E-Commerce in the New Normal

By CARI | 5 June 2020


CARI Analysis: E-Commerce in the New Normal

Author: Imran Said Shamsunahar | Research Editor: Eleen Ooi Yi Ling
Webmaster: Nor Amirah Mohd Aminuddin | Research Director: Hong Jukhee

‘CARI Analysis: E-Commerce in the New Normal’ looks at ASEAN’s e-Commerce industry in light of the changes in lifestyles and business operations forced upon by COVID-19. We look at how consumer spending habits have shifted in these new uncertain times, whether these will continue post-lockdowns, as well as the challenges the industry faces. Finally, we discuss what role policymakers can play in facilitating the growth of e-Commerce.

(This article contains 12 charts and best viewed on a desktop or horizontally on your mobile.)


a) Government use of shelter-in-place policies around the world to arrest the spread of COVID-19 in early 2020 saw a further surge towards digitalization by businesses and consumers, with global digital revenue seeing 41% growth in the final 15 days of Q1 2020.
b) Prior to the COVID-19 pandemic, the e-Commerce sector was predicted to be the fastest growing sector within ASEAN’s Internet economy, with 39% projected growth between 2015 and 2025.
c) Consumer spending habits have changed due to the pandemic, with online consumers prioritising spending on essentials like groceries over discretionary items.
d) Consumer preference for online shopping over interacting with physical stores will continue post-lockdowns.
e) The success of individual e-Commerce platforms will be dependent on several factors, including shifts in consumer demands from essential over to discretionary goods, the stronger fundamentals and readiness of larger corporations as compared to smaller businesses in dealing with supply chain disruptions, health and safety in the workplace, and protection of consumer privacy.
f) Among the government measures which could help further develop the e-Commerce industry include i) connecting businesses and consumers to the digital economy, ii) keeping workers and consumers safe, and iii) ensuring that e-commerce can continue to operate during travel restrictions.

1) E-Commerce has seen a surge due to government lockdowns

As governments’ shelter-in-place policies were being implemented around the world to arrest the spread of COVID-19, many economies saw a surge towards digitalization under the ‘new normal’ as businesses leveraged on e-Commerce platforms in order to continue reaching their markets. According to the Salesforce Q1 Shopping Index, 1 which analyzes data from more than one billion global shoppers worldwide in more than 34 countries, the first quarter of 2020 saw a dramatic surge of digital channels usage.

Among the highlights of Q1 2020 as compared to Q1 2019 included:2

  • 20% growth in global digital revenue quarter-by-quarter (compared to 12% growth in Q1 2019) (see Figure 1);
  • Increase of 16% in global digital traffic;
  • 4% increase in global shopper expenditure (reflects average amount spent by shoppers per visit).

Indeed, the final 15 days of Q1 2020 saw a 41% spike in digital revenue globally. This correlated fairly well with the increasing number of total reported COVID-19 cases worldwide during the same period (see Figure 2).3

2) ASEAN e-Commerce – fastest growing Internet economy sector pre-pandemic

2a. Growth of ASEAN e-Commerce builds upon pre-pandemic expansion

The ongoing growth of the Southeast Asian e-Commerce industry builds upon the previous expansion of online marketplaces where small and medium enterprises (SMEs) sold their goods directly to consumers. Top players in this industry such as Lazada, Shopee, and Tokopedia had spearheaded this growth prior to the outbreak of COVID-19 by providing scalable, readily-accessible platforms where smaller retail players could transact online and reach new consumers within and beyond Southeast Asia.

