Study: 5 years of digital acceleration compressed into 1, but loyalty remains an issue

Higher spending power and a heightened preference for contactless transactions will continue to drive the exponential growth of the digital economy, according to Facebook and Bain & Company who released a study titled “Digital Consumers of Tomorrow, Here Today”. According to the study, the growth of digital consumers in Southeast Asia is expected to reach around 310 million by the end of 2020, with millions more expected to join in the coming years.

This growth was originally forecasted for 2025 in the 2019 study, indicating a five-year acceleration within 2020 alone. Digital consumers surveyed are defined as those who have made an online purchase in at least two product categories in the past three months. This means that almost 70% of Southeast Asian consumers will go digital by the end of the year. The report also found that the new forecasts for the average spend per consumer in 2025 will more than triple (3.5x) that of 2018’s figure, also exceeding previous 2025 forecasts – with spending patterns between Tier 1 and 2 cities narrowing. Southeast Asian consumers are not just spending more online as forecasted in 2019, they’re also buying into more categories online.

Also, the study shows the immense potential to build brand loyalty and growth as the e-commerce market remains fragmented.

In 2020, savvy consumers are shop-hopping across 5.2 online sites before making a purchase decision — a notable increase from an average of 3.8 sites in 2019. Consumers are still searching for better pricing (42 %) and product quality (34 %) when browsing across sites. Similarly, an average of five in 10 respondents said that they changed their most purchased brand in the three months prior to the study, with reliability and value being the top two reasons for doing so.

Discovery commerce and online inspiration remains all-important with 68 % of consumers saying that they still don't know what they want to purchase before they shop online, while 62 % (as compared to 50 % in 2019) said they learn about new products and brands via social platforms, with short videos being cited as the top format of choice.  

"With five years of digital acceleration condensed into one – the impact of digital adoption on businesses has never been more apparent. 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,” said Sandhya Devanathan, managing director of Gaming,  APAC, at Facebook. “Turbulent times are often the catalyst for the rise of new business models. Our goal is to help businesses as they speed up their transformation to meet the new digital consumers where they already are."

“The last decade was about bringing consumers online. Now, with the rapid immigration of digital consumers from offline to online, coupled with the evolution of home-consumption habits, we will see more brands shifting their business models beyond the “omni-channel” option to meet the consumers where they are. What’s key is that businesses will need to adapt today’s consumer trends as it continues to shape the next normal,” said Dhruv Vohra, director of digital natives and Technology at Facebook.

The new study titled “Digital Consumers of Tomorrow, Here Today” looks into the rapid acceleration of the digital economy and how this affects the future of e-commerce in Southeast Asia. It surveyed approximately 16,500 digital consumers and gathered insights from interviews with about 20+ CXOs across six Southeast Asian countries, namely, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.

On what’s to come, the report found that Southeast Asian-based venture capital and private equity funds hit a record of US$8.7 billion in unspent capital as of end-2019. This opens doors for internet and technology disruptors to obtain more funding, grow profitably, and compete on a larger scale in the region. The report suggests that disruption may be more apparent in healthcare, education and online entertainment as it rapidly evolves to adapt to consumer’s home-consumption habits such as home-based learning, telemedicine and the sharp increase in preference for online gaming and live-streaming. 

“Southeast Asia is a dynamic region and is fast growing to be one of the top growth engines for the global digital economy. The number of Southeast Asian digital consumers has grown exponentially and their consumption habits are shaping today’s new norm. Looking forward, online spending is expected to triple by 2025 and reach close to US$150Billion,” said Praneeth Yendamuri, Partner at Bain & Company.

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