DIGITAL ECONOMY TAKES OFF IN SOUTHEAST ASIA AS THE NUMBER OF CONNECTED CONSUMERS SURGES 50 PERCENT IN THE LAST YEAR TO 200 MILLION

DIGITAL ECONOMY TAKES OFF IN SOUTHEAST ASIA AS THE NUMBER OF CONNECTED
CONSUMERS SURGES 50 PERCENT IN THE LAST YEAR TO 200 MILLION  

Bain & Company’s latest report finds the region’s rapid growth and
accelerating consumer demand represent significant opportunities amid a
fragmented digital ecosystem

Singapore – May
19, 2017 – Over the last year, the number of digital consumers in the region has
surged 50 percent to 200 million, which has helped region’s internet economy
balloon to more than $50 billion.  With a large and growing market up for
grabs, Southeast Asia has emerged as a key battleground for large industry
titans – mostly from the U.S. and China.  However, their biggest rivals
may not be each other; scaling local players are gaining a distinct edge in the
region.  These are the findings from Bain & Company’s latest digital
report released today, Digital Acceleration in Southeast Asia: Navigating
Tectonic Shifts.

“We have seen
monumental digital growth in Southeast Asia over the past year, but what is
even more interesting is how these businesses are competing with very different
business models, inspired by both China and the US players,” said Florian
Hoppe, co-lead in Bain’s Digital Practice in Asia Pacific and a lead author of
the report. “The challenge that lies ahead is whether these companies can
navigate what is still a highly fragmented market to stay head of the competition.” 

Bain’s latest
proprietary research, which includes a survey of 2,400 consumers in six major
Southeast Asian countries (Singapore, Malaysia, Thailand, Indonesia,
Philippines, and Vietnam), estimates that 230 million individuals in Southeast
Asia are now ‘online engaged consumers,’ meaning they have at least researched
products or services online.  Another 300 million have a smartphone, due
in part to a wave of lower-priced phones, which is helping to boost
connectivity across the region, as is the focus on mobile – not fixed –
broadband.  In Indonesia, for example, 48 times the number of users are
connected to mobile vs. fixed broadband.

While travel and
tourism in Southeast Asia represents the largest piece of the region’s digital
market ($22 billion) – followed by e-commerce ($15 billion) – the survey
revealed that most consumers use digital for social use and
entertainment.  Notably, social media and messaging are used several times
a day by 85 percent of users across ASEAN-6, with social media playing a
central role in Southeast Asia’s digital spending. 

According to Bain, at
least 90 percent of survey respondents across every country except Singapore
said they made a purchase using social media or said they were influenced by
it. As such, social is fast becoming a robust channel in its own right as users
rely on it to find products, interact with sellers and ultimately make a
purchase.

Even as Southeast
Asia’s digital ecosystem continues to grow and mature, there remains immense
opportunity. The combination of fast growing digital users with a fragmented
market, means that local players are successfully competing and gaining an edge
on global names in certain sectors.

While the impact of
this acceleration in Southeast Asia is advantageous for start-ups and online
brands, it is having a different and adverse effect on the real-world
economy.  From mall shopping to cinemas and taxis to travel agencies, it
is clear that digital has taken a toll on certain industries. 

Based on its work, Bain
has identified three ways these companies can get ahead of the digital wave:

·       Rapid innovation to
create new products and services using digital technologies and ways of working

·       Tech-enabled transformation to
change how customers experience a product or service, and leveraging technology
to gain an edge in operations

·       Reinvention
of internal functional capabilities to
adapt to and leverage a digital world

“Southeast Asia has
become a proving ground for digitally native companies as well as traditional
companies looking to tap into the digital market,” said Sebastien Lamy, an
expert in Bain’s Digital Practice and co-author of the report. “We have seen
many companies succeed here, but an almost equal number succumb to the
pressures and challenges of a still maturing market.  Those that can
develop and implement a strategy focused on adaptability, flexibility and
reinvention are likely to come out on top.”