2b. Pre-pandemic e-Commerce economy projected to grow by 39% between 2015 and 2025

In 2015 e-Commerce accounted for less than 1% of total retail sales in ASEAN, as compared to the rates of 6-8% in Europe, China, and the United States.4 Despite this, by 2019 e-Commerce had become the largest sector of ASEAN’s Internet economy by gross merchandise value (GMV), jumping from US$5.5 billion in 2015 to over US$38 billion.5 In the same year it was projected to be the fastest growing sector within Southeast Asia’s Internet economy with 39% growth between 2015 and 2025 (see Figure 3).6

2c. Online ASEAN consumers have shifted from buying big ticket items to everyday goods

The growth of e-Commerce in ASEAN coincided with shifts in consumer purchasing behavior. Consumers had shifted from buying big-ticket items to buying everyday goods such as groceries and beauty products, with the average order value (AOV), or how much an ASEAN consumer spends for each order, having fallen to between US$15 and US$20 (a quarter of the AOV in developed markets).7

2d. E-Commerce platforms turning to monetising their supplier network by providing value added services

Given the wide variety of goods that consumers can now purchase from the online marketplace, e-Commerce platforms have sought to add value to consumers by focusing on the supply side to ensure that their platforms are stacked with good quality products and original brands from reliable sellers.8

To ensure profitability, e-Commerce companies have also been turning towards supply-side monetization to sustain growth, such as by charging marketplace sellers for value-added services, marketing, logistics, and inventory management.9

3) Consumers spending have shifted from discretionary to essential goods

3a. Global online spending on essential goods surged by 200% in ten days in March 2020

Consumer spending patterns across categories have shifted dramatically, with consumers preferring essentials over discretionary items. Salesforce found that spending on essential goods via digital channels surged by a massive 200% between March 10-20, and remained elevated for the remaining quarter.10

3b. Spike in US grocery-related online expenditure in second week of March 2020

Data from Rakuten Intelligence found a dramatic spike in daily American grocery-related e-commerce expenditure within the second week of March 2020, when lockdown measures were starting to be implemented across different states. In comparison, daily e-commerce spending only saw a mild increase within the same time period (see Figure 4). 11

3c. Prioritization of groceries over luxury goods to continue in next six to nine months

This is expected to continue over the next six to nine months, according to an April 2020 survey of 11,000 consumers around the world12 carried out by the Capgemini Research Institute:13

  • The survey found that only 19% of respondents projected a reduction in their grocery spending in the next six to nine months, while 35% anticipated increased spending (see Figure 5);
  • In terms of luxury items, 57% of respondents projected a reduction in their expenditure while only 20% expected an increase (see Figure 5).

4. Consumer preference for online shopping will continue post-lockdowns

4a. Only 39% of global shoppers to frequent physical stores over next six to nine months

With more urban areas under lockdown and customers avoiding public places in general for health reasons, the April 2020 study by Capgemini found that 59% of consumers worldwide said they had high levels of interaction with physical stores prior to the outbreak of COVID-19, while during the current scenario only 24% did so. In the next 6-9 months, 39% of consumers expected a high level of interaction with physical stores (see Figure 6).14

4b. 40% of global shoppers to frequent online retail channels over next six to nine months

Concurrently, before COVID-19 only 30% of consumers had high interactions with online retail channels. A further 40% expected high interactions with online retail channels in the preceding 6-9 months (see Figure 7).15

5) Malaysian e-Commerce platforms and businesses adapted to the new norm through different marketing initiatives

Cloud-based, software as a service (SaaS) platform Adqlo conducted an analysis of the ad content and strategy of major e-Commerce platforms in Malaysia between 18 March and 17 April.16 They found that different platforms had different marketing approaches in response to the new normal established by COVID-19: 17

  • 5a. Shopee
    Shoppee strategized its advertising content based on current trends and consumer needs. In response to shifts towards essential goods by online consumers, Shopee introduced promotions like RM1 deals on groceries, fashion, and kitchen appliances as well as focusing their advertisements on these offers to capture the attention of consumers. The platform focused 17% of their advertising alone on the RM1 Deals promotion (see Figure 8).

  • 5b. Lazada
    Lazada for their part introduced a business stimulus package (Pakej Kedai Pintar) to support e-commerce entrepreneurs and SMEs. About 50% of their ad sets promoted its business stimulus package which entitled sellers to customised benefits such as free shipping services and access to micro loan facilities (see Figure 9).

  • 5c. Sephora
    For Sephora it was still business-as-usual during Malaysia’s Movement Control Order (MCO), as it leveraged upon the popularity of big brands to target consumers. 60% of their ad content focused on product highlights (see Figure 10).

