Marketers can no longer afford to overlook the significance of Southeast Asian consumers, especially with the region’s rapidly growing middle class. Advertisers have failed to regard this audience with proper attention in the past, underestimating the rate of adoption of digital platforms in areas further from big cities. A Bain & Company study, ‘The Rising Middle Class,’ states 33% of the population were connected to the market through smartphones in 2014, which grew to 82% in 2018 and is forecasted to grow to over 105% by 2022. By 2022, electronic payments are forecasted to grow to over $30 billion USD. These figures indicate that in the next five years, the growth of digital consumers will reshape the economic landscape of Southeast Asia and open even more opportunities for marketers.

Southeast Asia is fastest growing region by digital ad spend

New study findings

Facebook and Bain’s new study, ‘Riding the Digital Wave: Southeast Asia’s Discovery Generation,’ surveyed 12,965 respondents across Indonesia, Singapore, Malaysia, the Philippines, Vietnam, and Thailand to observe how the behaviours of digital consumers will transform the online spend in Southeast Asia.

From 2015 to 2018, the number of digital consumers grew 2.8 times from 90 million to 250 million. The study predicts there will be 310 million digital consumers in Southeast Asia by 2025. Online spending is expected to grow three times faster than the growth of digital consumers.

At an expected 350 million people, the emerging middle class in these regions are projected to account for 70% to 80% of the growth in digital consumers. They are estimated to have a combined disposable income of $300 billion USD by 2022.

The discovery generation

The study found that 67% of the consumers in the region said they don’t know what they’re looking to buy before they shop online. More than half say they learn about new brands and products through social platforms. Respondents also said they’re open to shopping across platforms and brands, and over 40% have tried a new online store in the past year.

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Country managing director at Facebook Singapore Sandhya Devanathan stated, 75% of respondents in Singapore said they are willing to buy from other brands or multiple brands when shopping online. Digital consumers in the Philippines and Malaysia were similarly open to buying from other brands.

“There is no longer just one way to shop and nobody shops the same way twice. The key takeaway is that designing for discovery is absolutely crucial, given that customers engage with a business through multiple channels at the same time.”

Sandhya Devanathan, Country managing director at Facebook Singapore

Over 80% of respondents indicated they have a strong preference for an omnichannel shopping experience. Over 80% of respondents say they compare prices in-store and across discovery platforms before making a purchase. Approximately 53% of shoppers say they compare options across websites, and 33% of respondents check physical stores before they make a purchase decision.

What this means for marketers

The rapidly changing e-commerce landscape, thanks to the exponential growth of Southeast Asia’s middle class means there are countless marketing opportunities on the horizon. “Businesses of all sizes, including specialty players have a significant opportunity to compete on a larger scale in Southeast Asia,” says Sandhya Devanathan.

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Bain & Company also conducted a separate study interviewing 40 industry business leaders across Southeast Asia and found that although 77% are aware of the emerging middle class, only 15% of leaders believe their companies are ready to market to the growing segment. Among company leaders, 60% state they currently lack a clear marketing strategy.

Praneeth Yendamuri, partner at Bain & Company, says most of the growth in e-commerce will come from apparel, personal care, and beauty. The value of clothing, footwear, and accessories are currently valued at $47 billion USD and online commerce penetration is 9%. The personal care and beauty market is valued at $15 billion USD with online penetration at 7%. These categories are projected to grow 25% per year.

The study found loyalty programmes are a particularly useful tool as there is no principal player in the e-commerce market. Respondents enrolled in a loyalty programme are 1.5 times more likely to promote brands and platforms than those without a loyalty programme. Members of loyalty programmes are also 45% more likely to make recommendations across categories, 25% more likely to have high purchasing frequencies across categories, and 20% more likely to have higher spending across categories.

The incoming flood of digital consumers in Southeast Asia is forcing marketers to adapt quickly, but also will allow for countless opportunities across industries. As the multiplying middle class embraces their identity as the ‘discovery generation,’ marketers possess a newfound freedom to sell specialty products to a vast audience, expand their reach, and so shape their businesses with more flexibility and creativity. In turn, consumers will have more options, exposure to new products, and more information to influence their purchasing decision than ever before.

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