E-COMMERCE OPPORTUNITIES IN THE TIGER CUB ECONOMIES

In 2019, the World Economic Forum (WEF) predicted that Asia could account for nearly 40% of global consumption by 2040¹. It has already become the world’s largest e-commerce market, with the total revenue of online retail in Asian countries adding up to nearly 1.7 trillion US dollars in 2023². The continent represents an enormous opportunity for cross-border e-commerce, but which countries should you focus on? Let’s look at five growing economies you may not have considered: the Tiger Cubs.

What are the world’s fastest growing large economies? You probably already know about Brazil, Russia, India and China. Together they’re the ‘BRIC’ countries – the supercharged economies set to drive global growth over the next 100 years. And that means they should play a big part in any exporter’s plans.

But they’re not the only players in an ever-expanding globalised marketplace. There's the ‘next eleven’ a high-growth, high-potential group that includes countries like Mexico, Iran, Pakistan and Egypt. And there's another group of countries that are often – and mistakenly – ignored by exporters: the Tiger Cub economies. 

On the trail of the Tiger Cub economies

The World Economic Forum (WEF) declared: "In the nineteenth century, the world was Europeanised. In the twentieth century, it was Americanised. Now, it is being Asianised."²

In Southeast Asia, five emerging markets – Indonesia, Malaysia, the Philippines, Thailand and Vietnam – are the ones to watch. Economists have dubbed these five countries ‘The Tiger Cubs’, in recognition of their proximity and similarity to the original ‘Tiger Economies’, Hong Kong, Singapore, Taiwan and South Korea. The Tiger Economies accelerated from primarily agrarian economies to fully developed, high-income industrialised nations in just a few decades between the 1950s and 1990s. And that’s exactly what the Tiger Cubs are doing today.

Indonesia is the biggest player – so much so that a number of organisations, including the Organisation for Economic Co-operation and Development (OECD), think Indonesia’s turbocharged long-term growth warrants its inclusion in the BRIC countries (making it ‘BRIIC’). 

The opportunity for exporters like you

E-commerce across all the Tiger Cubs is booming, driven by a young population, high internet penetration rates, and a growing middle class with more disposable income available.

Indonesia is the biggest player – so much so that a number of organisations, including the Organization for Economic Co-operation and Development, think the country’s turbocharged long-term growth warrants its inclusion in the BRIC group.  

In 2020, the highest total e-commerce revenue was recorded in Indonesia at approximately US$30 billion³ – perhaps unsurprising for a country with close to 140 million e-commerce users⁴. By 2025, this figure is expected to reach US$56 billion.

The shrewd exporter should also keep an eye on Malaysia, which last year had the highest average revenue per e-commerce user of all the Tiger Cub economies at ≈US$341⁵. This is expected to grow to around US$530 in 2025.

The other Tiger Cubs promise lucrative opportunities too, and with developments in international shipping making almost any market obtainable, there’s no reason your e-commerce business should not be thinking global.

Let’s get to know each of the Tiger Cub Economies a little better…

The Tiger Cub cross-border e-commerce opportunity  

With the total Asian e-commerce market projected to be worth US$1.81 trillion in 2023⁵, it’s no surprise that online shopping in Asia is booming. A young population, high internet penetration rates, and a growing middle class with more disposable income available are all driving the boom.  

Indonesia is the biggest Tiger Cub. Its e-commerce market was worth US$52.93 billion in 2023⁶ (up from just over US$30 billion in 2020⁷), and it’s expected to grow to a whopping US$86.81 billion by 2028⁸.     

You should also keep an eye on Malaysia, where the e-commerce penetration rate will be 40.2% in 2024, with the average revenue per user expected to reach an impressive US$571.40⁹. 

The other Tiger Cubs promise lucrative opportunities too. International shipping makes almost any market reachable, so they are all worth seriously considering. 

Let’s get to know each of them a little better… 

Indonesia has a population of over 279 million¹⁰, making it the world’s fourth most populous country, behind China, India and the US.  Having grown five-fold over the last five years, its e-commerce market is booming and has grown into the ninth largest sector in the world, according to a recent McKinsey & Company research report¹¹.  

According to McKinsey, 85% of the market is made up of resellers or distributors, with only 15% of merchants selling their own products. Indeed, TikTok has recently bought a 75% controlling stake in Indonesia’s biggest e-commerce platform, conveniently named Tokopedia, in a deal worth $1.5 billion¹². It will be integrated with TikTok’s own e-commerce marketplace, TikTok Shop, which will be incorporated into the Tokopedia brand. 

Alongside the emphasis on e-commerce marketplaces – and now TikTok – Indonesia is expected to lead Southeast Asia’s regional growth in Buy Now Pay Later (BNPL) for the next two years¹³. This is due to a combination of two factors: the fast-growing e-commerce sector and the large proportion of the population who don’t have conventional bank accounts.  

In fact, according to a report by International Data Corporate, Indonesia will make up to 58% of Asia’s BNPL spends on e-commerce platforms by 2025. So, if you do decide to venture into the Indonesian e-commerce market, make sure you offer a BNPL option. 

