Southeast Asia’s shift toward a digital economy is reaping dividends as more people gain access to a previously untapped market. Since the COVID-19 pandemic began last year, 70 million people have become digital consumers, according to research by Facebook and Bain & Company.
The Southeast Asia, Home for Digital Transformation report surveyed 16,706 online consumers and more than 20 leaders in six countries: Singapore, Thailand, Vietnam, the Philippines, Malaysia, and Indonesia. The research, conducted in May 2021, aimed to determine home-centric online trends and reveal how the region would change by adopting solutions facilitated by eCommerce startups.
Many observers were curious how the region would cope with the onset of the pandemic, and expectations were low due to the global economic damage. Surprisingly, 2020’s earnings surpassed estimates because of the shift in customer behaviour, spending habits, and access to online shopping and digital services.
Southeast Asian online sellers are confident the region will continue to grow according to Lazada
The increase in digital consumers matches the entire population in the United Kingdom (UK) at 70 million, and projections are there will be 380 million Southeast Asian customers this year. By the end of December, eight-in-ten shoppers 15 years and above will be purchasing online, with the estimated average spending being $381 USD per person.
As online consumption continues expanding, eCommerce startups in Southeast Asia are coming up with various financial technology (fintech) services to meet the demand for ePayments. For example, they offer digital wallets, cryptocurrencies, Buy Now Pay Later (BNPL), and Pay-as-you-Go (PAYGO) payment models.
The evolution of the consumer economy
After the onset of the pandemic, buyers had to adapt to the ‘new normal’, shifting from in-person retail purchases to online options. Governments and eCommerce businesses alike had to rush their digital transformation strategies and systematic approaches. There were changes to infrastructure, business hours, social contact, along with restriction of movement, all of which hurt local trade.
The survey found that adapting to the new way of life altered customers’ purchasing journeys, with 45% of respondents saying they now shop primarily online. The number of people who cite social media as their top solution for discovering products also tripled during this period. Moreover, 80% of the channels consumers use to find and analyse goods or services before purchase are eCommerce marketplaces, social media, and brand-owned websites.
Businesses also realised they needed to evolve to accommodate and retain customers. Buyers were more willing to try different brands and platforms, changing loyalties on a whim to find the right fit for their needs. The report discovered that 51% of consumers switched their customary brand in the previous three months.
Thailand led the way, with 63% of customers switching their loyalty to a different company. Vietnam was second, with 61%, followed by the Philippines at 51% and Malaysia at 45%. Indonesia and Singapore rounded off the final positions with 44% and 35%, respectively. The reasons mentioned for the shift included pricing, easy-to-use platforms and apps, product availability, fast delivery, and multiple shopping categories.
Another unexpected buyer-loyalty battle has emerged, with 9 in 10 consumers willing to pay extra for products that meet environmental, social, and governance (ESG) factors. Sustainability has become an essential part of the public’s social and economic approach making companies and governments feel compelled to take steps to protect people and the ecosystem from destruction. Green products are now available for purchase in many categories, including lighting and beauty & cosmetics.
Southeast Asia’s post-pandemic future
The ‘new way of living’ bodes well for eCommerce startups in Southeast Asia and the region’s development. Advances in fintech, agricultural technology (agritech), food technology (foodtech), education technology (edtech), and cloud-based technology provide opportunities for growth, innovation, solutions, and economic prosperity.
Home-centric lifestyles will likely continue post-pandemic, meaning eCommerce startups will continue disrupting traditional sectors, making digital apps and platforms convenient for consumers. Moreover, startup owners should be aware that their buyers are more conscious of preventing an environmental catastrophe. Thus, all products, foodstuffs and services must be sustainable, removing pathogens and significantly reducing greenhouse gases from the processes.
Long-term economic recovery is contingent on the region overcoming the COVID-19 pandemic. As per the report, Southeast Asia’s eCommerce gross merchandise value will likely rise from $132 billion USD to $254 billion USD in five years. While the pandemic has encouraged further innovation, these targets will not be possible if movement restrictions and other measures continue to damage trade.
Policymakers should consult stakeholders to create a conducive regulatory climate for startups to thrive. Governments, foreign investors, and local innovators must fund tech projects and industries to deliver significant value to consumers while showing robust support for the green digital economy, the rollout of 5G technology, and the use of mobile wallets.
Taking these approaches will allow businesses access to broader local and global markets and partnerships, which will drive further innovation in Southeast Asia.