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SEA's digital economy to reach $200b GMV sooner than expected
The region was initially projected to achieve this growth in 2025
SOUTHEAST ASIA
Southeast Asia’s digital economy is expected to reach $200b gross merchandise value (GMV) in 2022, three years earlier than the initial 2025 forecasts, a report found.
In its 2022 e-Conomy SEA report, Google, Temas,ek and Bain & Company projected Southeast Asia is already approaching the $200b milestone sooner than it had projected in its e-Conomy SEA 2016 report.
“The acceleration of the digital economy during the pandemic has unlocked significant value for industry sectors, but it is critical to recognize that the new macro turbulences ahead will see different growth archetypes emerging across verticals,” Florian Hoppe, Partner and Head of Digital Practice in Asia-Pacific, Bain & Company, said.
“We are seeing market leaders take a longer-term recovery strategy and invest in capabilities to target markets and consumer segments with higher value generation potential.”
The report noted that of the current 460 million internet users in the region, 100 million users have come online in the past three years.
This comes as high adoption of e-commerce was also seen amongst urban and suburban consumers, particularly in groceries, travel, and music-on-demand.
Between 2022 and 2025, the region is projected to see a compound annual growth rate of 20%, bringing the total GMV up to $300b. Of this, e-commerce is expected to account for $211b, followed by travel ($44b), food and transport ($39b), and online media ($36b).
To achieve this growth, retailers in the region will need to maintain economic health against headwinds by attempting to strike a balance between price increases, cost optimisation measures, and raising the cost of capital.
Digital adoption of urban and suburban users
Despite the widespread adoption of e-commerce, there is still a wide gap between urban and suburban in terms of usage, particularly in grocery shopping.
According to the report, only less than 5% of suburban users buy groceries online. This is much lower than the 37%-58% monthly active urban users. Amongst urban users that shop for groceries online, 58% said they were affluent users, 49% were young digital natives, another 49% were metro mainstream, whilst 37% were ‘on a budget’ users.
“While all segments have adopted e-commerce, usage frequency is much higher among affluent users than ‘on a budget’ and suburban users,” the report read in part.
“Young digital natives are spending the most on groceries—75% more than the median—indicating significant headroom for growth even as the sector matures.”
Moreover, the e-Conomy SEA report noted that whilst digital services led to more convenience in food delivery, and transport, it is still “not for everyone.” A wide gap was also observed between the usage of urban and suburban users.
Only 10% of suburban users relied on digital services in food delivery and transport. This is against 70% affluent users, 58% young digital natives, 58% metro mainstream, 43% ‘on a budget users’ that ordered food online; and 50% affluent users, 43% young digital natives, 37% metro mainstream, and ‘on a budget’ users that used digital services for transport.
“Affluent users are the largest segment among transport and food delivery users, and spend nearly twice more than the median,” the report noted.
“Food delivery usage correlates with income levels, with young digital natives and metro mainstream consumers equally dependent on the ease and convenience it provides, whilst metro mainstream consumers are less likely to use transport services as they are more likely to own a family car.”
