Southeast Asia’s Digital Decade and What It Means for Brands

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The latest e-Conomy SEA report by Google, Temasek and Bain & Company was recently published and it shed some light on opportunities for growth in Southeast Asia’s digital economy. For 589 million people in Southeast Asia, a decade of new possibilities has dawned. The region’s digital economy is moving from resilience to resurgence, paving the path for a roaring future. That future looks like something where the internet economy is projected to reach a $1 trillion gross merchandise value (GMV) by 2030.

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The report shows that pandemic-driven shifts in consumer behaviour are expected to have a lasting impact on key growth drivers in the internet economy. This includes e-commerce, food and transport, online media, online travel and digital financial services. If you want to unlock the massive opportunity for your business’ growth, you need to know what it takes to meet consumer expectations and increase customer satisfaction. We have rounded up what the state of Southeast Asia’s internet economy in 2021 and this decade means for brands and marketers.

Online shopping is the new way of life and it’s here to stay

Southeast Asia has seen a continued increase in new internet users throughout 2021. More importantly, the number of digital consumers, or users who have paid for an online service, has also increased. To be precise, Southeast Asia added 40 million new internet users this year, on top of the 40 million people who came online in 2020. This means the region’s internet penetration has reached 75%.

Additionally, what with the pandemic, 60 million people started using a digital service for the first time and one-third of them only started doing so in 2021. Remember the pandemic has left us heavily dependent upon last-mile delivery, from e-commerce to food delivery. Growth across these services has led to the adoption of digital services remaining robust in 2021.

Internet users across digital services in percentages

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Consumers are not only embracing digital services but also deepening their use. In fact, since the pandemic, they made purchases in almost four more digital services. Their frequency of use and spending across digital services is also increasing, especially for services such as groceries and food delivery. Six in 10 existing users of these two digital services increased their spending and usage frequency since the start of the pandemic.

Consumption of digital services is indeed the new way of life. And it is expected to power ahead in the coming digital decade. Already, 80% of digital consumers in Southeast Asia are satisfied with digital services. Furthermore, 9 in 10 new consumers who started using digital services in 2020 continue to do so in 2021.

How brands can succeed in this digital decade

The consumption of digital services is becoming integral to everyday life, that is clear. As such, digital consumers are now placing greater value on satisfaction when it comes to deciding how much they spend and which brand they spend on.

The report shows that there are five key factors that influence a consumer’s decision to stay with a brand or switch to an alternative brand:

  • Wider selection and assortment
  • Competitive pricing and deals
  • Better purchase experience
  • Increased convenience
  • Comprehensive payment options

The good news for brands is that increased customer satisfaction has a positive effect on consumers’ willingness to spend. For example, those who are satisfied with ride-hailing services spend 70% more per transaction, compared with those who are neutral or dissatisfied. With food delivery services. satisfied customers spend 40% more, compared with those who are neutral or dissatisfied.

A few tips for marketers

If you want to succeed in this digital decade your brands must meet the rising expectations of digital consumers to retain customers and grow brand loyalty. For starters, here are four tips on how to win over new digital consumers and have them become advocates of your brand.

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  1. Make life easier or more convenient for digital consumers. This applies to both new and existing digital consumers. Of those who intend to continue using digital services, more than 50% say it is because it has made their life easier or more convenient. A seamless online-offline customer experience is one way digital services can provide users with greater convenience.
  2. Make your website user-friendly. This way your digital consumers can easily find and purchase what they need. Provide detailed descriptions of products and services, clearly display shipping and delivery options and create a smooth checkout process so customers don’t abandon their carts mid-checkout.
  3. Offer a variety of digital payment and digital lending options. This can include account-to-account (A2A), e-wallet and buy-now-pay-later (BNPL). This is important in Southeast Asia as people have differing access to payment services. A2A has become a popular form of payment amongst banked populations. Meanwhile, BNPL is a common digital lending option for underbanked consumers who can’t acquire a credit card.
  4. Regularly ask digital consumers for feedback on their experience. You can do this for every stage of the customer journey. This will help you identify their needs, areas for improvement and address any pain points to improve customer satisfaction.

Key consumer sectors are shifting

The report also identified key consumer sectors that are driving growth in Southeast Asia’s digital economy. E-commerce leads the charge, with its GMV almost doubling year over year, from $74 billion in 2020 to $120 billion in 2021. Food delivery and online media are two other digital services driving growth.

Growth drivers of the SEA internet economy

What does the growth potential of e-commerce, food delivery and online video mean for marketers?


E-commerce has driven most of the market growth in 2021. It is forecasted to make up over two-thirds of Southeast Asia’s GMV in 2030. By then, the expectation of online shopping becomes the norm for consumers of all ages, in both urban and rural areas. Furthermore, almost 50% of retail spending will happen online, as compared with about only 10% now. This growth will ride on the popularity of digital financial services such as e-wallets and BNPL services, which will enable a new generation of underbanked consumers to shop online.

Particularly a significant potential for brands to move the needle is e-grocery. This is because grocery currently accounts for more than 50% of all retail spending in Southeast Asia. But the overall online share of the category remains low at around 2% because of lower purchase frequency and transaction value as compared with offline consumption. If penetration reaches around 10 to 20% by 2030, the sector could potentially grow to the size of the entire e-commerce market today.

As market penetration increases, acquiring users will not cut it. Growing user stickiness and order value is also crucial. This entails, for example, providing a wider selection of products and developing e-commerce platforms that offer varied digital payment and lending options to make the buying experience more convenient for digital consumers.

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For the e-grocery sector, a convenient, seamless customer experience is key to winning over customers. This includes providing more expedient delivery options, such as one-hour, two-hour or same-day delivery for fresh food. You can also offer a seamless grocery shopping experience where people can buy online and pick up in store.

Food delivery

Food delivery is the digital service with the most substantial increase in adoption in the first half of 2021. As many as 71% of Southeast Asia’s internet users adopted the service and 65% of existing consumers have increased their frequency of use. This mass adoption and deepened usage mean that the habit of ordering meals is likely to stick for years to come. If penetration and share of wallet continue to increase, the food and transport sector could reach by 2030. This is the size of the e-commerce market today.

The food delivery sector will be highly competitive. But not least because it is a hyperlocal service with relatively low barriers to entry. Instead, the service is viewed as essential to brands that want to deepen user engagement or develop a super app. With multiple players in each country market in Southeast Asia, you will need to double down on customer loyalty. This is especially because 63% of digital consumers indicate that they are likely to switch to another food delivery provider that better meets their needs.

Subscription video

A sub-sector of online media, subscription video is poised for strong growth. There is an increasing appetite for the service and potential for it to penetrate the non-metro areas. Subscribers grew by 30% from 2020 to 2021. What’s more, there is a growing demand for “multi-home” services or multiple over-the-top media services. Subscriptions beyond metro areas have also multiplied on the back of ready internet access and convenient access to digital payment infrastructure.

But consumers in non-metro areas may still be underbanked. So to further penetrate the mass market, you will need to offer various pricing mechanisms and payment options. This can be in the form of sachet pricing and top-up cards. By catering to people’s different financial habits, you make it easier for people to subscribe to your service.

As Southeast Asia’s internet economy moves towards $1 trillion GMV in this digital decade. Brands need to meet rising consumer expectations. They also must deliver customer satisfaction at every stage of the purchase journey in order to thrive. There are many ways in which brands can start transforming to ride on this opportunity.

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