E-commerce spend will grow from US$31 billion to US$120 billion by 2025

By 2025, projected annual spend for online shopping in South-east Asia is expected to hit US$120 billion, Facebook and Bain & Company said.

You're at home on a sweltering Sunday, opening a parcel containing the latest designer wear you really wanted – and you didn't even need to step out of your house to get it.

For many, online shopping has become a routine activity, and even more are turning to digital shopping platforms for their everyday needs and wants.

A Facebook-comissioned study by Bain & Company has found that there were 250 million South-east Asian digital consumers in 2018. By 2025, this number is expected to grow to 310 million.

As part of the study, 12,965 respondents were surveyed across Indonesia, Malaysia, Phillippines, Singapore, Thailand and Vietnam, and over 30 CEOs in the region were interviewed.

Released on Friday (Oct 18) at Facebook's Marina One office in Singapore, the study also found that by 2025, the increase in South-east Asia's online spending will outpace the growth of digital consumers by three times – with clothing, personal care and beauty as the leading categories.

According to Bain, the average spend per digital consumer in the region is expected to grow from US$125 (S$171) in 2018 to US$390 by 2025, bringing total online spend to US$120 billion, up from US$31.2 billion.

The growth in online spend and digital consumers is expected to rise explosively.

Bain & Company

Digital spending is discovery-driven, consumers using multiple platforms

According to the study, discovery platforms are social channels like Facebook, Instagram and YouTube.

Bain & Company

Facebook said that its study also identified “discovery” as a key driver of growth for e-commerce businesses in Singapore.

Sandhya Devanathan, country managing director of Facebook Singapore, said that there is no longer just one way to shop, and “designing for discovery” is “absolutely crucial” because customers engage with a business through multiple channels at the same time.

“In Singapore alone, 75 per cent of the respondents said that they are either open to other brands or will buy from multiple brands when shopping online,” she added.

On top of that, over eight in 10 respondents said they compare prices across different platforms -including offline – before they purchase something, and 40 per cent said they have tried an online store they had never heard of.

The top three reasons for making an online purchase were positive reviews from other users, good deals, and interesting products.

Most respondents said that they were open to buying from other brands.

Bain & Company

Businesses should capitalise on fragmented market by building brand loyalty

Beyond discovery, the study found that South-east Asian consumers shop-hop across 3.8 platforms on average. This is even higher in Singapore, where online buyers shop across 5.1 websites before making a purchase.

According to the report, this fragmentation shows an “immense potential” to build brand loyalty and growth.

Respondents who were loyalty programme members indicated that they are 45 per cent more likely to recommend the brand or product. Around 25 per cent said that their purchasing frequencies are more likely to increase if they are rewards programme members, and a further 20 per cent said they would spend more.

Additionally, shopper experience also helps e-commerce firms retain brand loyalty. Praneeth Yendamuri, partner at Bain & Company, said the use of gamification, such as those used by Shopee, can help to add a different element into the shopping experience.

“Brands need to be very savvy and re-imagine their marketing and trade spend to be in sync with the ever-evolving omnichannel consumer journey.

“They also need to build new muscles to ensure a positive online shopping experience to their digital consumer,” he added.

According to the study, e-commerce sites from the US and China have the highest relative market share. Facebook said this showed that there is “immense potential” for South-east Asian companies to build brand loyalty and growth in South-east Asia.