Southeast Asia e-commerce has slowed down significantly in 2023.

Tokopedia 1Q23 Results: Declining GTV (comparable to GMV), increasing revenue capture (take rate) from a low base, and first positive quarterly contribution margin.

Indonesia’s local e-commerce champion, and the ‘To’ in GoTo Group, Tokopedia, reported results for the first quarter of 2023 earlier this week. Here’s the most important take-aways:

1) Gross Transaction Value (GTV), or ‘total platform trade volume’, is declining year-on-year for the first time, by -3.6%. This is due to multiple factors, including some in Tokopedia’s control (e.g., drastic reduction in promo subsidies, marketing cuts) and several outside its control (e.g., the rise of TikTok Shop in Indonesia, general soft consumer sentiment)

2) Marketplace take rate (Gross revenue as a % of GTV) continues to climb, although from a low base (Shopee is at ~10% for a similar metric). In other words, it is getting steadily more expensive for sellers to generate revenue through Tokopedia, and that trend will continue in the coming years.

We’ve now seen both Shopee and Tokopedia report these “flatline” results after several years of rapid growth. Some reflections for the rest of 2023:

– E-commerce in Southeast Asia is generally not growing very fast in 2023, according to our fresh Cube Asia GMV estimates for 1Q23. There are bright spots in individual categories and markets, but the regional outlook is pretty challenging. Most brands won’t be able to rely on existing channel growth as a significant contributor to hitting this year’s targets, so it’s time to start planning new moves (e.g., new channels, assortment/pricing optimization).

– Shopee, Tokopedia and Lazada are all on a mission to (1) break-even as soon as possible and then (2) start generating significant cash flow. The age of exuberant promos and subsidies, and very low channel costs, is over. The only significant exception is TikTok Shop which is “partying like it’s 2017” and gaining significant share on the back of aggressive growth investments.

– Shopee and Tokopedia appear to be harder hit by these ‘austerity measures’ than Lazada. In fact, our preliminary Q1 GMV data indicates positive growth and meaningful share gains for Lazada in several categories and markets. Our theory is that Lazada has become increasingly attractive to consumers as Shopee and Tokopedia have reduced promos.

PS – Our premium Southeast Asia e-commerce GMV data set for brands and investors is now live with 1Q23 estimates for all consumer categories and channel drill-downs for Shopee, Lazada, Tokopedia, and TikTok Shop. Email us at info@cube.asia to hear more.

Get Social Commerce in Southeast Asia 2022 Report: https://cube.asia/social-commerce/