SEA consumers ‘going digital’ will outpace 2025 predictions this year

• The pandemic has dramatically influenced the shopping behaviors of Southeast Asia’s citizens
• Numbers of consumers ‘going digital’ are expected to outpace previous forecasts for 2025

Business tech readers may well have become weary with the repeated assertions that the pandemic has ‘ignited’ or ‘catalyzed’ or ‘accelerated’ a chunk of consumers to ‘go digital’. 

The reasoning, generally, is that lockdowns imposed by the pandemic have led us to adopt new behavior befitting of the limitations. Reduced access to physical stores has led more people to explore and understand the unbridled choice and convenience of e-commerce. Closure of bank branches on the street — or merchants adopting cashless payments to avoid transmission — means there’s little option but to adopt digital banking or contactless.

Once consumers are forced to embrace the benefits of the technologies around us, there will be no going back to old ways, we’re told. According to an annual report by Facebook and Bain & Company, this kind of speculation is holding water across Southeast Asia, on a massive scale. According to the research, the region will be home to 310 million digital consumers by the end of the year, hitting a figure that was previously forecast for 2025, as imposed physical distancing measures saw spend directed online. The rise of consumers going digital is such that online spending in Southeast Asia will account for 5% of the total retail market worldwide, surpassing India at 4%. 

The findings were based on more than 16,000 respondents from six Southeast Asian countries, including Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, as well as executives from firms like Sephora, Gojek, Shopee, L’Oreal, and Sendo. 

This overnight circuit change has been largely driven by Southeast Asia’s business agility, which has meant that, rather than the economy stagnating and receding, it’s simply been reshaped and redirected into online platforms and services. For many businesses, the only way to secure a future was to establish a robust digital presence, quickly. “The crisis has also reminded us that businesses across all industries from corporations, SMEs, and micro-entrepreneurs need to be flexible and adaptable to remain resilient to weather through the challenges and changes that any crisis may bring,” Grab Malaysia’s MD, Sean Goh, told Tech Wire Asia previously. 

Commenting on the report, Facebook’s managing director of gaming for Asia-Pacific, said: “With five years of digital acceleration condensed into one, the impact of digital adoption on businesses has never been more apparent.

“A lot of what has happened has been helped by the unfortunate pandemic, but there has been an exponential growth in the region nonetheless.” By the end of the year, the report states that 70% of Southeast Asia’s population will go digital, with the average online shopper tripling spend from 2019 to US$429 in 2025.

Last year, Southeast Asian consumers went online to purchase items from an average of 3.7 categories, but this year that’s grown to 5.1, representing an increase of 40%. Most significant has been a shift to buying groceries online, going from having the least online retail penetration, to capturing around 43% of digital consumers this year, attracting the most first-time online purchases throughout the pandemic. 

First-time digital purchases were also dominated by items such as home furniture and consumer electronics, while growth in spend per transaction has also increased, doubling that of last year. Interestingly, it’s not the first time a health crisis has led to a boost in digital adoption. There are numerous parallels between the SARS epidemic of 2002-2003 and the COVID-19 coronavirus outbreak of 2020 — both caused consumers to change expectations towards online shopping to fill a physical retail gap.

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