The recent Singles' Day shopping festival in Southeast Asia presented a paradox for online sellers. While official data showed impressive growth—with two-thirds of Lazada merchants tripling their sales in the first 12 hours and Shopee's new cross-border sellers seeing a 20-fold surge in certain categories—many merchants found the reality less glamorous than the numbers suggest.
Platform statistics continue to paint an optimistic picture. In 2020, Shopee reported that cross-border orders from overseas warehouses grew nearly fourfold, while gross merchandise value increased sixfold. During this year's 9.9 promotion campaign, Chinese beauty brand Focallure recorded nearly 100,000 orders across Shopee's platforms, with Vietnam and the Philippines accounting for 80% of sales. Other Chinese brands like Xiaomi, Roborock, and Perfect Diary have also made significant inroads in the region.
Market research firm eMarketer projects a 20.6% growth in Southeast Asia's e-commerce sales for 2022, reaching $89.67 billion. The recent expansion of TikTok Shop's cross-border operations to four Southeast Asian countries has further fueled optimism about the sector's potential.
The Other Side of the Coin
However, beneath the surface of these impressive metrics, significant challenges are emerging. Interviews with regional sellers reveal growing polarization in market sentiment following what many described as a difficult 2021.
One camp remains bullish, viewing Southeast Asia as the final e-commerce blue ocean and an ideal testing ground for new ventures. These optimistic sellers point to the region's young, tech-savvy population and believe early movers will establish lasting advantages.
Others paint a starkly different picture. They highlight several structural issues: low average order values (often under $5), rising procurement costs, and razor-thin profit margins. Infrastructure deficiencies—particularly in logistics—compound these challenges, increasing operational costs and risks. Most concerning, many sellers report the market has devolved into what they describe as a "bloody red ocean" of cutthroat competition.
Systemic Challenges
The pressure to engage in predatory pricing has become particularly acute. To attract price-sensitive consumers, many sellers have sacrificed profitability, triggering a race to the bottom that threatens the sector's long-term health.
Cultural and regulatory complexity presents another hurdle. The region's linguistic diversity, varying consumer preferences, and disparate legal frameworks require substantial localization efforts—from product adaptation to marketing strategies—that strain resources, particularly for smaller merchants.
As the market matures, success will increasingly depend on sophisticated market entry strategies rather than brute-force discounting. Sellers who fail to recognize this shift risk becoming casualties of Southeast Asia's e-commerce gold rush.