Bain and Facebook on online shopping in Southeast Asia

22 June 2020 Consultancy.asia

A promising outlook for online commerce in Southeast Asia has been made ever more promising by the Covid-19 crisis, according to new analysis by Bain & Company and Facebook. The use of new apps is on the rise, accompanied with a strong preference for ‘at home’ consumer activity.

Facebook and Bain identify six themes that have been unfolding across Southeast Asia’s consumer market in recent years, particularly as online engagement has increased in the region. The Covid-19 crisis has affected the progress of these trends, in some cases accelerating them significantly.

Theme number one is the shopping of essential goods online. In a similar roundup of the online commerce market last year, Facebook and Bain reported that online retail was mostly picking up in the clothing, accessories and personal care segments. Online groceries, meanwhile, had achieved a market penetration of less than 1%.

Under lockdown, nearly 50% of consumers in Southeast Asia have spent more on fresh and packaged grocery purchases online, and most of them plan to continue this behaviour even once economies reopen. The groceries market across Southeast Asia amounts to $350 billion according to the researchers, and this new trend could mean billions in revenue from online groceries.

Top 5 app categories being used more often  + Top 5 app categories being used for the first The second theme is the rate of discovery of new apps. The telling statistic here is that 85% of all digital consumers in Southeast Asia report that they have tried a new app since the start of this year. Social media, video streaming and instant messaging apps have dominated this scenario, appealing to consumers across all age groups.

Other apps that have gained lockdown traction include ecommerce, food delivery and digital payments among the middle-aged (25-54 years) demographic, while those between the ages of 18 and 24 embraced new music, gaming and short video content apps. Meanwhile, the report highlights that the 40 and above age group has developed a fresh affinity for ecommerce.

Value for money

Third, Facebook and Bain examine the focus on getting value for money in the online space. Online bargain hunters were in the minority last year, while the global spending crunch has boosted these numbers in the latest report. Consumers with ‘value for money’ among their top priorities when making a purchase have increased by well over 50% in most Southeast Asian markets, and more than 40% in Vietnam and Indonesia.

Saving has become the priority in these markets, with most reporting that they plan to be less materialistic, take out insurance and put more away in the bank. In this regard, consumers in Southeast Asia appear to be substantially more prudent than those in the US, according to the report.

Theme number four is the type of brands being favoured in the region. Southeast Asian consumers have reportedly been open to a variety of brands in the past, although the trend in recent weeks has been to favour well-established and trusted brands. This trend is unfolding across all product segments. 

Facebook and Bain attribute this to the stronger capacity at established brands. “This preference is driven by the fact that established brands have the consumer trust and robust supply chain to ensure their products are always available and visible,” said the report.

New app downloads by age groupThe fifth theme being explored is more consciousness in consumer activity. Well over 70% of all Southeast Asian consumers report being more health conscious about their purchases, while more than half report being more environmentally conscious. Consumers in the Philippines and Vietnam even ranked environmental factors as a higher priority than value for money in their purchases.

Contactless payments

Finally, Facebook and Bain explore how ‘at home’ and contactless consumer activity has developed under lockdown. Nearly 80% of consumers in Southeast Asia now cook at home more often than before, while television consumption has increased by two-thirds.

“This behaviour is likely here to stay as Southeast Asian consumers adopt more favourable attitudes to working from home and use remote-presence apps more often. At least a third of respondents felt more productive when working from home and felt that doing so has improved their mental health and stress,” states the report.

The research also shows an increase in contactless payments, even in what it calls “cash-dominant markets,” as retailers, financiers and food delivery companies become innovative with their payment mechanisms. An example is the Philippines, where online payments platform GCash has become the most downloaded finance app on the Google Play Store.

Facebook and Bain recommend that businesses across Southeast Asia respond to these changes in the market, increasing their focus on online channels, building a more health and environmentally friendly product portfolio and providing more value for money.

“The new normal poses new challenges, but it also presents companies with the opportunity to help society redefine what this future would look like. It’s the beginning of a journey for businesses to form new partnerships, boost resiliency, and embrace the digital future,” concluded the authors.