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e-Commerce

Southeast Asia’s Tech Giants Face Growth Challenges Amid Market Shifts

Nicole Kristine Jovero
Last updated: July 3, 2024 2:15 am
Nicole Kristine Jovero
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  • Southeast Asia’s tech giants face steady growth but hit ceiling due to market shifts.
  • Food delivery take rates stagnate; e-commerce platforms focus on profitability amidst consolidation.
  • New entrants struggle in SEA as tech giants navigate evolving consumer preferences.

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Steady growth, but hitting a ceilingEcommerce: consolidation and profitability focus

Steady growth, but hitting a ceiling

Southeast Asia’s tech giants, such as Grab and Sea Group, are expected to maintain steady growth despite the waning Covid-led digitalization surge.

Maybank Research projects the total addressable market for e-commerce and on-demand services in the region to reach US$416 billion by 2030, growing at a compounded annual rate of 15%.

However, industry watchers caution that take rates for food delivery services may not increase due to customers’ affordability concerns and rising inflation.

Ecommerce: consolidation and profitability focus

As e-commerce platforms prioritize profitability, they are seeking higher take rates amidst market consolidation.

TikTok Shop has become less aggressive following its merger Indonesia’s Tokopedia, forming a duopoly Shopee in the Indonesian market.

Shopee has managed to keep competition under control by doubling its sales and marketing spending since last year, but the sustainability of this growth remains uncertain when spending returns to normal levels.

New entrant Temu has experienced slower expansion in Southeast Asia compared to Europe and the US. While its cash burn strategy might work in the US due to higher average order values, analysts suggest this approach may not be as effective in Southeast Asia.

The region’s tech giants face the challenge of boosting profitability while navigating market shifts and evolving consumer preferences.

To read the original article: https://www.techinasia.com/seas-tech-titans-face-revenue-ceiling

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