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e-Conomy SEA 2021: Exploring a Decade of Possibilities

Updated: Dec 7, 2021

For almost 600 million people living in Southeast Asia (SEA), various new avenues of opportunities have opened up. The region’s digital economy has displayed a resurgence and seems to be overcoming the downturn caused by COVID-19. The region’s digital economy, which is expected to hit $1 trillion gross merchandise value (GMV) by 2030, bears a strong testimony to the roaring future that SEA is looking at. The latest e-Conomy SEA report by Google, Temasek, and Bain & Company offer fresh insights on growth opportunities in the region’s digital economy.

1. Digital Consumption a New Way of Life

Digital consumption has now become wholly ingrained into the lives of consumers in SEA. People who had been using digital services since before the pandemic are now using four more digital services than they used in 2020. SEA saw an increase of 40M in new internet users in 2021 along with the 40M users who started using digital services in 2020, driving the internet penetration in the region to 75%.

The report reveals that 60M new consumers started using digital services since the pandemic. Also, 9 out of 10 consumers who started using a new digital service in 2020 have continued using the service in 2021 too.

2. Rise of the Digital Merchant

The growing shift in consumer behavior and their increasing inclination toward digital services have together led to the emergence of the digital merchant. Native digital SMEs and early adopters have adopted digital services end-to-end. In fact, one out of three merchants believes that had digital platforms not been there, they would have not survived the pandemic. While most merchants had a favorable stance towards digital platforms, profitability remained a top concern for most of them.

The growth in the number of digital merchants has naturally translated into the growth of e-commerce with its GMV doubling year over year to $120 billion in 2021 from $74 billion in 2020. Food delivery and online media are the other two digital services that have seen substantial growth.

3. From Resilience to Resurgence

While the digital economy in SEA was resilient in 2020, it has been highly resurgent in 2021 with a $170B GMV. Food delivery, e-commerce, and digital financial services have performed as the primary growth drivers and are expected to take the digital economy to $360B by 2025.

Much of the market growth has been driven by e-commerce, which is expected to make up for over two-thirds of the region’s GMV by 2030. Till then, online shopping is expected to pick up greatly amongst consumers across different age groups in both rural and urban settlements. Also, the report says that compared to the current 10%, 50% of retail spending will happen online in 2030.

4. Growing Investments

Supportive regulations, strong growth indicators, and successful exits have led to an influx of global investments into SEA at an exponential rate. Deal activity has also been at a record high raking in $11.5B single-handedly in H1 2021. This has put it on par with the entire year’s value for 2020.

As mentioned previously, e-commerce and digital financial services have made up the bulk of the market growth and therefore, continue raking in more investments. The growth in both these industries is somewhat co-related as the growth in e-commerce is expected to ride on the popularity of digital financial services like e-wallets and BNPL services, which will make online shopping accessible to a whole new generation.

5. Shift Towards a $1T GMV

The report mentions that continuous shifts in consumer and merchant behavior have been well-supported by strong investor confidence, which has ushered SEA into its ‘Digital Decade’, propelling the region towards an internet economy of $1T GMV by 2030. Talent continues to be critical to success, along with new enablers around infrastructure, data regulation, and equitable development of the digital economy.

Brands need to offer different pricing mechanisms and payment options like top-up cards and sachet pricing to further penetrate the mass market and non-metro areas. By catering to their different financial habits, brands can make it easier for people to subscribe to their service.

Key Takeaways for Marketers

As the digital economy in SEA continues to move towards $1T GMV in the current digital decade, brands need to find new ways to meet the rising consumer expectations. Also, they must ensure the utmost customer satisfaction at the various stages of their purchase journey in order to make the most out of the rapidly changing landscape. As the market penetration continues to increase, it will be important for brands to not just acquire users but also boost order value and user stickiness. This would mean offering a wider selection of products and the development of e-commerce platforms that offer varied digital payment and lending options that could make their purchase experience more convenient for consumers.

To delve deeper into the findings of the report, click here.


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