Southeast Asia’s direct-to-consumer revolution may be underway

Businesses seem to be growing more discontented with the world’s biggest internet platforms.

Media companies relied on Facebook to build their empires, only for the social network to turn on them with an algorithmic tweak. Merchants made good money within various online marketplaces, only to be sucked into a race to the bottom.

Direct-to-consumer (D2C) companies, which make their own products and then sell and distribute them through their own digital channels, are taking back control. They’re cutting out the middlemen – the third-party aggregators and retailers – and reaching directly into your wallets.

In the media world, it’s led to successful efforts by The New York Times, Netflix, and Disney+ to gate their content.

In ecommerce, companies like Casper, Dollar Shave Club, and Warby Parker are making a killing in the US without relying on Amazon. They’re becoming massive, with Warby Parker now worth a little over US$1.7 billion.

Southeast Asia is still catching the wave. But the region has been developing rapidly, with rising incomes, shifting consumer tastes, and maturing infrastructure all possibly culminating in a coming D2C boom.

Slogging in the background

To understand how we’ve gotten to this point, let’s trace the history of ecommerce in Southeast Asia.

Pioneering D2C brands in Singapore were launched in the late 2000s. Furniture store FortyTwo, for instance, was founded in 2006, while fashion firm Love Bonito has been designing its own clothes since 2010.

Ecommerce marketplaces emerged in 2009, with Tokopedia, Qoo10, and Bukalapak sprouting up in rapid succession. A game-changer was the entry of Rocket Internet’s Lazada and Zalora and the hundreds of millions of US dollars that came with them.

Following the inflow of money, D2C upstarts mushroomed as more investors and entrepreneurs opened their eyes to ecommerce’s potential. Thailand’s Pomelo Fashion, Singaporean companies Secretlab and Castlery, as well as Indonesia’s Fabelio were started between 2013 and 2014.

For years, marketplaces hogged all the attention as they outraised one another like players in a high-stakes poker game. Shopee is a great example. A latecomer that launched in 2015, it surprised many people by blitzscaling its way to become a leading – but highly unprofitable – contender in Southeast Asia.

No massive D2C brands in Southeast Asia?

Pre-empting copycats

Combining media and ecommerce