70% of Southeast Asian consumers to go digital this year: report

The number of digital consumers in Southeast Asia is growing in a much quicker pace than expected, with higher spending power and increased preference for contactless transactions as key drivers.

Global consulting firm Bain & Company projected last year that the number of digital consumers – those that have purchased a product or service online in the past 12 months – in the region will reach around 310 million by 2025.

In its follow-up report titled “Digital Consumers of Tomorrow, Here Today,” done in collaboration with Facebook, the company now expects Southeast Asia to reach that number this year. This means that almost 70% of consumers in the region will go digital about five years earlier than previously forecasted.

The study surveyed approximately 16,500 digital consumers and gathered insights from over 20 chief experience officers across Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. The respondents were consumers who have made an online purchase in at least two product categories in the past three months.

Rapidly increasing online spending

The study found that the average spend per consumer will more than triple to US$429 in 2025 from US$124 in 2018. This exceeds Bain’s previous 2025 forecast of about US$392.

A key driver to the uptick this year is a significant lift in spending power across Southeast Asia compared to 2019. Data from the report showed that spending patterns between tier-one and tier-two cities have narrowed in the past 12 months.

“Southeast Asia is a dynamic region and is fast growing to be one of the top growth engines for the global digital economy,” Bain partner Praneeth Yendamuri said. “Looking forward, online spending is expected to triple by 2025 and reach close to US$150 billion.”

Along with this growth comes the consumers’ tendency to buy into more categories online. According to the report, purchases in categories such as clothing, electronics, personal care, beauty, and household appliances grew by around 1.5x since last year.

Seeing a much larger increase is the online groceries category, which grew by 2x to 2.5x compared to 2019. According to the report, 43% of respondents in Southeast Asia have done their groceries online.

Opportunities to seize

Bain and Facebook also noted that contactless and home-consumption habits are expected to continue despite the easing of physical distancing measures. This presents several opportunities for businesses.

“With five years of digital acceleration condensed into one, the impact of digital adoption on businesses has never been more apparent,” Facebook’s Asia-Pacific managing director of gaming Sandhya Devanathan said. “It is vital for businesses to connect with consumers in ways that are frictionless and to replicate in-person interactions through social platforms, messaging, and short videos as much as possible to drive discovery and loyalty.”