SMEFeaturedSoutheast Asia

Here are the insights of Lazada’s first-ever ‘Digital Commerce Confidence Index’

Jean Cabico - August 5, 2021

Singapore – Despite the uncertainties of the global pandemic, more consumers continue to resort to e-commerce platforms, and with this, online sellers must cater to the surge in demand for online shopping.

To determine how confident online sellers and companies are about their businesses’ future growth, e-commerce platform Lazada has released its first-of-its-kind business confidence index for digital commerce called ‘Digital Commerce Confidence Index’.

The ‘Digital Commerce Confidence Index’ is a business sentiment survey that seeks to map out the perspectives of online sellers in Southeast Asia about the digital commerce industry while shedding light on the challenges and opportunities that lie ahead. It has surveyed 750 sellers across six markets in Southeast Asia, namely Indonesia, Philippines, Thailand, and Vietnam, as well as Malaysia, and Singapore in the first half of 2021.

The survey found that 52% of sellers experienced a high level of growth during the first half of 2021, with 70% expecting additional growth of more than 10% in the third quarter of 2021. Out of the 70%, about 33% of sellers surveyed were extremely confident that their sales volume would increase by more than 30% in the same time period. As a result, the overall index achieved an ‘optimistic’ score of 64, with 0 being ‘very pessimistic’ and 100 being ‘very optimistic’ on the spectrum.

Moreover, the same survey shows that a key driver of sellers’ positive sentiment could be attributed to significant shifts in SEA consumers’ consumption habits with greater diversification between online and offline purchases. With 47% of consumers reducing their offline purchases and 30% increasing their online spending in 2020, the pandemic has accelerated the expansion of digital commerce and made it a pivotal battleground for sellers looking to scale up their businesses. 

Meanwhile, the strong growth momentum was generally recorded across all retail categories, sellers from the electronics and fast-moving consumer goods (FMCG) categories appeared to be the biggest beneficiaries of a stay-at-home economy, with 53% reporting that their business recorded strong growth in the first half of 2021.

Magnus Ekbom, Lazada Group’s chief strategy officer, commented that they are excited to launch the Digital Commerce Confidence Index, aiming to shed more light on forward-looking indicators and sentiment among SMEs in the region.

“Many SMEs have embraced new technology and acquired digital capabilities to transform and future-proof their businesses. Despite the challenging health situation and ongoing challenges, our Index shows that sellers remain both resilient and optimistic about the future,” said Ekbom.

The survey also uncovered interesting variations in how sellers felt about the future. For example, sellers from the fashion segment made the biggest leap of faith. Even though 48% say their businesses improved in the first half of the year, 75% say that they expect business to improve in Q3 2021, and almost 40% of them anticipated that their growth would exceed 30% in the same quarter.

In addition, the survey identified sellers as key enablers of online business growth. About 52% of sellers are developing a unique and differentiated offering, while 50% are driving more user traffic, and 23% have the ability to harness data insights. 

With this, Lazada said that in a highly saturated environment, competition among online sellers no longer occurs under a simplistic framework of price wars but has evolved to take on an additional dimension where technology-driven customer engagement serves as a differentiating factor for many sellers.