We take stock of how marketplaces are evolving in Southeast Asia, from vertical integration to social commerce and B2B commerce.

Indonesia's Floating Market in Lok Baintan

Where are Southeast Asia’s marketplaces headed?

We take stock of how marketplaces are evolving in Southeast Asia, from vertical integration to social commerce and B2B commerce.

For marketplaces in Southeast Asia, the barriers to entry are lower than ever, but the paths to scale are also narrowing with greater competition. Because of this, it’s easy to think that there are too many companies getting into the space than there is opportunity in the market to grow on.

What we’ve found working with founders in Southeast Asia is that this is a matter of perspective. Looking at the narrow scheme of things, the marketplace is getting crowded with more intense competition with the likes of Lazada and Shopee or Grab and Gojek. 

At the same time, the ocean of marketplaces will continue to expand long-term. As more consumer activities and business operations find their place online, there will continue to be areas available for disruption by online marketplaces. What is exciting being a VC in Southeast Asia is following this long-term perspective and seeing how the marketplace model is evolving to target new opportunities. 

Evolution of Marketplaces

Evolution of Marketplaces

Online-to-offline distribution and data-driven marketplaces capture entire customer journeys

Consumer tech marketplaces in China and the US evolved from discovery platforms where demand and supply meet (e.g. eBay, Dianping in the early 2000s) to ecosystems of products and services that cover entire transactions around specific lifestyle purchases (e.g. Lianjia, Carvana). The same trend has been happening in Southeast Asia over the past half-decade moving into 2020.

The ability to capture the entire customer journeys makes it easier for startups to monetize transactions around lifestyle purchases, from automobiles and property to prescription eyewear and retail investing (e.g. money market funds, stocks). These purchases aren’t as recurring as FMCG goods or food delivery but involve varying levels of consumer education and associated products and services (e.g. maintenance, mortgage, insurance). This vertical expansion is ultimately motivated by the goal to enable greater access, but from a business perspective, it has the potential to beef up cashflow and carve out a path to profitability. 

Marketplaces achieve this trajectory with online-to-offline (O2O) distribution and data engines. In Southeast Asia, offline touchpoints, usually agents or physical locations outfitted with apps or POC devices, are a gateway to digital services and stronger long-term retention. Some services also inevitably come with offline touchpoints like maintenance. 

O2O distribution can seem costly on the onset vis-a-vis purely online distribution, but with the right mechanics and arrangement with the marketplace, it addresses the key issues around consumer education and accessibility. 

In the case of property marketplace Propzy, offline centers for property buyers and sellers enabled them to win the trust of the Vietnamese market and ease them into making these transactions online. For Pinhome, offline agents equipped with the Pinhome app drive distribution for their marketplace. 

Meanwhile, transaction data is accumulated and serves as an engine for the marketplace to extend into services like financing where data is necessary or optimize the customer journey by sharpening pricing capabilities and shortening transaction processes. 

As we’ve written in this essay, Carro’s accumulation of data enables their financial services, Genie, which provides insurance and financing for the marketplace. For Propzy, the data accumulated over the past four years of facilitating property transactions has enabled them to better value real estate. 

The hybridization of platforms incentivize and monetize “many-to-many” social interactions

The future business of consumer tech platforms in Southeast Asia is social. Gaming, media/content, ecommerce, fintech, and even logistics features are being repackaged into hybrid platforms that enable, or better yet, incentivize social interactions and monetize these interactions. 

Take for example Pinduoduo in China, a social commerce platform that has mastered the art of interactive commerce by combining community, entertainment, and gamification into the customer journey. This is an evolution from traditional search ecommerce which simply focuses on enabling customers to get what they are looking for to an ecommerce where the interactions among users drive both sales and user acquisition. 

Compared to capturing the entire customer journey, this trajectory focuses on monetizing “many-to-many” interactions, be it between creators and their audience (as with TikTok), between buyers and sellers, or even among customers (as with Pinduoduo). And in order for this monetization to be effective, the platform must have developed efficiency in facilitating the core social interactions. This is where “hybridization” comes in. 

And in Indonesia, this “hybridization” is bread and butter for social commerce platforms. For example, Super is enabling more efficient hyperlocal ecommerce (FMCG) transactions for second-tier and third-tier cities with a strong community-based logistics foundation that enables more affordable group buying schemes. Meanwhile, RateS leverages groups and membership interactions to attract and support resellers on their platform. 

Social commerce has huge potential in Indonesia, where demographic diversity opens up many possible approaches to social commerce (like Super and RateS) and network effects can be achieved relatively quickly at low cost.

B2B marketplaces are marrying consumer retail innovation with B2B requirements and processes

While the B2B commerce space in Southeast Asia is still in its infancy stage, it’s taking cues from innovations B2C and C2C ecommerce to make transactions more seamless. Compared to consumer marketplaces, however, B2B marketplaces also have to take into account the stringent requirements to filter quality like vendor checks and require documentation at scale. 

In this regard, this is where working with existing software and processes comes into play. While B2B procurement marketplace Eezee started as a standalone marketplace, they’ve eventually begun to work with procurement software companies like SAP Ariba and Coupa to place their platform seamlessly into the procurement process for buyers. Moving forward they’re also looking at how to integrate themselves into the supplier’s process of order fulfillment. 

This trajectory of integrating themselves as a marketplace into the existing protocol and processes enables Eezee to tap into network effects of their software partners serving multiple buyers, suppliers having existing buyers, and buyers operating across multiple markets (traditionally running procurement on a market-to-market basis). 


The diversity of Southeast Asia in terms of consumer and business experiences has made it a very appealing sandbox for these nonobvious marketplaces to emerge.

Regardless of the approach, however, at its very core, the online marketplace aims to make supply and demand matching more seamless. The ones that have endured over time were also able to make the growth of their marketplaces self-sustaining — reducing churn in demand to a minimum, retaining supply as a result, and monetizing high margin activities. This will continue to be the case even as the marketplace moves in new directions.

We’re always keen to talk to founders building the future of Southeast Asia’s digital marketplaces! Shoot us an email at hello@insignia.vc.

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Paulo Joquiño is a writer and content producer for tech companies, and co-author of the book Navigating ASEANnovation. He is currently Editor of Insignia Business Review, the official publication of Insignia Ventures Partners, and senior content strategist for the venture capital firm, where he started right after graduation. As a university student, he took up multiple work opportunities in content and marketing for startups in Asia. These included interning as an associate at G3 Partners, a Seoul-based marketing agency for tech startups, running tech community engagements at coworking space and business community, ASPACE Philippines, and interning at workspace marketplace FlySpaces. He graduated with a BS Management Engineering at Ateneo de Manila University in 2019.