Direct-to-consumer (D2C) businesses have been gaining traction in Southeast Asia in recent years, with many new players emerging and investors taking notice. According to a report by DSG Consumer Partners, Meta, and Bain & Company, the market share for young consumer brands in Southeast Asia – those less than 10 years old – grew from 19% in 2013 to 23% in 2022, generating US$52 billion in revenue last year.

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At the Tech in Asia Conference in Jakarta last week, DSG’s Sameer Mehta, along with Cindy Angelina, CEO of Indonesian cosmetics firm Esqa, and Andrew Kandolha, founder of eyewear retailer Saturdays, discussed the future of the D2C space in Southeast Asia.

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Live commerce has been an influential trend in the beauty category, according to Angelina. Consumers can now attend live selling sessions from cosmetics brands to inquire about products or see them before making purchases – all from the comfort of their homes. This was a major channel for Esqa before the closure of TikTok Shop in Indonesia, though the contribution from the platform to the company’s sales was not as significant as what it saw from other channels.

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Mehta elaborated on a number of other consumer trends that businesses and D2C brands need to pay attention to, as highlighted in the DSG report. He said that some products have shifted from being a “want” to a “need,” such as those in the beauty category, and that Gen Z values individuality, authenticity, and identity more than other generations.

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Infrastructure remains a challenge for distributing products offline in Indonesia, said Angelina. She pointed out that distribution through physical retailers is crucial for D2C brands like hers, which target the premium mass market or what she calls “masstige.” Esqa has 300 points of sale in 55 cities across Indonesia, and its products can also be found in offline stores owned by Sociolla, a beauty and personal care ecommerce startup. Saturdays has 47 stores in 12 cities across the archipelago, and earlier this year, the brand opened a new lifestyle store at Central Park Mall in Jakarta

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Mehta suggested that brands should focus on becoming “the country champion” in their home markets before going abroad, as many young brands are hindered by a lack of focus in their operations. Esqa and Saturdays are currently focused on the Indonesian market, though the former has a presence in Vietnam and Malaysia through partnerships with Sociolla and Watsons, respectively.

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With generative AI taking off this year, many companies have been trying to innovate with the tech. Angelina said that genAI can help streamline customer services that are still performed manually, while Kandolha said that Saturdays has already started using AI to provide recommendations to customers in its app. According to the DSG report, 63% of consumers are willing to spend more if a product or service is personalized to their tastes.

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Sources: https://www.techinasia.com/d2c-indonesia-life-tiktok-shop-ban-offline-retail-matters