Southeast Asia Has Added 70 Million On-line Consumers Since Covid: Report
On April 20, 2020, cyclists will pass each other in Singapore.
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An estimated 70 million more people in six Southeast Asian countries have shopped online since the pandemic began, according to a report by Facebook and Bain & Company.
As governments encouraged people to stay home to slow the spread of the coronavirus, digital services such as e-commerce, grocery delivery, and online payment methods were rapidly adopted in Southeast Asia.
And this trend is likely to continue. The report, which polled more than 16,000 people in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, forecast the number of digital consumers in Southeast Asia will reach 350 million by the end of this year.
By the end of 2021, Facebook and Bain expect more than 70% of people aged 15 and over to shop online in the countries surveyed. The report forecast that the number of online shoppers in Southeast Asia will reach 380 million by 2026.
Among the surveyed countries, Indonesia, the largest economy in Southeast Asia, continues to show the highest growth rate. The digital consumer population is forecast to grow by around 15%, from 144 million in 2020 to 165 million in 2021.
Many parts of Southeast Asia are struggling with a Covid resurgence due to the highly transmissible Delta variant. In some emerging markets, vaccination rates remain low. With temporary locks and movement restrictions making it difficult for consumers to visit brick and mortar stores, many e-commerce markets have flourished.
The poll, which was conducted in May, found that the proportion of respondents who said they shop “mostly online” increased from 33% in 2020 to 45% this year, with the largest increases coming from Singapore, Malaysia and the Philippines.
Facebook and Bain predict that average online spending will increase 60% this year, from $ 238 per person in 2020 to $ 381 per digital consumer. The share of online retail in total retail sales rose from 5% in 2020 to 9% in Southeast Asia, the report said.
“For the next five years, e-commerce sales in Southeast Asia are expected to keep pace with these countries as well, growing 14% annually,” the report said.
Fintech investments are reaching new heights
With more and more online purchases, fintech services such as “buy now, pay later”, digital wallets, and cryptocurrencies have become more widespread.
In the first three months of the year, 88% of private equity and venture capital investments in the region went to the technology and internet sectors. Of that, 56% went into financial technology, according to the report.
“We’re seeing a massive triple explosion of fintechs. Not only are regulators removing the regulatory barriers, we will see a rapid flow of capital without friction, ”said Dmitry Levit of Cento Ventures in the report.
Digital wallets were the preferred payment option for 37% of respondents, compared with 28% who preferred cash, 19% for credit or debit cards, and 15% for bank transfers. The Philippines, Malaysia and Vietnam saw the largest gains in digital wallet adoption at 133%, 87% and 82% growth, respectively.
The rapid digitization of Southeast Asia during the pandemic shows the immense opportunities in the region’s digital economy, the report says.
“The region will be a growth market for at least the next 10 years as new industries, industries and products emerge,” Justin Hall, partner at Golden Gate Ventures, said in the report.