‘A joint study by Bain and Facebook found that the number of digital consumers in Southeast Asia is growing faster than predicted’
Higher spending power and a heightened preference for contactless transactions will continue to drive the exponential growth of the digital economy, according to new research from Facebook and Bain & Company in a follow-up to their 2019 study, “Riding the Digital Wave.” The new study titled “Digital Consumers of Tomorrow, Here Today” looks into the rapid acceleration of the digital economy and how this affects the future of e-commerce in Southeast Asia.
The study surveyed approximately 16,500 digital consumers and gathered insights from interviews with about 20+ CXOs across six Southeast Asian countries – Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. Digital consumers surveyed are those who have made an online purchase in at least two product categories in the past three months.
According to Bain, the growth of digital consumers in Southeast Asia is expected to reach around 310 million by the end of 2020, with millions more expected to join in the coming years.
What makes the findings interesting is that this level of growth was originally forecast for 2025 in the 2019 study, indicating a five-year acceleration within 2020 alone. This means that almost 70% of Southeast Asian consumers will go digital by the end of the year.
|Chart via Facebook|
The report also found that the new forecasts for the average spend per consumer in 2025 will more than triple (3.5x) that of 2018’s figure, also exceeding previous 2025 forecasts – with spending patterns between Tier 1 and 2 cities narrowing.
“With five years of digital acceleration condensed into one – the impact of digital adoption on businesses has never been more apparent,” said Sandhya Devanathan, Managing Director of Gaming, for the APAC region, at Facebook.
“It is vital for businesses to connect with consumers in ways that are frictionless and to replicate in-person interactions through social platforms, messaging, and short videos as much as possible to drive discovery and loyalty. Turbulent times are often the catalyst for the rise of new business models. Our goal is to help businesses as they speed up their transformation to meet the new digital consumers where they already are.”
|Chart via Facebook|
According to the report:
Southeast Asian consumers are not just spending more online as forecasted in 2019, they’re also buying into more categories online. With contactless and home-consumption habits expected to continue despite the easing of physical distancing measures, and in line with Facebook and Bain & Co.’s June 2020 research update “Southeast Asia Digital Consumer Trends that Shape the Next Normal”, people are also now more receptive to grocery shopping online with 43% of respondents in SEA doing so.
Also, the study shows the immense potential to build brand loyalty and growth as the e-commerce market remains fragmented. In 2020, savvy consumers are shop-hopping across 5.2 online sites before making a purchase decision — a notable increase from an average of 3.8 sites in 2019. Consumers are still searching for better pricing (42%) and product quality (34%) when browsing across sites. Similarly, an average of 5 in 10 respondents said that they changed their most purchased brand in the three months prior to the study, with reliability and value being the top two reasons for doing so.
Discovery commerce and online inspiration remains all-important with 68 percent of consumers saying that they still don’t know what they want to purchase before they shop online, while 62 percent (as compared to 50% in 2019) said they learn about new products and brands via social platforms, with short videos being cited as the top format of choice.
“The last decade was about bringing consumers online,” said Dhruv Vohra, Director of Digital Natives and Technology at Facebook. “Now, with the rapid immigration of digital consumers from offline to online, coupled with the evolution of home-consumption habits, we will see more brands shifting their business models beyond the “omnichannel” option to meet the consumers where they are. What’s key is that businesses will need to adapt today’s consumer trends as it continues to shape the next normal.”
On what’s to come, the report found that Southeast Asian-based venture capital and private equity funds hit a record of US$8.7 billion in unspent capital as of end-2019. This opens doors for internet and technology disruptors to obtain more funding, grow profitably, and compete on a larger scale in the region. The report suggests that disruption may be more apparent in healthcare, education, and online entertainment as it rapidly evolves to adapt to consumer’s home-consumption habits such as home-based learning, telemedicine, and the sharp increase in preference for online gaming and live-streaming.
“Southeast Asia is a dynamic region and is fast growing to be one of the top growth engines for the global digital economy,” said Praneeth Yendamuri, Partner at Bain & Company. “The number of Southeast Asian digital consumers has grown exponentially and their consumption habits are shaping today’s new norm. Looking forward, online spending is expected to triple by 2025 and reach close to $150 billion USD.”
To read the Bain & Facebook report ... CLICK HERE !!