As the third most populous economy in the world, Southeast Asia is expected to double its domestic consumption to USD 4 trillion in the 5 upcoming years. The domestic consumption across Southeast Asia accounts for approximately 60% of the region’s GDP.
Despite the uncertainty faced due to the ongoing COVID-19 pandemic, SEA annual growth is forecasted to bounce by 5% in the next year. According to the World Economic Forum (WEF), Southeast Asia will reach 140 million consumers in 2030. In addition, the region offers bright opportunities for digitalization as there will be approximately 575 million internet users, spurring continuous digital adoption.
The COVID-19 outbreak has brought a new normal of work from home (WFH) and social distancing at home, thus shifting consumers’ behavior toward shopping online for their everyday essential purchases. Leading e-commerce players in Southeast Asia, for example, Lazada, Shopee, and Tokopedia reported 63% increase in revenues during the coronavirus period.
As the majority of the population in the region, young and tech-savvy people will bring Southeast Asia toward digital economy and digital consumption, amounting to 70-80% of the new consumers. The cost of the Southeast Asian labor market is comparatively lower than those of other parts in Asia, making it highly attractive for foreign investments.
Consumers in Southeast Asia are consistent to shop online, due to interesting products, seasonal promotions, and online reviews. These online reviews contribute a large segment in digital consumption, as more consumers engage themselves in comparison shopping, in which they compare products based on users’ reviews and compare prices with other websites.
Rising internet access all across Southeast Asia is expected to drive digital consumption, with 40 million new users, especially during COVID-19 lockdowns. Further, a recent report highlighted that SEA will be the home to around 300 million digital consumers by the end of 2025, with more than 90% of the population in SEA connected to the Internet.
Opportunities Behind the Digital Consumption
Other than acting as a means for online commerce, digital consumption trends offer opportunities for foreign investors to dive into several aspects, such as:
In conclusion, the rising of digital consumption is viewed as a potential for businesses to go digital. With a lot of room to grow, multinational investors can consider doing business in Southeast Asia, backed by the right market research and analysis.