By Jonathan, Unlimit Head of Sales and Partnership APAC
In recent years, Southeast Asian companies have made significant progress in expanding into Western markets. A survey by HSBC conducted in November 2023 revealed that many Southeast Asian businesses are particularly focused on broadening their supplier networks, with China often acting as a pivotal gateway to the West.
In 2023, Southeast Asia’s exports to the European Union reached 1.9 million TEUs, reflecting an 8.7% growth. This trend underscores the immense opportunities available for Southeast Asian merchants in Western markets, which have shown a growing demand for diverse products. According to Statista, the global cross-border B2C e-commerce market is expected to reach 7.9 trillion USD by 2030, indicating significant growth prospects for businesses in the region.
E-Commerce Giants Influencing the European World
The European e-commerce market is undergoing transformation, influenced by the arrival and expansion of Asian e-commerce giants like Shein, Aliexpress, and Temu. These platforms are redefining the retail industry, introducing innovative shopping experiences that reshape consumer behaviour and dictate global online shopping trends.
Shein has particularly taken the Western market by storm. It has become a go-to platform for young, fashion-conscious consumers seeking trendy items at competitive prices. According to a report, in June 2024, Shein attracted 46.9 million unique visitors in the US, with approximately 1 in 4 U.S. consumers reporting that they shopped at Shein in the past 12 months.
Similarly, Aliexpress is making a significant impact in Europe. Known for offering a wide variety of products at competitive prices, the platform has become a staple for European consumers seeking value and variety. Data from Cross-Border Commerce Europe shows that it has been reported that AliExpress has overtaken Amazon to become the largest e-commerce site in Europe.
Newer in the market but equally impactful is Temu, whose rapid growth captures attention across Europe. A study by IFH Köln indicated that while only 11% of German consumers reported purchasing from Temu in 2023, this figure is expected to rise to 32% by the end of 2024.
The growing presence of these platforms signals a broader shift in European consumer preferences towards international brands and products. They are increasingly open to exploring and embracing international brands, driven by a desire for unique styles, competitive pricing, and the influence of global trends. This expanding acceptance and demand for international products highlight a significant window of opportunity for Southeast Asia brands to penetrate further and capture the Western market.
Golden Opportunities Meet Great Challenges
With their extensive consumer base and strong purchasing power, European markets offer lucrative opportunities for Southeast Asia merchants looking to expand their reach and increase revenue. However, entering these markets comes with its own set of challenges.
One major obstacle is the lack of a local entity and, therefore a local business account. This can impede partnerships with local financial institutions necessary for secure and cost-effective cross-border transactions.
Additionally, merchants often face difficulties in establishing effective payment systems. Many Southeast Asia businesses struggle to integrate local payment methods, vital for providing Southeast Asian consumers with a seamless and inclusive experience. The diverse consumer preferences and financial regulations across countries can further complicate payment processes.
Cultural barriers also play a crucial role. For Southeast Asian (SEA) brands aiming for long-term success, understanding and adapting to Western consumer behaviour, preferences, and cultural nuances is essential. Localising marketing strategies and product offerings necessitates thorough market research and a deep understanding of regional trends.
To overcome these challenges, Southeast Asian businesses must employ card solutions and integrate local payment methods strategically. These are crucial for creating smooth transactions and enhancing the overall user experience for global customers, ultimately building a trustworthy brand image in new markets.
Additionally, it is important for SEA businesses to consider omnichannel payment strategies that encompass social commerce and mobile commerce. By ensuring that payment systems are integrated seamlessly across various platforms, businesses can provide a consistent and efficient transaction experience for consumers, whether they are shopping through social media, mobile apps, or traditional online stores.
Conclusion
Investing in cross-border solutions is not merely advantageous but essential for a strong international foothold. It is predicted that the global B2C cross-border e-commerce market will reach a value of 7.9 trillion USD by 2030, offering immense revenue opportunities for businesses willing to innovate and adapt.
To harness these opportunities, companies need to develop seamless payment solutions that align with Western consumers’ preferences. This includes integrating local payment methods and ensuring security for cross-border transactions to provide a smooth and reliable shopping experience. On top of that, by using advanced data analytics, businesses can gain insights into consumer payment behaviors and emerging trends, allowing them to customize their strategies accordingly.
With a tailored strategy that covers strong payment offerings, Southeast Asia businesses can navigate the complexities of market entry and capitalise on vast growth opportunities, establishing a sustainable global presence.
