Shop till they drop: E-commerce platforms fight for share of maturing South-east Asian market

[SINGAPORE] The early e-commerce experience was all about discounts and subsidies.

But, as the sector matures, e-commerce platforms in South-east Asia are no longer competing on price for market share.

While price remains a critical factor, the landscape has shifted towards “competing on engagement and content”, says Willy Chang, a partner at Bain.

Social and live commerce, as well as artificial intelligence, are reshaping how consumers find and decide on purchases, he adds.

The e-commerce market is currently dominated by three key players, Shopee, TikTok Shop and Lazada. Together, they control about 98.8 per cent of the market in South-east Asia, based on a report by consultancy Momentum Works.

Shopee is in pole position with a market share of 53 per cent. The dominance of these three international players means single country e-commerce platforms are struggling to compete, the report noted.

GoTo, the parent company of Indonesia-based e-commerce platform Tokopedia, has felt the effects of competition on its share price – which fell by some 74.6 per cent since listing in April 2022 until December 2023, when it announced that TikTok Shop would acquire a controlling stake in Tokopedia.

That’s as new challengers are eyeing the region as well.

For instance, Chinese e-commerce platform Pinduoduo has made a concerted effort to enter Singapore, with ads and discounts for new customers in the city-state.

Broadly, industry growth has not slowed.

The gross merchandise value (GMV) of e-commerce platforms in South-east Asia hit US$157.6 billion in 2025, a 22.8 per cent increase from 2024, according to Momentum Works. Regional e-commerce GMV now stands at close to three times the value in 2020.

Shopee vice-president Ian Ho says: “There continues to be considerable room for growth – from expanding adoption among under-penetrated consumer segments to giving existing shoppers more reasons to turn to e-commerce by providing a wider range of daily goods.”

Rising expectations

South-east Asia is a highly diverse region with different levels of economic and infrastructure development, as well as different cultures and consumer behaviour.

For instance, the average order value for TikTok Shop in Indonesia is US$7.20 – the lowest spending in South-east Asia, where the regional average is US$8.10 – while the average order value in the affluent Singapore market is US$20.

Understanding individual markets is thus a key challenge for operating in this region.

“Organisations that can combine regional scale with local relevance will be better positioned to grow a loyal customer base,” says James Wilson, head of consumer and retail at KPMG Singapore.

A mature market also brings its own challenges. Now that consumers across the region have experienced e-commerce, expectations are rising.

Notably, fast delivery is now taken as a baseline rather than a premium service, says Wilson.

Some 74 per cent of Singapore consumers prefer sellers offering fast, reliable and cost-effective delivery, according to a recent report from market research firm Milieu.

Delivery has thus been a key point for e-commerce platforms, with Lazada and Shopee’s parent Sea eventually setting up their own logistics fleets to handle some orders. (* See amendment note)

Shopee launched SPX Express in 2018, as part of recognising the need for reliable and cost effective delivery, Sea CEO Forrest Li said during the Shopee parent company’s Q3 2025 earnings call.

The logistics service has become a differentiator for Shopee, allowing it to compete with instant and same-day delivery for some products and markets. In Indonesia, order volumes using instant delivery grew by about 80 per cent year on year in Q2 2026.

“Over time, we hope to make same-day delivery increasingly accessible for everyday purchases, as that level of immediacy meaningfully changes the consumer experience,” says Shopee’s Ho.

Meanwhile, Lazada merged its delivery arm Lazada Express and its fulfilment and third-party logistics manager Lazada eLogistics into Lazada Logistics in August 2021.

That year, 85 per cent of first-mile parcels – when packages move from the seller’s premises to a transport hub – were handled at Lazada’s facilities.

“Meeting those expectations requires continuous investment across technology, logistics and marketplace governance,” says a Lazada spokesperson.

These investments can drive long-term growth, as consumers who have confidence in the platform will shop more frequently, buy more and be willing to engage with new services, the spokesperson added.

But Chang from Bain notes: “What were once differentiators now puts ongoing pressure on platforms to keep investing in fulfillment, and has led to increasing capex on logistics.”

Sea spent about US$1 billion in 2022 to develop its logistics business, after experiencing delivery bottlenecks during the Covid pandemic.

Now, it is further building up its fulfilment arm, although, as Li said of expenditure more broadly, “the most intense investment comes not in the form of money, but in time and effort”.

The challenge now lies in balancing expectations with profitability.

Operators need to optimise supply chains, inventory placement and fulfilment to enhance customer satisfaction while still being sustainable, says KPMG’s Wilson.

On this front, Shopee’s income from value-added services – which are mainly related to logistics – stood at US$743.1 million in Q3 2026.

Creating demand

Besides high standards for delivery, customers also expect authentic products and good after-sales service.

Product discovery is now the most competitive battleground, with Wilson noting that e-commerce platforms are now focused on guiding consumers to products that they may not have known they wanted.

“Consumers are increasingly moving away from traditional search-led behaviour, towards purchases shaped by strategic marketing informed by consumers’ shopping patterns and personal aspirations,” he says.

