Southeast Asia’s E-Commerce Set for 16% Growth as Video Commerce and AI Accelerate

The digital commerce sector in Southeast Asia is riding a wave of innovation and adoption, with overall growth forecast at around 16% in 2025, driven by a surge in video-based shopping and artificial-intelligence (AI)-powered buying tools, according to the “e-Conomy SEA 2025” report by Google, Temasek Holdings and Bain & Company. Business Standard+2digitalnewsasia.com+2

The report highlights that as consumers increasingly embrace mobile-first shopping, platforms incorporating live-video commerce, algorithmic recommendation and immersive brand experiences are gaining traction. Video-commerce formats—where creators livestream product demonstrations, flash deals and interactive chat shopping—are rapidly becoming mainstream in markets such as Indonesia, Thailand and the Philippines.

Key Drivers of the Growth

Video Commerce Takes Centre Stage
Live-streaming shopping sessions, often hosted by influencers or creators on apps like TikTok and regional equivalents, are reshaping how Southeast Asian consumers discover and buy products. The report finds that video-commerce formats will contribute significantly to growth, as social and entertainment formats converge with e-commerce. Business Standard+1

AI-Powered Shopping Experiences
Retailers and marketplaces are leveraging artificial intelligence to personalise offers, optimise pricing, predict shopping behaviour and recommend products. AI-driven features such as “shop by image”, voice-based search, and smart up-sell/cross-sell engines are becoming standard expectations among consumers. The report notes that advertising revenue in the region is growing at 16% year-on-year, fuelled by the maturity of retail-media networks and AI-enabled ad formats. Temasek Corporate Website English+1

Rising Digital Economy and Consumer Base
The aggregated digital economy of Southeast Asia which includes e-commerce, digital media, ride-hailing, food delivery and fintech — is projected to exceed US$300 billion in gross merchandise value (GMV) by 2025, supported by a decade of strong growth. digitalnewsasia.com+1 Mobile-internet penetration is high across many markets, and younger consumers, especially Gen Z and Millennials, are comfortable purchasing via apps and social-commerce channels.

Market Implications

For Retailers and Marketplaces:
To capitalise on this growth, companies must optimise their storefronts for mobile, video-enabled discovery, and AI-assisted purchase journeys. Merchants that remain reliant purely on traditional e-commerce layouts risk falling behind.

For Brands:
Brands entering the Southeast Asia region will need to adapt to shorter attention spans, interactive livestreaming formats, influencer-driven campaigns and context-rich shopping environments. Differentiation increasingly relies on engaging storytelling in video formats, quick fulfilment and seamless mobile UX.

For Investors and Ecosystem Players:
The structural shift towards video and AI presents opportunities for platforms enabling creators, providing backend AI-infrastructure, inventory and logistics optimisation tools, and social-commerce monetisation models. Advertising-tech firms and retail-media networks are especially well-positioned.

Challenges to Address

While the growth prospects are strong, several factors merit caution:

• Logistics and delivery remain complex across Southeast Asia’s archipelagos and rural regions; fulfilment cost and time may impact consumer satisfaction and margins.

• Data-privacy, algorithmic transparency and regulatory oversight of live-commerce and creator-driven sales are still evolving in many countries.

• As more merchants shift to video-commerce, competition intensifies, raising marketing costs, creator incentives and discounting pressure, which may compress margins.

• Monetisation of AI-led experiences and ensuring ROI from technology investments remains a medium-term challenge for smaller players.

Looking Ahead

Key indicators to monitor in 2026 and beyond include:

• Growth rates of live-commerce transactions as a share of total e-commerce in regional markets (especially Indonesia, Vietnam, Thailand, Philippines).

• Uptake of AI-enabled shopping features (voice search, image-based discovery, recommendation engines) by major marketplaces and brands.

• Advertising spend in retail-media networks and the effectiveness of AI-driven ad-formats in driving conversion.

• Infrastructure improvements: delivery lead times, cross-border shipping efficiency, returns management.

If current trajectories hold, Southeast Asia will not only expand its e-commerce market but also lead on innovation in video-commerce and AI-driven retail globally.

Conclusion

Southeast Asia is entering a transformative phase of digital commerce, one where video-based shopping and AI-powered experiences are rewriting the playbook. The forecasted ~16 % growth in 2025 underscores both the scale and speed of change. For retailers, brands and investors, the message is clear: evolve your approach from classic e-commerce to interactive, intelligent, mobile-first commerce or risk being outpaced.