SG's Internet economy to reach US$27bn by 2025, sees surge in online travel

Singapore's Internet economy is expected to reach a gross merchandise value (GMV) of US$27 billion by 2025, up 16% from a forecasted value of US$15 billion this year; according to the "e-Conomy SEA 2021, Roaring 20s: The SEA Digital Decade" study by Google, Temasek, and Bain & Company.

The forecasted GMV for this year will see a 35% year-on-year surge, underpinned by a 45% growth in eCommerce, with significant innovation in eGrocery. Overall, Singapore saw a double-digit surge across all other sectors as well. Transport and food rose by 35%, while online travel and online media saw a 28% and 15% increase respectively.

According to the study, digital merchants are becoming tech-savvy, with even more digitalisation expected in the future. COVID-19 had a part to play in this, as social restrictions led to a shift in consumer behaviour - 38% of digital merchants said they would not have survived the pandemic if not for digital platforms. On average, each digital merchant used two digital platforms to access consumer demand online.

Digital financial services are also becoming critical enablers, with 89% of digital merchants now accepting digital payments and 37% of digital merchants now adopting digital lending solutions. Many are also embracing digital tools to engage with their customers, with 43% expecting to increase usage of digital marketing tools in the next five years. At the same time, 33% said they will invest in website analytics in the next five years, and 28% said the same for digital analytics.

According to the study, Internet penetration in Singapore remains highest in the region, with 97% of internet users also being digital service consumers.

Since the beginning of the pandemic until the first half of this year, Singapore has seen 500,000 new digital consumers; 93% of whom still use the services and 99% intend to continue using them going forward. Additionally, individuals who have used the services before the pandemic have consumed an average of 2.9 more services since the pandemic began.

Deal activity also rebounded strongly in the first half of 2021 and is on track to outpace the activity of recent years as investors become accustomed to dealmaking post-pandemic. The study stated that Singapore added the most new unicorns this year, and investment appetite remains strong in digital services that surged as a result of COVID-19, such as eCommerce, eCommerce enablers, and fintech. 

Singapore's deal value in the first half alone reached US$4.3 billion, compared to US$4.9 billion for the whole of 2020. However, 2018 remains Singapore's busiest deal year, with a deal value of US$9.1 billion.

In a broader view, the Southeast Asia region is on the path to become a US$1 trillion digital economy by 2030. Propelled by a fast-growing base of digital consumers and merchants, acceleration in eCommerce and food delivery, SEA is estimated to reach US$174 billion in gross merchandise value (GMV) by the end of 2021. The region’s digital economy is also further expected to reach approximately US$360 billion by 2025, outgrowing the earlier projection of US$300 billion.

Google commissioned Dynata to run the survey across Indonesia, Malaysia, Singapore, Philippines, Thailand and Vietnam. Fieldwork for the consumer research ran from 16 July to 16 August this year online via a 25-minute computer-assisted web interview survey with a total of 9,402 respondents interviewed. Fieldwork for the merchant research ran from 4 to 16 August this year online with a total of 3,036 respondents surveyed.

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Photo courtesy: 123RF

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