As governments encouraged people to stay home to slow the spread of the coronavirus, Southeast Asia saw a rapid adoption of digital services like e-commerce, food delivery, and online payment methods.
And that trend is likely to continue. The report, which surveyed more than 16,000 people in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, projected the number of digital consumers in Southeast Asia will reach 350 million by the end of this year.
By the end of 2021, Facebook and Bain expect more than 70% of people 15-years-old and above in the surveyed countries to shop online. The report predicted the number of online shoppers in Southeast Asia will reach 380 million by 2026.
Among surveyed countries, the report said Indonesia, Southeast Asia’s largest economy, continues to see the highest growth rate. Its digital consumer population is predicted to grow around 15%, from 144 million in 2020 to 165 million in 2021.
Many parts of Southeast Asia are grappling with a resurgence of Covid due to the highly transmissible delta variant. Vaccination rates remain low in some emerging economies. As intermittent lockdowns and movement restrictions make it difficult for consumers to visit brick-and-mortar shops, many e-commerce markets have thrived.
The survey, which was conducted in May, found that the share of respondents who said they shop “mostly online” rose from 33% in 2020 to 45% this year, with the greatest gains coming from Singapore, Malaysia and the Philippines.
Facebook and Bain projected that average online spending will grow 60% this year from $238 per person in 2020 to $381 per digital consumer. Online retail’s share of overall retail surged in Southeast Asia from 5% in 2020 to 9%, the report said, noting that paces is faster than in Brazil, China or India.
“Over the next five years, Southeast Asia’s ecommerce sales is also projected to keep pace with these countries, growing at 14% per year,” the report said.
With more purchases being made online, fintech services such as “buy now, pay later,” digital wallets and cryptocurrencies have also become more widespread.
In the first three months of the year, 88% of private equity and venture capital investments in the region flowed into the technology and internet sector. Of that, 56% went into financial technology, according to the report.
“We are looking at a massive triple explosion of fintech. Not only are regulators removing the regulation barriers, we’ll also see a roaring river of capital with no friction,” Dmitry Levit of Cento Ventures said in the report.
Digital wallets were the preferred payment option for 37% of respondents, compared with 28% who preferred cash, 19% for credit or debit cards and 15% in favor of bank transfers. The Philippines, Malaysia and Vietnam saw the biggest gains in digital wallet adoption, at 133%, 87% and 82% growth, respectively.
Southeast Asia’s rapid digitalization during the pandemic proves the immense opportunity in the region’s digital economy, the report said.
“The region will be a growth market for at least the next 10 years as new verticals, industries and products emerge,” Justin Hall, partner at Golden Gate Ventures said in the report.