In 2023, the four most popular e-commerce categories in Indonesia were fashion (purchased by 70.1% of online shoppers), followed by beauty and personal care (49.7%), food and beverages (40.8%), furniture and home appliances (37.3%) and consumer electronics (31.5%)¹⁴. The most popular overseas online shopping destinations were China, the US and Singapore. Due to underdeveloped fixed-line internet infrastructure, Indonesians rely on smartphones to shop; international merchants with a dedicated mobile app will be at an advantage. 

The e-commerce opportunity

The biggest e-commerce categories in Indonesia are Fashion (31% of total revenue) followed by Electronics & Media (23%) and Food & Personal Care (16%)¹⁰. Cross-border spending is exploding: in 2019, the country had a 814% increase in imported e-commerce parcels, from 6.1 million to 49.7 million¹¹. The most popular overseas online shopping destinations are China, the US and Singapore. Due to underdeveloped fixed-line internet infrastructure, Indonesians rely on smartphones to shop; international merchants with a dedicated mobile app will be at an advantage. 

The richest country of the Tiger Cub economies. Malaysia’s economy was hard hit by the pandemic but returned to growth in the fourth quarter of 2021.  

• Population: 33.06 million¹²
• GDP per capita (2020): US$11,415¹³
• Forecast GDP growth rate for 2022: 6%¹⁴
• Internet penetration rate (2020): 82.3%¹⁵

The e-commerce opportunity

The biggest e-commerce categories in Malaysia are travel (63% of the market), consumer electronics (10%) and fashion (9%)¹⁶. In 2020, cross-border e-commerce accounted for 44% of total e-commerce sales, with China, Singapore and Japan the top international shopping markets¹⁷. Social media is hugely popular there – one in six Malaysians spend more than nine hours a day on social platforms¹⁸ – presenting brands with an ideal way to reach and target prospects. Cross-border companies face challenges from the country’s geography and high B2C import taxes.

Like all Southeast Asia’s economies, Thailand’s was hit hard by the pandemic; the country’s dependence on tourism left it particularly vulnerable. So, unlike other ASEAN countries, it has experienced a relatively slow economic recovery.  

The Thais are a nation of smartphone and social media users – consumers like browsing, chatting, shopping and accessing information on one device. Apps are the most-used method of shopping online. According to Consumer Report Thailand 2023, the biggest e-commerce categories in Thailand were fashion (60% of the total market) followed by personal care (43.2%) and food and beverages (34.6%). 30% of the e-commerce market is cross-border18 with China, Japan and the US the most popular countries to buy from. 

International e-commerce merchants wishing to tap into the market must first register with the Department of Business Development (under the Ministry of Commerce) to obtain a license. 

In its ‘Asia Macro Outlook 2024’ report, Nomura Global Markets Research noted the Philippines as one of ‘Asia’s striving Tiger Cubs’ and likely to be one of the fastest-growing economies of the decade¹⁹. Along with its fellow Tiger Cub, Indonesia, it is one of the countries most likely to benefit from the biggest foreign direct investments (FDIs) in the coming years, which would supercharge its economy.  

“They have been scaling up structural reforms to address infrastructure gaps, strengthen regulations and improve competitiveness,” Nomura said. 

The Philippines promises strong growth overall with a GDP per capita that is expected to reach US$3754.00 by the end of 2024²⁰. And now it has become a member of the Regional Comprehensive Economic Partnership (RCEP), it should be more competitive as a manufacturing hub too.  

In 2023, the most popular e-commerce categories in the Philippines were fashion, beauty and personal care, food and beverages, consumer electronics, and furniture and home appliances. E-commerce made up just 7.5% of the country’s total retail market²¹, yet growth is happening, driven by a young, digitally savvy population, and the pandemic nudging people online. Importantly, according to a recent JP Morgan report, 50% of all online consumers there have shopped cross-border²². The country has some of the highest rates of social media usage in the world and shoppers frequently make purchases via live streaming. 

Following the pandemic, Vietnam’s economic recovery is expected to accelerate in 2022, with a revived services sector, and the country’s manufacturing industry benefitting from steady demand from the US, EU and China.

• Population: 98.7 million³⁰
• GDP per capita (2020): US$3,758³¹
• Forecast GDP growth rate for 2022: 6.6%³²
• Internet penetration rate (2021): 77.4%³³

The e-commerce opportunity

B2C e-commerce in Vietnam is experiencing an exciting era of development. Thanks to a rising middle class, e-commerce has a projected 29.6% compound annual growth rate (CAGR) to 2024³⁴.

In 2020, the most popular e-commerce categories in Vietnam were food (purchased by 52% of online shoppers); clothing, footwear & cosmetics (43%); and home appliances (33%)³⁵. Vietnamese shoppers frequently look to overseas markets for wider product choice and value – cross-border transactions make up 38% of the country’s total e-commerce market – with the US, China and Japan the top destinations³⁶. International merchants wishing to target Vietnamese consumers should be aware of the popularity of mobile commerce – in particular, in-app shopping.

Ready to tap into the potential of the Tiger Cubs? As international experts, we can help. Sign up for a DHL Account here.

Ready to tap into the potential of the Tiger Cubs? As international experts, we can help. Sign up for a DHL Account here.