Driving this is social commerce, as short-form video, livestreaming, influencer content and AI-driven recommendations are playing a bigger part in the shopping journey.

This shift has been partially led by the arrival of TikTok Shop, which combines a social media platform with e-commerce features, in South-east Asia.

The platform made its debut in Indonesia in 2021 and is tapping its user base in the wider South-east Asian region, which crossed 460 million as at November 2025.

The Business Times understands that TikTok Shop Singapore has grown its GMV by 1.7 times year on year in 2025, while the number of monthly buyers grew by 1.6 times.

“As the market matures and consumer behaviours evolve, businesses are looking beyond simply capturing existing demand to creating new demand,” says a TikTok Shop spokesperson.

“This is leading businesses to take a more holistic view of the consumer journey, with content-led discovery playing an increasingly important role in building awareness, generating interest, and ultimately driving purchases.”

TikTok Shop’s edge lies in how its core social media offering directs users to its e-commerce platform.

Other platforms like Lazada and Shopee have inked partnerships with Meta and Google, leveraging Facebook, Instagram and YouTube as new avenues for customers to discover products.

“Partners such as Meta and YouTube have enabled us to extend sellers’ reach through their platforms, and we will explore more collaborations in the future,” says Shopee’s Ho.

All three e-commerce platforms now have affiliate programmes where content creators get a fee for every purchase made using their links or from their content.

Shopee, for instance, has seen its affiliate creators produce over 360,000 Reels – short-form videos – between mid-April and July.

These content creators are key in the product discovery ecosystem, notes the TikTok Shop spokesperson. The company’s research has found that 76 per cent of consumers want brands to have “authentic content”, or content that is not produced by the brand.

By producing such content, social media influencers “can help businesses introduce products to new communities and build trust with consumers”, says the spokesperson.

In fact, the distinction between content and commerce is getting blurred, KPMG’s Wilson observes. E-commerce platforms are now evolving into engagement platforms that use data, algorithms and personalised experiences to keep consumers within their ecosystems for longer, while boosting conversion rates.

AI is also being used to drive and improve conversions, with Bain’s Chang noting that consumers increasingly trust AI in their research and use it during their purchase journey.

Lazada, for instance, is leveraging the technology to understand local dialects such as Singlish or Taglish.

Its AI-powered shopping assistant AI Lazzie, launched in May 2023, can curate recommendations based on search requests, or provide users with product comparisons.

The chatbot has helped to boost average order value by about 75 per cent above the platform average, while shoppers who tapped AI Lazzie for the recent 6.6 Mega Sale event contributed about US$2 million in GMV, according to the Lazada spokesperson.

Says Wilson: “The winners will be those that can offer relevant, trustworthy and seamless product discovery experiences to both existing and potential customers.”

Building “stickiness”

The South-east Asian market has been a fruitful field for e-commerce platforms.

Shopee, which reports its financials via listed parent Sea, posted operating income of US$160.3 million for Q2 2026, compared with US$154.9 million in Q2 2025.

But operating in the region is no easy task, given the intense competition.

Lazada has focused on brands as part of its strategy, striving to be the preferred platform for “authentic, high-quality products”, its spokesperson says.

“Consumers are becoming more discerning about quality, authenticity and reliability, while brands increasingly see e-commerce as a long-term growth channel rather than simply a promotional one.”

Shopee has focused on delivery and value, with its ShopeeVIP programme, a subscription service that offers free delivery, exclusive deals and priority customer service.

The programme, which was launched in 2025, has grown to more than 15 million members across the world as at end-June, although the company does not disclose how many are from South-east Asia.

ShopeeVIP members contributed about 24 per cent of GMV for Q2 2026, with average monthly retention at 80 per cent. Ho says: “We are encouraged by how it has strengthened retention and engagement.”

While other platforms also serve small and medium-sized enterprises (SMEs), TikTok Shop has focused heavily on this space in particular, and has rolled out initiatives to equip small businesses with capabilities to sell in the digital economy.

For instance, the Asean Soar Together programme, which it jointly launched with the Asean Foundation in 2025, trains SMEs in skills such as live selling and digital marketing.

TikTok Shop also recently announced that it is committed to supporting more than 1,000 businesses in Singapore by the end of 2027, and will help build capability through initiatives such as its Growth Accelerator Programme and Go Live Academy.

Above all, the region’s incumbent e-commerce platforms are focused on their own ecosystems as a moat against new challengers.

That’s as e-commerce is no longer just about selling things online.

E-commerce platforms will have to use data and technology to better understand their customers’ needs, personalise engagement and remove friction from the customer journey, says KPMG’s Wilson.

“It is about building customer-centric ecosystems that create value by proactively anticipating and meeting consumer needs,” he says.

Market observers note that the key to continued success for e-commerce platforms lies in making the entire experience seamless.

“Increasingly, that also means owning the customer relationship end to end and building the ecosystem stickiness that keeps shoppers from defecting,” says Chang.

Amendment note: The previous version said that Shopee had set up SPX Express.