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  • Writer's pictureJefrey Gomez

Digital Consumers: Today and Tomorrow

COVID-19 has altered consumer behaviour and buying patterns in unimaginable ways. Social distancing has pushed people indoors to make way for commerce with minimal physical contact. Extensive economic disruptions have led business owners to explore new avenues and building a robust digital presence is one of them.

However, merely moving online without adequate information on market trends and consumer behaviour might result in having a hazy end goal.

To that end, SYNC Southeast Asia, which is thought-leadership series by Facebook and Bain & Company can help business leaders dive deeper into the emerging trends and rising opportunities.

Here are the major highlights of their recent study.

1. Digital Consumer Adoption Has Exceeded 2025 Forecasts

Bain & Company had projected in 2019 that the number of digital consumers (people who have purchased any product or service online, except travel, in the last 12 months) in Southeast Asia will be around 310 million in 2025.

However, the region is expected to hit that mark well before the forecast, in 2020 itself. By the time 2020 ends, 310 million digital consumers will account for 69% of Southeast Asia’s population over the age of 15 years.

Between 2018 and 2020, 60 million new digital consumers joined the list of existing online consumers. Thus, their number increased at a CAGR of 12%. Now almost 70% of the 443 million population in Vietnam, Singapore, Malaysia, Thailand, the Philippines, and Indonesia are digital consumers.

2. Online Spending Outperforming 2019 Estimates

Offline consumers across Southeast Asian countries are going increasingly digital. However, Indonesia has seen maximum digital adoption amongst all the countries in the region where average growth in digital consumers was between 5%-9%. In Indonesia, the digital consumer population surged by 15% in 2020 and the country now has 137 million digital consumers, who represent 69% of its population who are over the age of 15 years.

Online spending has also beaten the 2019 forecasts. By 2025, digital consumers are expected to spend 3.5x more than they did in 2018. The figure for 2025 was 3.2x in the 2019 study by Bain & Company.

By 2020 end, the average gross merchandise value, which is the monetary value of goods and services sold through online marketplaces, is expected to reach $172 per person in Southeast Asia.

3. Online Retail Penetration Triples for Groceries

Bain & Company reported in 2019 that Southeast Asia’s online retail penetration stood on parity with India’s at 3%. However, online retail penetration in Southeast Asia has increased by 1.6x to 5% since then and has surpassed India. Also, the percentage of internet users who are online consumers is higher for Southeast Asia at 79% than that of India, which has 20% internet users who are online consumers.

Not only has online spending for Southeast Asian consumers increased, but they are also purchasing from more categories like clothing, toys, household appliances, electronics, groceries, etc. While each Southeast Asian consumer purchased an average of 3.7 categories online in 2019, it increased by 40% to reach 5.1 categories in 2020.

Online grocery purchases have seen greater mainstream adoption. While every category grew by at least 1.4x between 2019 and 2020, the most dramatic growth was seen in groceries, which saw a surge of 2.7x.

In fact, the growth in online purchases has been driven mainly by groceries and food delivery, with 35%-43% of digital consumers going for packaged food and groceries.

4. Social Media and Short Videos Pave the Way for Discovery-Led Commerce

The discovery habits of digital consumers have undergone many changes too. They usually find new brands on social media and through short videos. Social media has now become the primary source of discovery for both short and medium-length videos.

Of all the people who were surveyed for the study, 63% said that they found new short videos mainly through social media. 54% said that social media was their primary source for medium-length videos.

An average consumer views 17 short videos,13 medium-length videos, and 0.75 long videos every day. This suggests that social media has been playing a more significant role in facilitating brand discovery through video views than international channels for some time.

5. Consumers More Open to Switching Brands

Consumers have now become more open to switching from one brand to another. 54% of the surveyed people said that they had changed the brand that they had purchased the most from, three months before the study. This means that businesses need to be more innovative to retain customer loyalty.

In the 6 Southeast Asian countries where people were surveyed, reliability and value were cited as the top two reasons for people switching their brands. These two were also cited as the top factors for switching between most used websites. While 42% switched due to better pricing, 34% cited product quality as the reason for switching.

Businesses that seek to retain customer loyalty can do so by addressing reliability issues such as quality control, mismatched product expectations, and lack of availability. The study found that brands that paid greater attention to value and reliability were better placed to stand out in a crowded marketplace.

Bottom Line

The study makes it clear that brands that have been waiting to increase their online presence will ultimately lag behind as the rise of digital consumers won’t take five years- it’s happening right now. Large enterprises should prepare for an omnichannel future, while small businesses should amp up their digital presence. By working on the insights provided in this report, brands operating in all verticals can survive and thrive in the long run.

To delve deeper into the findings of this study, find the full report here.


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