Bain and Facebook see hugely accelerated online shopping trend

31 August 2020 4 min. read
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Last year, Bain & Company and Facebook expected Southeast Asia to have 310 million people shopping online by 2025. Now, thanks to Covid-19, that milestone will be achieved by the end of this year.

The pair conducted a study in June last year among nearly 13,000 consumers in six Southeast Asian markets – Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. The goal was to find out the number of digital consumers, defined by Bain & Company and Facebook as “anyone who has purchased a product or service online (excluding travel) in the past 12 months.”

Based on the data, the region was charting a course to reach 310 million digital consumers by 2025, but that was well before the Covid-19 crisis struck. Among the heaviest repercussions from the crisis has been the impact on consumer behaviour, particularly the growing dependence on online channels.

Digital consumer growth in Southeast Asia

Fear of infection, coupled with restrictions on collecting in public places drove many to seek sustenance from the safety of their own home. So for the lockdown and weeks to follow, online platforms became the go to option, for everything from groceries to consumer goods.

Looking to measure how these trends weighed up against the previous outlook of digital consumption, Bain and Facebook analysed new consumer data from the past months, and the results have predictably raised some eyebrows. The new report notes a dramatic increase in each market since last year– with the number of digital consumers nearly doubling in some markets such as Malaysia, Indonesia and Singapore.

At current rates, 70% of all consumers in Southeast Asia are likely to have gone online by the end of this year, taking the region to the 310 million mark half a decade early. The milestone would mark a 60 million increase in the last two years alone, at a compound annual growth rate of 12%.

Increased adoption on online as a channel for shipping across markets

The new forecast for 2025, meanwhile, has been upped to 340 million digital consumers, continuing the rapid rate of digitalisation. No doubt, Covid-19 has been a tremendous catalyst for the digital consumer market. Underlying that acceleration, meanwhile, has been a steadily expanding digital infrastructure.

Be it smartphone penetration or online payment systems, the use of digital mechanisms has been growing ever more sophisticated in Southeast Asia. In part, this is visible in the expanding product portfolio that falls within the online bracket. Even before the crisis, consumers had increased their online purchase frequency for products such as clothing, electronics, personal care, beauty and household appliances.

Since the crisis, the researchers note that the versatility of the online marketplace has only increased. Groceries, for one, have seen their online market share skyrocket. In fact, the average Southeast Asian consumer had made more than seven grocery purchases online in the last three months, according to the report.

Growth in number of categories shopped online

Beverages, toys, baby care products, other household furnishing and gym equipment have all seen increased frequency. Across the board, the number of categories purchased online has jumped by nearly one and a half times the volume last year. That being said, it’s not just the purchases that are growing more versatile. Online activity is as well.

In June this year, Bain and Facebook published a separate analysis of the Southeast Asian online marketplace, indicating that the ‘at home’ culture was driving more online discoveries and the use of online channels for entertainment, information, and even inspiration for choice of brand.

A note for brands in the region is that this trend has also intensified in recent months. “The digital consumer’s discovery habits are changing, too. They go online mainly to connect on social media and videos. They are also more open to switching brands, lean more on ecommerce platforms, and expect brands to be more reliable while providing good value for money,” states the Bain and Facebook report.

In another report commissioned by Facebook, Analysys Mason recently found that Facebook’s Connectivity programme could generate $70 billion in value for the region over the next half a decade.