Cross-Border eCommerce: How to Win in Southeast Asia

With eCommerce sales in Asia Pacific seen nearly doubling by 2025 – the highest retail growth rate of any region – the stage is set for brands to start going beyond their local shores to tap into a buzzy US$2 trillion marketplace.

That the international market is the next frontier is a given. And yet, the tailwinds for Southeast Asian brands to venture out have never been stronger: internet connectivity is at an all-time high and rising exponentially alongside cross-border eCommerce traffic, even as online sales channels and the range of digitally-tradeable products grow in strength and number. Southeast Asia’s internet economy remains on track to surpass US$300 billion by 2025. And a DHL report said merchants boosted sales by 10% to 15% via international customers, which means those staying on the sidelines are missing out on a lucrative opportunity.

But given its origins as a digital-native product, the cross-border eCommerce shopfront of today bears little resemblance to the export-import trading shop of old. That means brands and marketers need to be aware of both the opportunities and pitfalls unique to this sales channel. In the following sections, ADA’s eCommerce Enablement experts provide a framework for succeeding in cross-border eCommerce.

Poised for Growth

Southeast Asia especially is setting up to be rich hunting grounds for SMEs and retailers hoping to launch brands for the cross-border market. A report from Mordor Intelligence said cross-border eCommerce already accounted for over 40% of total eCommerce sales in the region.

Lazada and Shopee are two big reasons for this phenomenon. Their platforms facilitate cross-border sales in Southeast Asia as both cover the six major regions – Singapore, Malaysia, Thailand, Philippines, Vietnam, and Indonesia. Each of these countries in turn shows huge potential for growth in eCommerce.

Luxasia key growth drivers ecommerce platforms
Source: Luxasia

Collectively, the region is reaping the rewards of a large, increasingly urban, and young working-age population eager to keep up with the latest trends they see on TikTok or Instagram by buying foreign goods. Indonesia, unsurprisingly, will be the biggest market with GMV touching U$82 billion by 2025. Vietnam is seen leaping from US$400 million to a mammoth US$23 billion. Thailand is predicted to hit US$18 billion, and the Philippines US$12 billion. In Singapore, 55% of all online transactions is expected to come from cross-border orders.

SEA ecommerce GMV
Source: The Asean Post

Above all, the positive response from shoppers to cross-border sales comes down to a single factor: product availability. By offering foreign products from more mature eCommerce markets like Japan and South Korea, merchants give Southeast Asian shoppers access to coveted goods that are unavailable in their home markets.

Lower Operational Cost

Whilst demand continues to grow for cross-border eCommerce in Southeast Asia, the market still lags behind regions such as China and the Middle East, where 70% of shoppers are likely to shop for cross-border products. What makes Southeast Asia attractive to merchants, however, are the low set-up and operational costs.

Vis-a-vis more developed markets such as China, Japan, and the US, eCommerce is still a nascent industry in Southeast Asia. Furthermore, competition is minimal and fees are significantly lower. Take the price of entry to popular eCommerce marketplaces as an example. Lazada’s sales commission is around 1% to 4% and transaction fees typically range from 1% to 2%. Shopee claims to charge commissions of 1% to 2% and transaction fees of around 1.5%. Outside of the big two, there are local marketplaces such as Tiki and Sendo in Vietnam, Bukalapak and Tokopedia in Indonesia, and Qoo10 in Singapore.

A picture of ecommerce platforms

For brands looking to enter new overseas markets that combine strong potential for growth, low competition, and affordable fees, the Southeast Asian market should be their first port of call.

Beware of Local Competition

Nonetheless, each new market presents unique challenges due to the local context and market situation. It’s crucial for brands to identify, assess, and respond to these challenges before taking the plunge into cross-border eCommerce. Local competition can be a high barrier to entry and can make it difficult for international brands to penetrate and build momentum. Likewise, logistics and cost hurdles vary from country to country. Each market has its own tax regulations and customs procedures, which may cause high variability in service levels and pricing.

As eCommerce shoppers are known to be price-sensitive, cost will be one of the most important considerations for any cross-border business model. Brands need to spend time researching, strategising, and working out their return on investment before launching a store, product or campaign. Scalability, along with the lack of digital infrastructure and automation, present additional issues. In Southeast Asia, many business processes are still conducted manually and involve human intervention.

Challenges faced in cross-border ecommerce platforms
Source: Luxasia

Meanwhile, last-mile fulfilment continues to be a challenge in rural areas. For island nations such as the Philippines and Indonesia where only 50% of the population lives in cities, additional costs for shipping and fulfilment to remote regions can be expected. Payment methods across the region also vary widely. While payment options such ATM transfer, credit and debit card payments, and over-the-counter are typically available in most countries, the bulk of shoppers still default to cash-on-delivery likely due to factors including weak digital payments infrastructure and high cash use. Secure payments are also far from uniform.

When in Rome

In a cross-border eCommerce setting, brands need to take a customised approach and make sure they are aligned with the preferences of the local market. Language should be the first consideration. Brands can minimise the language barrier through a mix of human and machine translation. Cultural sensitivity is key: some activities may be inappropriate in the local context, and ignorance towards using the proper cultural translations – especially during big and highly visible campaigns – can lead to unwanted consequences.

But localisation is hard work. Marketers will have to redesign online assets and reassess their campaigns and marketing plans, or even rethink the customer journey. 

Paradigm Shift 

The growth of cross-border eCommerce in Southeast Asia is a mega-trend brands can leverage on for years to come. While technology and infrastructure play a vital factor in making cross-border sales more efficient, they are not enough. A paradigm shift in mindset, conceptualising, and execution are the backbone of a successful cross-border eCommerce operation.


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Sherry Tan

Regional Head of eCommerce

Sherry Tan

Sherry has extensive experience in retail, having spent an equal amount of time split between online and offline. She was the Head of Tesco MY private labels and the pioneer in launching Tesco Grocery Online. Prior to joining ADA, Sherry was the Chief Business Officer of Lazada Malaysia, responsible for the growth of Lazmall as well as managing multiple categories, namely FMCG and Mobile. When not focusing on campaigns and continuously crunching numbers, Sherry enjoys travelling and is fully in belief that retail therapy reliefs all manner of stress.