KUALA LUMPUR: Southeast Asia's digital economy continues to expand as it sees an increase in mobile first digital consumers and purchasing more categories online, according to Facebook and Bain & Company's annual SYNC Southeast Asia report, which looks at the digital economy and the future of e-commerce in the region.
This report is based on a survey of approximately 16,700 digital consumers and gathered insights from interviews with over 20 CXOs across six Southeast Asian countries, namely, Malaysia, Indonesia, Philippines, Singapore, Thailand and Vietnam. Over 2,142 Malaysians digital consumers surveyed are those who have made an online purchase in at least two product categories in the past three months and are above 15 years of age.
According to Bain & Company, there will be 350 million digital consumers in Southeast Asia at the end of 2021 compared to around 310 million at the end of 2020. This means that almost 80 per cent of Southeast Asian consumers will go digital by the end of this year.
Malaysia is leading in the region with the highest percentage of digital consumers (88 per cent or 22 million people) and 90 per cent of consumers will go digital by the end of 2021.
"The digital transformation is here to stay and Malaysia is taking the lead to be the most digitised nation in South East Asia. As consumers 'purchase journey and digital lifestyle is evolving, it's important to reimagine consumer engagement. It presents opportunities for businesses to build their brand and be connected to consumers on what matters most to them. At Facebook, we bring solutions to businesses to help people easily discover and buy the things they are most likely to love," says Facebook Malaysia's country director, Nicole Tan.
Digital spending per person is up 47 per cent compared to last year, with overall e-commerce sales set to further increase by 1.3 times by 2026. Malaysian consumers are not only spending more online as forecasted in 2020, but there's also a continued accelerated adoption of online as a channel for shopping with 46 per cent of them using online as a primary purchase channel. They are open to discovery of new products and services with 63 per cent of them saying they don't know what they want to buy when they go online and 44 per cent saying they had tried new online stores this year that they'd never heard of before.
They are also buying an even wider range of categories online with an average of 7.6 categories than the five average seen in 2020 (52 per cent increase).
The study also shows the immense potential to build brand loyalty and growth as the e-commerce market remains fragmented. In 2021, savvy Malaysian consumers are shop-hopping across seven websites before making a purchase decision — a notable 1.8 times increase from an average of 4.8 sites in 2020.
Consumers are also becoming environmentally conscious with over 87 per cent of those surveyed saying they are willing to pay more for sustainable and socially responsible products, and some 77 per cent of consumers willing to pay up to 10 per cent premium for such products.
In fact, environmental impact was cited as one of the top three reasons for Malaysian consumers to switch brands apart from value for money and quality of product.
The home-centric lifestyle is getting even more entrenched in Malaysia. While some believe that the shift to digital is temporary, the report predicts it is here to stay, especially for dining and shopping.
Seventy-five per cent of respondents said they will continue spending time at home post Covid-19, with 68 per cent of the time spent shopping online at home.
Digital discovery is crucial - 79 per cent Malaysians use online channels as the primary channel for discovery. Social media remains the number one online discovery channel in Malaysia, with social videos dominating in popularity, three times more than previous year (22 per cent). When it comes to evaluation, 81 per cent of Malaysians turn to online channels to find more information about a product or service.
Social media is mainly used for product reviews while brand sites emerge as a new source of evaluation. On brand consideration, online channels pose a stronger influence of 71 per cent versus 29 per cent for offline channels.
"We hope to be able to help businesses ramp up their digital transformation and rewrite the digital first strategy. It is now the time for businesses to be bold and creative in experimenting new ways to meet the new digital consumers of today and be discovered. These could range from commerce features like Shops to help businesses of all sizes to set up free storefronts that consumers can easily access across Facebook, Instagram and WhatsApp, to Reels, a new way to create and discover short, entertaining videos on Instagram," added Nicole.
On what's to come, the report found that over 80 per cent of venture capital funds are flowing into the internet and technology sectors - particularly Fintech, EdTech and HealthTech. The report suggests that disruption may be more apparent in healthcare and education as they rapidly evolve to adapt to consumer's home-consumption habits such as home-based learning and telemedicine.
"The past year of agile decision-making has certainly paid off for brand owners and platforms. Forty-seven per cent more consumers in Malaysia have switched to online channels as their most used channel across categories, with the most significant increase in groceries and furniture. Consumer goods companies can expect further headroom for growth and take advantage of Southeast Asia's (SEA's) paradigm shift in consumer behaviours.
"The most successful brand owners will focus on strategies to both capitalise on a post-pandemic digital boom in the region and insulate themselves from ensuing digital disruptions," said a partner at Bain & Company, Gwendolyn Lim.
The full report is available at: https://www.facebook.com/business/m/sync-southeast-asia