SINCE the start of the pandemic, 70 million people – equivalent to the entire population of the United Kingdom – have become digital consumers in South-east Asia.
Almost 8 in 10 people (78%) among South-east Asia’s population of 15-year-olds and above will be digital consumers by end-2021, with the strongest growth seen in Indonesia. The region’s online retail penetration is also projected to grow 85% year-on-year by end-2021, and is now larger than India’s or Brazil’s.
This was one of the key findings in the 2021 Digital Consumer Report, released by Facebook, in partnership with Bain & Company. Here are the other highlights.
• Sales from ecommerce to double in five years.
In five years, South-east Asia’s ecommerce gross merchandise value, which refers to the monetary value of goods or services sold through online marketplaces over a specific period of time, is expected to reach US$254 billion. That’s nearly double its US$132 billion size by the end of 2021 and represents a compounded annual growth rate of 14%.
• South-east Asians show more openness to the range of products that can be bought online
Consumers in the region now buy online for an average of 8.1 categories – 60% higher than the 5.1 average seen in 2020. Indonesian consumers buy across the widest range of categories at 8.8, followed by Thailand at 8.3 and the Philippines at 8.2.
• E-wallets dethrone “king cash” as the preferred way to pay
E-wallets are now the preferred payment option for 37% of consumers compared with 28% who say they still prefer cash. When asked why people don’t use online payment options, the top 3 cited reasons were security concerns, privacy concerns, as well as high charges and fees.
• The pandemic leads to a paradigm shift in the consumers’ purchase journey
From discovery to purchase, online channels have become ever more prevalent in the purchase journey of consumers today. Around 80% of channels that consumers use to browse and discover new products are online. The number of respondents who say they shop “mostly online” have gone up by 35%. And when asked whether online or offline is their top channel for considering brands, at least 7 in 10 respondents said “online”.
• Social media videos tripled in popularity as a discovery channel
Twenty-two percent of respondents cite social media videos as the top channel for discovery – 3x more than did so the previous year.
• In the battle for loyalty, product quality and experience, not just price, win over consumers.
Digital consumers shop across 7.9 online websites or platforms on average – a 52% increase from 2020. Fifty-one percent of consumers say they switched from their most purchased brands in the past three months. Price wasn’t the only reason they switched: Better product quality, better availability and faster delivery times all contributed to their decisions.
• Environmental and sustainability factors now compel consumers to switch brands— and pay more for them.
Environmental, social and governance (ESG) factors were among the top three most cited reasons for switching brands in Southeast Asia as a whole as well as Vietnam. Nine in 10 are also willing to pay more for ESG, with eight in 10 of all consumers saying they can accept a 10% premium if it means buying a more sustainable product.
• Home-centric lifestyles to persist beyond the pandemic
Nine in 10 of the executives interviewed believe a hybrid work-from-home model will be the norm after Covid-19. Some buying activities are also likely to move “out of home” as restrictions ease, but 75% of the time spent shopping online from home will remain. Majority of consumers also plan to either increase or maintain their at-home online spending on groceries, self-care and other categories.
• Investments fuel fintech, e-learning, ecommerce and other digital disruptors in the region.
More than 80% of venture capital funds have flowed into the internet and technology so far, with the vast majority of it going into the fintech sector.
Download report here
• Featured image credit – The vast majority of venture capital funds has gone into the fintech sector in South-east Asia: Getty Images
