Our 2019 study Riding the Digital Wave introduced us to the new type of Southeast Asian consumer: The digital consumer who purchases goods or services online at least once a year, and a Discovery Generation consisting of digital consumers whose purchasing habits are largely driven by inspiration and openness to digital discovery. We examined their rapid rise, their spending patterns, and what their emergence means for many brands.

Come 2020, the move from the offline economy to online has taken off much faster than anyone expected. Change that was supposed to take place over a few years happened in one. Many of the trends we forecasted took place, but at an accelerated (and exhilarating!) pace.

Digital transformation that was forecasted to happen over 5 years took place in just one, be it in terms of number of digital consumers, online spending, size of the retail market, or number of categories purchased online.

In 2019, Bain & Company projected that the number of digital consumers — anyone who has purchased a product or service online (excluding travel) in the past 12 months — in Southeast Asia will reach around 310 million by 2025.¹

That day has arrived much faster than anticipated: Southeast Asia is projected to reach that figure by the end of 2020, with millions more expected to join in the coming years. By the end of 2020, 310 million digital consumers will make up 69% of Southeast Asia’s population that are 15 years old and above.²

Online spending has also outperformed. By 2025, the digital consumer will spend, on average, 3.5x more than they did in 2018.⁵ This is higher than the 3.2x increase we forecasted in 2019.⁶ By the end of 2020, the average gross merchandise value — the monetary value of goods or services sold through online marketplaces — in Southeast Asia is forecast to be US$172 per person.⁷

Southeast Asian consumers aren’t just spending more online, they’re also buying into more categories — clothing, electronics, household appliances, groceries, toys, to name a few. In 2019, each Southeast Asian digital consumer went online to purchase an average of 3.7 categories. In 2020, that number has grown to 5.1 — an increase of 40% in just one year.⁸

In particular, online grocery purchases have started to see greater mainstream adoption. Between 35% to 43% of digital consumers now go online for packaged groceries, fresh groceries, and non-alcoholic drinks.⁹ Indeed, in the past 3 months, the growth in online purchases was driven mainly by groceries and food delivery, highlighting the impact social distancing measures have had on consumer behaviour in the region.

Southeast Asia’s online retail market has also surpassed India’s. In 2019, we reported that Southeast Asia’s online retail penetration stood at 3%, on parity with India’s.¹⁰ Since then, the region’s online retail penetration has surpassed the South Asian country, increasing by 1.6x to 5%. Southeast Asia's ecommerce gross merchandise value also grew 23%. This is faster than the growth rate of ecommerce GMV in China, India, and the United States.¹¹

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.

Consumers’ preference for social media and short- and medium-length videos paves the way for discovery-led commerce through these channels.

Social media is the primary source of both discovery for short and medium-length videos. Among those surveyed, 63% find new short videos primarily through social media, while 54% discover medium-length videos through this platform.¹²

This is significant because short and medium-length videos on social media account for nearly all instances of video views online, making them a key channel for brands to consider. On average, consumers view 17 short videos per day, 13 medium-length videos per day, and 0.75 long videos per day.¹³ Based on this metric, short videos make up 55% of the total number of video views per day, with medium-length and long videos taking up the rest.¹⁴

Besides discovery habits, we also noticed that openness to different brands is a trait shared by many Southeast Asians: On average, 54% say they changed their most purchased brand in the three months prior to the study.¹⁶ For people who do switch between websites and brands, reliability and value are the most cited reasons for doing so, regardless of country.

People also tend to lean into ecommerce more. Ecommerce is now the preferred medium for online intentional channels — platforms that help people find specific information, item, or service online. As a whole, 70% of intentional engagements now happen through ecommerce.¹⁷

Online is no longer just one of many channels. For many businesses, it has become their main channel, helping them secure the future of their business.

As businesses move online, the ecommerce landscape continues to boom, but remains highly fragmented. Overall, we see a higher level of cross-shopping across multiple websites compared with 2019. In 2020, digital consumers shopped at an average of 5.2 websites, up from 3.8 in 2019 — a one-year increase of 40%.¹⁹

Companies can boost their likelihood of success by doing more to attract Promoters and avoid Detractors. Overall, Promoters spend around twice as much as Detractors, and are more likely to recommend a product or service to a friend.²¹

To succeed in an omni-channel space, companies will also need to prepare for a fully digital purchasing funnel and develop omni-channel capabilities by partnering or investing to build proprietary assets. With more and more capital available to digital disruptors, large brands can expect to face constant challenges from emerging brands.

In 2019 alone, private equity and venture capital firms in Southeast Asia had US$8.7 billion in unspent capital.²² This record amount of unused capital means more potential firepower for start-ups, emerging mid-sized companies, and “unicorns” — successful start-ups valued at more than US$1 billion.

The rise of the digital consumer won’t happen slowly in the next 5 years. The challenge is real, and it’s happening now. Large brands should make their move by, among other things, preparing for an omni-channel future, being a leader in discovery-led ecommerce, building a reputation for reliability, and recognising the challenge posed by insurgent brands.

2020 is the time to hit fast forward.