What’s next for asia’s 3rd Party Platforms in a post-covid world?

Asia’s third-party platforms have been growing at an unprecedented pace in recent years. These platforms are playing an increasingly important role in facilitating e-commerce, digital payments, and other online transactions across the region. However, the outbreak of COVID-19 in early 2020 has disrupted the global economy and forced many businesses and consumers to shift their operations online. As a result, Asia’s third-party platforms have seen an even greater surge in demand, leading to new trends and opportunities in the post-COVID world.

The Growth Drivers of Asia’s Third-Party Platforms

The growth of Asia’s third-party platforms can be attributed to several key factors, including:

1. Rapid urbanization and digitalization: Asia’s population is rapidly urbanizing and digitalizing, with more people living in cities and using digital technologies to access goods and services. This trend has created a massive market for third-party platforms, which can provide a convenient and efficient way for businesses to reach urban consumers.
2. Rising middle class: The middle class in Asia is expanding rapidly, with more people entering the middle-income bracket and becoming more digitally savvy. This has led to a surge in demand for online shopping and other digital services, providing a significant opportunity for third-party platforms to capture this growing market.
3. E-commerce boom: E-commerce has been growing rapidly in Asia in recent years, driven by rising consumer demand for online shopping and a shift towards mobile-first e-commerce platforms. Third-party platforms have been able to capitalize on this trend by providing a range of services, including online marketplaces, payment gateways, and logistics solutions.
4. Government support: Many governments in Asia have recognized the importance of third-party platforms for driving economic growth and have implemented policies to support their development. For example, China’s government has been actively promoting the development of its digital economy, including third-party platforms, through initiatives such as the “Digital Silk Road” and the “New Infrastructure” plan.

Challenges Facing Asia’s Third-Party Platforms

Despite the many growth opportunities, Asia’s third-party platforms also face several challenges, including:

1. Intense competition: The market for third-party platforms in Asia is becoming increasingly crowded, with many new players entering the market and established players expanding their offerings. This has led to intense competition, making it harder for platforms to differentiate themselves and attract customers.
2. Regulatory challenges: Many governments in Asia are implementing stricter regulations on third-party platforms, particularly in areas such as data privacy, anti-trust, and consumer protection. This can create compliance challenges for platforms and limit their ability to expand into new markets.
3. Cybersecurity threats: Third-party platforms are often targets for cybercriminals, who can use them to launch attacks on businesses and consumers. This can damage the reputation of the platform and erode customer trust.

Opportunities for Asia’s Third-Party Platforms Post-COVID

Despite these challenges, there are also several opportunities for Asia’s third-party platforms in the post-COVID world. These include:

1. Increased demand for e-commerce: COVID-19 has accelerated the shift towards e-commerce, with many consumers now preferring to shop online rather than in physical stores. This trend is likely to continue post-COVID, providing a significant opportunity for third-party platforms that offer e-commerce solutions.
2. Greater adoption of contactless payments: COVID-19 has also accelerated the adoption of contactless payments, as consumers look for safer ways to pay. Third-party platforms that offer contactless payment options are likely to see increased usage post-COVID. This could include services such as mobile wallets, QR code payments, and other digital payment solutions. According to a report by the Asia-Pacific Economic Cooperation (APEC), the use of contactless payments is expected to increase by 46% in the region by 2023, providing a significant opportunity for third-party platforms.
3. Expansion into new markets: With the continued growth of e-commerce and the expansion of third-party platforms into new markets, competition is likely to increase. This may lead to a greater focus on innovation and differentiation among platforms. For example, Chinese e-commerce giant Alibaba has been expanding its operations in Southeast Asia through its subsidiary Lazada, which provides an online marketplace and logistics solutions in the region.
4. Diversification of services: Third-party platforms may also look to diversify their services beyond e-commerce and digital payments, to provide a more comprehensive suite of solutions for businesses and consumers. For example, platforms such as Grab in Southeast Asia and Meituan in China have expanded into food delivery, ride-hailing, and other on-demand services, providing a one-stop-shop for consumers.

An Evolving, Competitive & Increasingly Consolidated Landscape

Let’s take a closer look at some recent examples by 3rd Party Platforms to illustrate these trends and opportunities:

1. Alibaba’s expansion into Southeast Asia: Alibaba has been expanding its operations in Southeast Asia through its subsidiary Lazada, which provides an online marketplace and logistics solutions in the region. In 2020, Lazada reported that its annual active buyers had reached 70 million, up from 50 million in 2019. This growth was driven by increased demand for e-commerce during the pandemic and Lazada’s expansion into new markets such as the Philippines, Vietnam, and Thailand.
2. Grab’s diversification into on-demand services: Grab, a ride-hailing platform in Southeast Asia, has diversified its services to include food delivery, grocery delivery, and other on-demand services. In 2020, Grab reported that its food delivery service had seen a 5x increase in orders since the start of the pandemic, as more consumers turned to online ordering. This diversification has helped Grab to weather the pandemic and expand its customer base beyond ride-hailing.
3. Meituan’s dominance in China’s on-demand market: Meituan, a third-party platform in China, has become the dominant player in the country’s on-demand market, offering services such as food delivery, hotel bookings, and ride-hailing. In 2020, Meituan reported that its revenue had increased by 77% year-on-year, driven by increased demand for food delivery during the pandemic. Meituan’s success has been attributed to its ability to offer a wide range of services and leverage its large user base to provide targeted advertising and promotions.

Asia’s third-party platforms are well-positioned for continued growth in the post-COVID world, driven by the expansion of e-commerce, digital payments, and other online services. However, these platforms also face challenges such as intense competition, regulatory compliance, and cybersecurity threats. To succeed in this environment, third-party platforms will need to focus on innovation, differentiation, and diversification of services. By doing so, they can capture a growing market of digitally-savvy consumers and businesses across the region.