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In the recent years, Southeast Asia has embraced the internet and growth opportunities it provides with arms wide open. As approximately 70% of the population in the region is under 35 years old, the young people have been driving the adoption of the internet that continues to disrupt existing business models.
The latest Digital in 2017: Southeast Asia report by We Are Social and Hootsuite provides useful data for ecommerce entrepreneurs about internet and mobile usage trends in the region. The data once again emphasizes how different each country is across one region, meaning a one-fits-all solution in Southeast Asia wouldn’t fly without localization.

Digital in 2017: Southeast Asia from We Are Social Singapore

The scope of the report has expanded over the years and new data points have been added to provide a wider picture of the digital trends in the markets.
Here are the key insights from the report about the region to know:

  • Ecommerce is becoming the region’s gold mine as 53% of Southeast Asia’s population uses the internet
  • The growth opportunity in the region is tremendous, to put it in the words of the new US president Donald Trump – the number of internet users grew by 31% (80 million) during the last year, continuing the double digit growth in 2015
  • More than 300 million people or 47% of the region are active mobile internet users and mobile internet penetration is likely to pass 50% in the next few months.

While the situation does vary across countries – the trend remains the same, Southeast Asia is digitizing and very quickly. This is a list of what is expected to change from 2016, some things we expected and others, we were surprised to learn:

1. The love for mobile

Southeast Asians love their mobile phones. Across the region, around 90-95% of the population use mobile phones, and in most countries, except for Indonesia, more than 60% of the population have smartphones.

Source: compiled by eIQ based on reports Digital in 2016 and Digital in 2017. Digital in 2016 contains data about device ownership, while Digital in 2017 provides insights on device usage.

The smartphone is essential for accessing the internet, especially taking into account that only 21% of Indonesia’s population and 26% of Thailand’s population use laptops.
In Malaysia, the Philippines and Vietnam, the computer usage is higher – around 40% of the population but that is still well below the popularity of smartphones.

With this in mind, ecommerce businesses should think mobile-first by ensuring that their customer experience is mobile friendly. The biggest online marketplaces like Lazada, Zalora, 11street and Zilingo have launched mobile apps to capture this growing audience.
Zilingo built a seller app specifically with the small fashion brands in mind to make it easier for them to create an online store just with their mobile phone.

2. Media consumption is hypnotic

Cheaper smartphones and tailored data services for social networks mean that people can afford to use the internet more often. In 2016, the number of respondents who are using the internet every day has increased by around 10 percentage points in Malaysia, the Philippines, Singapore and Vietnam. In Indonesia, the increase is a staggering 30 percentage points.

Source: compiled by eIQ based on Digital in 2016 and Digital in 2017.

The amount of time people spend with media is also rising. In the Philippines, people on average spend 9 hours online on their computers compared to a little more than 5 hours a year ago.
Indonesia, Malaysia and Thailand follow closely as people spend around 30 minutes less than Filipinos do online. Southeast Asians use the internet on their phones for about 4 hours a day except in Singapore and Vietnam where the average daily use of the internet via a mobile device is around 2.5 hours.

As more and more people go online, it makes sense for businesses to meet their customers where they prefer to be – in the digital environment. This doesn’t mean giving up offline channels.

Ecommerce players such as eyewear brand Glazziq and fashion brand Pomelo have gained their popularity as online-only businesses but plan to expand their presence offline also by launching physical showrooms.

3. Email? What is that, majority of Thais may ask

Email marketing is typically one of the most effective tools for ecommerce businesses to lure customers and drive conversions. According to Campaign Monitor, for every $1 spent on email marketing, it generates $38 in return on investment.
A report by Salesforce Marketing Cloud showed that 96% of Southeast Asian online consumers identify themselves as email newsletter subscribers and 48% have made a purchase as a result of a marketing email.
However, the latest Digital in 2017 shows that email might not be the best choice to target customers in the region, at least – not in all countries.

Apart from Singapore where 71% of respondents check their emails weekly on smartphones, less than one third of the rest of Southeast Asia checks their emails during a week.

The situation is most surprising in Thailand where less than 10% of the population checks their emails either on smartphone, computer or tablet.

This has significant implications for online marketers because instead of asking for customer emails, they should capitalize on phone numbers. If most Southeast Asian customers are plugged to their phones, SMS marketing could be good for targeting customers.

99% of text messages from brands are opened and the click rate is nearly 20%.

4. Ecommerce is growing up

The highly quotable report by Google and Singaporean investment fund Temasek predicts that the ecommerce market will reach $88 billion by 2025 from the relatively low $5.5 billion in 2015. There are indications that the market opportunity might be even bigger and valued at $238 billion.
The data shared by online statistics and business intelligence portal Statista in Digital in 2017 predicts the value of the consumer (B2C) ecommerce market of six Southeast Asian nations in 2016 has been $14.8 billion.

Source: Digital in 2017, Statista Digital market outlook, e-commerce industry, January 2017.

In all countries, more respondents have reported making a product or service purchase online in the past 30 days. More than half of the population in Malaysia, Singapore and Thailand, which make up a $6.4 billion market together, buy online.

Source: compiled by eIQ based on Digital in 2017 and Digital in 2016.

Singapore at the moment is the dream market for ecommerce businesses as the average annual ecommerce spending per user in 2016 was $1,022. In Indonesia and Thailand, the annual ecommerce revenue per user was 4.5 times smaller.

Source: Digital in 2017, Statista Digital market outlook, e-commerce industry, January 2017.

In Vietnam, the average ecommerce revenue per user is predicted to have been $55 in 2016, the second lowest in the region only to the Philippines but the country’s eagerness to shop online makes up for it. Vietnam has the third highest ecommerce penetration (35%) in the region following Singapore (51%) and Malaysia (45%).
What does all this data tell us? That ecommerce is moving away from being a “buzzword” to a business model that traditional companies in Southeast Asia should consider adopting. The region’s real potential, either $88 billion or $238 billion, will only grow as the respective countries develop and their populations urbanize.