Blue Ocean Southeast Asia E-commerce... Naver Rides on Cafe24

[Asia Economy Reporter Yuri Kim] The distribution industry is rushing to enter the Southeast Asian e-commerce market. As the global e-commerce market rapidly grows, the Southeast Asian region is expected to continue recording explosive growth rates. Naver and Cafe24, which have formed a strategic alliance by exchanging shares, are also expected to focus on targeting the Southeast Asian market within the global e-commerce sector.

◆Naver + Cafe24 Target Global E-commerce

On the 11th, Naver exchanged shares worth 130 billion KRW with Cafe24 to expand their presence in the global e-commerce market. Naver has established itself as a content powerhouse through 'LINE Webtoon,' which ranks first in webtoon platform sales in Indonesia and Thailand, and the messenger service 'LINE,' which has 81 million users in Southeast Asia. Cafe24 leads the global e-commerce market by linking services with Southeast Asia’s two major e-commerce companies, Shopee and Lazada. The partnership between the two companies is expected to actively target the Southeast Asian e-commerce market.

According to Bain & Company, the Southeast Asian e-commerce market grew more than tenfold from $6 billion in 2015 to $62 billion last year. It is projected to grow to $172 billion by 2025. The expected annual growth rate is up to 35%. Southeast Asia has a population of approximately 660 million, making it the third-largest market after China and India. However, online shopping transactions account for only 5% of the total distribution market, and with half the population under 30 years old, there is significant growth potential.

◆Rapid Growth of Shopee and Lazada

Shopee, headquartered in Singapore and operating in six Southeast Asian countries as well as Taiwan and Brazil (eight countries in total), announced that total orders in the first quarter of this year reached 1.1 billion, a 153% increase compared to the same period last year. Transaction volume rose 103% to $12.6 billion. This growth rate is faster than last year’s, when total orders reached 2.8 billion and transaction volume $35.4 billion. As of 2020, cumulative app downloads exceeded 200 million, and there are about 10 million sellers on the platform. The number of Korean sellers also increased fivefold compared to the previous year.

Lazada is also rapidly growing by offering specialized delivery services tailored to the island-rich Southeast Asian market through its own logistics services. Lazada is used by over 100 million people annually across six Southeast Asian countries including Singapore, Vietnam, Thailand, and the Philippines. Since being acquired by Alibaba Group in 2016, it has maintained triple-digit growth rates every year.

◆Domestic Companies Rush to Enter Shopee and Lazada

Shinsegae Group’s online mall SSG.com has entered Shopee as a seller, selling over 6,000 Korean products in Taiwan, Malaysia, Singapore, and other markets. The number of products sold doubled from about 3,000 last year within one year. Ninety percent of the products are food items such as snacks, ramen, and home meal replacements (HMR), with the remainder being non-food items like masks, hand sanitizers, and mouthwash. SSG.com’s product sales increased by 234% from January to July this year compared to the same period last year, and the number of orders increased sixfold. The goal is to expand to 10,000 products by the end of the year. Entry into the Philippine market is also being considered within the year.

CJ Olive Young opened an 'Olive Young Pavilion' on Lazada this month following its entry into Shopee earlier this year, selling private brand (PB) products. In October last year, Aekyung Industrial launched its representative cosmetic brands 'Age 20’s' and 'LUNA.' Amorepacific’s tea brand O’Sulloc entered Shopee in Singapore and Taiwan earlier this year, achieving 110 times sales growth in seven months. Samsung Electronics, LG Electronics, CheongKwanJang (Donginbi), Dr. Jart, and Lock&Lock are cooperating with Lazada to enter the local market. Live commerce leveraging the Korean Wave is also active. Since March, Shinsegae Duty Free has been conducting live commerce on Shopee with five famous influencers introducing and selling K-brands.

◆SMEs and Local Governments Also Head to Southeast Asia

It is also a good opportunity for small and medium-sized enterprises (SMEs). The streetwear brand 'Covernat' established itself as a leading K-fashion brand in Taiwan after entering Shopee Taiwan. Korean beauty reseller brands such as The Ordinary and Nature Republic saw sales on Shopee increase fivefold last year compared to the previous year.

The government and local governments are also utilizing Southeast Asian e-commerce platforms to expand overseas market entry for SMEs. The Ministry of SMEs and Startups, the Foundation for Cooperation between Large, Small, and Medium Enterprises and Agriculture, Forestry and Fisheries, and CJ ENM collaborated to hold the Shopee Korean Brand Exhibition 'K-Collection,' where 50 domestic SMEs participated and recorded sales of 1 billion KRW. The government also led the opening of a 'Korean Food Pavilion' in famous overseas online malls including Southeast Asia and conducted joint marketing for 'K-Food.'

An e-commerce industry official said, "The Southeast Asian e-commerce market has great growth potential, and the perception of Korean products is positive, so domestic companies see it as a blue ocean compared to China. The entry of domestic companies into Southeast Asian e-commerce will accelerate in various forms in the future."

This content was produced with the assistance of AI translation services.