continue racking up record-breaking sales, e-retailers have to look beyond surface-level engagement with consumers. Both Shopee and Lazada incorporated interactive features such as livestreaming, as well as social games , in their mobile shopping apps to retain users on the platform and keep them engaged.
Inspired by their Chinese peers like Alibaba, the two regional e-commerce giants also live stream shopping festival galas on their platforms, inviting celebrities to perform and internet influencers alike to promote sales. For example, Shopee reported an accumulated 20 million-plus hours of livestreams watched on Shopee Live, while in-app games were played more than 2.5 billion times.
Cross-border sellers on these platforms, many from China, witnessed phenomenal sales growth on Singles Day, which has been a nice confidence boost compared to the stagnant situation during the past few months due to the coronavirus pandemic
"The shopping festival has greatly aroused consumers' desire, the order volume of my store is nearly twice that of the same day last year," Sam, an apparel seller on Shopee who mainly targets Thailand, told Pingwest, "but before the event, my sales were worse than in the same period last year. Previously, due to the pandemic outbreak in Southeast Asia, people have to stay at home, and their demand for clothing shrunk." Another cross-border seller, who sells household goods to Filipino consumers, said that the sales on Singles' Day beat the usual monthly order volume.
Cross-border e-commerce is going big in China due to the effective control of the pandemic and the rapid recovery of the manufacturing industry. While the overall foreign trade in China only gained 0.7% in the first three quarters compared to last year, data from China's General Administration of Customs showed that import and export through its cross-border e-commerce management platform reached 187.39 billion yuan ($28.30 billion), an actual annual increase of 52.8%.
"The success of 11/11 Big Sale reflects the continued growth of e-commerce in the (Southeast Asia) region and the many opportunities it presents for businesses and shoppers," said Shopee CEO Chris Feng in an official statement.
COVID-19 has accelerated the penetration of e-commerce in Southeast Asia. "There was a spike in online spending in response to COVID-19, with over half of those surveyed (59%) now spending more online. Total online spending for the average SEA consumer increased by almost a third (32%)," Blackbox Research and Toluna wrote in their report. Internet economy in the region, mainly driven by online shopping, is predicted to be worth $300 billion by 2025, according to Google and Temasek's research.
"This market is still at a fast-growing stage," Zhou Junjie, Chief Commercial Officer at Shopee, told CNBC in an interview before Singles Day. "If you look at online retail (portion) of the overall retail space, it's still a very, very small percentage. But, at the same time, it's growing much faster compared to traditional offline retail."
The competition will keep heating up in the region as e-commerce players try to outdo each other to gain market share. By leveraging Chinese manufacturing, Lazada and Shopee, which have branches in China, have gained first-mover advantages. Meanwhile, local e-tailers are also looking for opportunities.
Eventually, it is those players with robust financial resources who will stay and likely prosper.