Southeast Asian consumers intensify online habits, spending 60% more

Region will be home to 350 million online shoppers by end-2021, up from 310 million last year, and will see online spending climb 60% per person, pushing e-commerce sales to grow two-fold to $254 billion by 2026.
Written by Eileen Yu, Senior Contributing Editor

Southeast Asia will be home to 350 million online shoppers by the end of 2021, up from 310 million last year. Online spending also is expected to grow 60% per person this year, pushing total e-commerce sales to expand two-fold to $254 billion in gross merchandise value (GMV) by 2026. 

The average consumer in the region was estimated to spend $381 online this year, compared to $238 last year. This figure was further projected to hit $671 in 2026, according to the fourth iteration of an annual study conducted by Bain & Company and commissioned by Facebook. The survey polled 16,706 consumers across six Southeast Asian markets including Singapore, Indonesia, the Philippines, Thailand, and Vietnam. 

E-commerce GMV in the region would reach $132 billion by end of this year, 1.8 times larger than last year's $75 billion, the report estimated. Respondents in the study were aged 15 years and above, and had made an online purchase in at least two product categories in the last three months, including electronics, household goods, and clothing. Some 30 million online shoppers were added in the past year alone. 

Online retail would account for 9% of overall retail by end-2021, up from 5% last year. Some 85% of the region's internet population also were buyers, which was higher than India's 20% and just below China's 90%. 

With 350 million online shoppers in Southeast Asia, 78% of the region's population--448 million in total--would spend digitally by year-end. More than 95% accessed the internet via their smartphone, according to the report, which estimated there would be 380 million online shoppers in Southeast Asia by 2026. 

Some 45% tapped online as their primary purchase channel, with 65% acknowledging they did not know what they wanted to buy when they browsed. Some 80% went online to discover potential purchases, while 83% used online platforms to gather more information about products and services. 

On average, digital shoppers had visited 7.9 websites before making their purchase, up from 5.2 last year. In Singapore, this figure clocked at 6.2 websites this year. 

Across Southeast Asia, 92% said they were willing to pay more for sustainable and socially responsible products, of which at least 80% said they would pay up to 10% more to do so. In addition, consumers had made online purchases from an average 8.1 product categories, up from 5.1 last year.  

The report also revealed that respondents were likely to maintain their home-based lifestyles beyond the global pandemic, with 72% noting their "in-home" time spent would remain unchanged, dedicating 75% of their time shopping online from home. 

Benjamin Joe, Facebook's Southeast Asia and emerging markets vice president, said the pandemic had not only pushed people online at an accelerated pace, but also prompted consumers to establish new habits around online discovery, assessment, and purchases. 

It underscored the need for brands to tweak their strategy to better engage consumers across the entire buying journey, Joe said in a virtual media briefing Tuesday. 

Praneeth Yendamuri, partner at Bain & Company, noted this cut across multiple industries, including fintech and online learning, as more in the region moved to digital channels for all their daily and lifestyle needs. 

He noted that 67% of Southeast Asian digital consumers used fintech for the first time since the COVID-19 outbreak, fuelled largely by competitive prices and rich user experience, amongst others. Another 45% of respondents between 16 and 25 also tapped online platforms for e-learning purposes, while 79% used digital healthcare services for the first time. 

To better engage online shoppers, Yendamuri suggested brands and organisations "rewrite" their multi-year digital-first and consumer engagement strategies. These should encompass cross-selling opportunities in an omnichannel consumer journey. They also would need to refresh their product offerings and diversify their portfolio, tweaking prices dynamically.

He added that organisations would need to realign to the new norm, designing their product and services to address the heightened "at-home" focus. 

E-commerce players, specifically, should expand their product range and seller networks, as well as improve platform awareness and product discovery. 

Asked if increased online scams and regulations might hamper future growth in online activities, Joe noted that Facebook worked with governments in the respective markets to ensure the social media platform was "safe" for its users and scams were weeded out. 

He added that digital literacy and user education were essential in driving such efforts, and Facebook was working with governments to upskill users with the necessary digital skills to prevent online scams. 

He noted that new regulations in the region were not a surprise as the pandemic had fuelled people's dependency and activities on digital platforms. In particular, social commerce had emerged to provide a source of income for small businesses. 

According to the study, 21% of online purchases were made on social commerce sites while e-commerce marketplaces accounted for 32% of online buys.

Joe said Facebook welcomed regulations that aimed to foster online community spirit and support the digital boom in Southeast Asia. 

China this week introduced a new mandate that restricted local residents, aged 18 and below, to three hours of online games a week, or one hour each on Fridays, Saturdays, and Sundays as well as official holidays. 


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