6) Success of e-Commerce platforms dependent on several factors

While e-Commerce certainly presents new opportunities for many small-and-medium businesses to continue to reach their markets in a time of social distancing and restrictions of movements, it should be noted that the ultimate growth of the sector will be uneven. The ultimate success or failure of individual e-Commerce platforms will be dependent on several factors, including:18

    • 6a. E-Commerce platforms which focus on essential goods to benefit more:
      COVID-19 and the lockdowns have caused changes in consumer behavior, with consumers now prioritizing purchasing essential goods such as foodstuff and health-related products over discretionary goods such as luxury items or travel goods.Data from e-commerce aggregator iPrice Group and analytics company SimilarWeb noted that three of the four major Vietnamese e-Commerce platforms actually experienced drops in website traffic in the first quarter of 2020, with only Shopee Vietnam seeing their website traffic increase year-on-year (see Figure 11).19

      This surprising drop was attributed in part to shifts in consumer purchasing behavior. By March 2020, when most consumers stayed at home to avoid catching the virus, online grocery and healthcare product retailers saw quarter-on-quarter growth of 45% and 32% respectively in web traffic, while fashion retailers saw drops of -38% and smart device retailers saw growth of only 4% within the same period (see Figure 12).20

      Unfortunately most Vietnamese e-Commerce platforms at the time had tended to focus more on discretionary goods such as smart devices and fashion instead of online groceries and pharmaceuticals.21

    • 6b. Larger online retailers better suited to deal with supply chain disruptions:
      Large online retailers have been better suited to dealing with supply chain disruptions in comparison to smaller businesses due to stronger business fundamentals. That said, even e-Commerce giant Amazon had to announce that due to a spike in consumer demand it would have to either have to delay or flat out not entertain the delivery of non-essential items.22

    • 6c. Increasing importance of health and safety standards in the workplace:
      With companies now facing greater demand, this has put greater strain on these companies’ workforce in terms of necessary health and safety standards being implemented in package fulfillment facilities.

  • 6d. Increasing importance of protecting consumers’ privacy:
    Consumers and businesses will also have to focus more on cybersecurity threats as they increasingly rely on the Internet and digital services.

    According to a December 2019 edition of CyberSense, a monthly bulletin published by Singapore’s Cyber Security Agency (CSA), e-commerce platforms have become valuable targets for hackers since they hold large amounts of consumer credit card details and personal information.23

    Singapore’s CSA noted that from a business perspective, not having secure platforms poses reputational risks by coming across to consumers as not taking customer privacy seriously. Among the new risks for e-Commerce platforms include hackers targeting third party software companies that provide services to these e-Commerce companies, as well as the rise of ‘bad bots’ and malicious advertising.24

7) Government support essential in helping businesses harness e-Commerce in the new normal

As the world starts to adjust to a new normal of social distancing and more possible lockdowns, Christoph Ungerer and Alberto Portugal from the US-based think tank Brookings Institution argued that policymakers can adopt a variety of policy tools to help businesses and households harness the opportunities presented by e-Commerce:25

    • 7a. Governments can make it easier for businesses and households to connect to the digital economy:
      • Legal frameworks surrounding online remote service delivery can be clarified and, where appropriate, relaxed. The United States, for example, adjusted their Medicare program to pay for telehealth services on the same basis as in-person visits to the doctors, in light of the new difficulties in accessing medical attention in light of restricted movements across the country.
      • The government can also help people overcome informational barriers concerning how to properly leverage digital sources to meet day-to-day needs. For instance, the Italian government established a website listing free online services offered by companies during the crisis.26

    • 7b. Governments can help ensure that e-commerce remains safe amid the epidemic:
      • A COVID-19 Special Operating Procedures (SOP) for e-commerce companies and delivery services can help ensure health and safety standards that all businesses need to maintain to avoid becoming virus spreaders.
      • Governments will also need to educate customers about how to stay safe when shopping online, with consumer protection agencies having to redouble their efforts to ensure the protection of consumers and the maintenance of quality standards in e-commerce security, consumer protection and logistics.
      • Governments should also work with financial institutions to encourage greater adoption of contactless payment systems.

