Southeast Asian ecommerce spend will triple by 2025, but loyalty a challenge

Southeast Asia will add 60 million new digital consumers by 2025, with average spend per digital consumer expected to more than triple from US$125 in 2018 to US$390 within the same time frame. However, loyalty remains a key challenge.

According to a Facebook-commissioned study by Bain & Company on the region's digital consumers, consumers in Southeast Asia shop-hop across 3.8 platforms on average before they make a purchase decision and are prone to learn about products via social media.

Titled ‘Riding the Digital Wave: Southeast Asia's Discovery Generation’, the study predicted there will be 350 million digital consumers in Southeast Asia by 2025, a 24% increase from 2018.

By 2025, the study estimates online spending will outpace the growth of digital consumers by a factor of three, with clothing and personal care emerging as two of the leading categories.

The emerging middle class in Southeast Asia will account for 70% to 80% of the growth in digital consumers by 2025.

The study, which surveyed 12,965 CEOs and venture capitalists across Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, was released on Friday (18 October) at Facebook’s Marina One office in Singapore.

There is no one dominant ecommerce platform in Southeast Asia, according to the study. This spotlights an opportunity for brands to build loyalty with consumers through loyalty programmes. In the study, respondents with a loyalty programme indicated they were 1.5 times more likely to be a promoter than those without a loyalty programme. Loyalty members were 45% more likely to make recommendations across categories, 25% more likely to have higher purchasing frequencies across categories and 20% more likely to have higher spending across categories.

The study also identified ‘discovery’ as a key driver of growth for e-commerce businesses in Singapore. Two-thirds (67%) of respondents said they do not exactly know what they want to purchase before they shop online, with more than 50% of respondents saying they learn about new products and brands via social platforms. 

Southeast Asian shoppers showed a strong preference for omnichannel, with over 80% saying they compare prices across online discovery platforms and in-store before they make a purchase decision. Over 40% have tried an online store they have never heard of in the past year. 

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

Facebook Singapore country managing director Sandhya Devanathan said: "There is no longer just one way to shop and nobody shops the same way twice. The key takeaway is that designing for discovery is absolutely crucial, given that customers engage with a business through multiple channels at the same time.”

Bain & Company partner Praneeth Yendamuri added: "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.”