  • 7c. Governments need to ensure that e-commerce can continue to operate during lockdowns and restricted movements:
    • The e-commerce and delivery services can be granted priority access to rationed COVID-19 testing kits and protective gear, as well as a vaccine once ready. Simple and workable mechanisms should also be put into place to allow delivery services to continue to operate during travel restrictions.
    • Maintaining the operation of, as well as expanding upon vital public infrastructure services such as the postal services as well as mobile and internet networks (particularly in more rural areas).

8. Conclusion

8a. COVID-19 has expedited the Fourth Industrial Revolution

The dramatic changes in lifestyle caused by COVID-19 and the surge towards digitalization has forced businesses and consumers within ASEAN to devise new ways of interacting with each other under the so-called ‘new normal’. This has been in line with global trends, as government shelter-in-place policies and newfound concerns over public health worldwide has expedited the trend towards digitalization across almost all facets of lifestyle. This is part of what has been commonly referred to as the Fourth Industrial Revolution.

8b. ASEAN has high potential, but growth of e-Commerce industry to be uneven

ASEAN, with its relatively high growth rates, expanding middle classes, and high mobile internet penetration, will no doubt play a key role in facilitating this revolution, including in the burgeoning e-Commerce industry. Platforms such as Lazada Group, Shopee, Tokopedia and Bukalapak have become household names in the US$38 billion regional industry. While there is undoubtedly much potential for the sector, it is important to note that its growth will be uneven. The success of e-Commerce platforms will depend on factors such as the rapidly changing purchasing behaviors by online consumers, the uneven playing field between big businesses and small-and-medium enterprises, health and safety issues in the workplace, and consumer privacy concerns.

8c. ASEAN policymakers have a role to play in leveraging e-Commerce for business continuity

It will be advisable for ASEAN policymakers to keep their ears to the ground to ensure e-Commerce can be properly leveraged in the fight to maintain business continuity. They could provide support through various ways such as helping businesses and consumers connect through legal and informational means, focusing on workplace safety and consumer protection, and finally facilitating e-Commerce operations during a time of restricted movements and closed borders.


1 Salesforce Q1 Shopping Index.
2 Ibid.
3 Ibid.
4 Temasek & Google, ‘SEA Internet Economy Report 2019‘, October 2019.
5 Ibid.
6 Ibid.
7 Ibid.
8 Ibid.
9 Ibid.
10 Salesforce Q1 Shopping Index.
11 Rakuten Intelligence, ‘The New Consumer Executive Briefing’, March 2020, as found on Why Is This Interesting?, ‘The Online Grocery Edition: On Delivery, Groceries, and the E-Commerce Surge‘, March 2020.
12 The survey reached out to consumers in US, UK, Germany, France, the Netherlands, Sweden, Norway, Italy, Spain, India, and China.
13 Capgemini Research Institute, ‘The consumer and COVID-19: Global consumer sentiment research in the consumer products and retail industry‘, April 2020. Available at Brochure Potrait.
14 Capgemini Research Institute, ‘Global consumer sentiment research in the consumer products and retail industry’, April 2020.
15 Ibid.
16 Adqlo, ‘Life After COVID-19: How the Retail Industry is Forever Changed‘, May 10, 2020.
17 Ibid.
18 Malay Mail, ‘No easy roads to take even for e-commerce amid Covid-19 — Moonyati Yatid and Ryan Chua‘, May 2020.
19 SimilarWeb and iPrice Group, ‘Vietnamese Map of E-Commerce for Quarter 1, 2020‘, May 2020.
20 Ibid.
21 Marketing in Asia, ‘Vietnamese E-commerce Industry In The Time Of Covid-19: Missed Opportunities’, April 2020.
22 Visual Capitalist, ‘The Pandemic Economy: What are Shoppers Buying Online During COVID-19?’, April 2020.
23 CyberSense, ‘E-Commerce Security’, December 2019.
24 Ibid.
25 Brookings, ‘Leveraging e-commerce in the fight against COVID-19‘, April 2020.
26 Minister for Technological Innovation and Digitization of Italy, ‘Digital Solidarity‘.

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