With the increasing ubiquity of mobile phones, Southeast Asia is undergoing something of a tech revolution. In 2009, four out of five Southeast Asians had limited, if any, internet access. A decade later, the region holds 360 million Internet users, with more than 9 out of 10 users primarily or exclusively accessing the internet through smartphones. In fact, the top 4 countries by mobile internet usage are all located in Southeast Asia. In order, they are Thailand, the Philippines, Indonesia, and Malaysia.
The prevalence of smartphones has made internet connectivity more affordable, and the rapid changes in internet connectivity has brought with it changes in many aspects of life. Smartphones work as pocket-sized universes; they are gaming devices, television, shopping, social media and texting. They are also productivity task-masters, business networking, and mobile classrooms. The adoption of new technologies has shifted consumer behaviour towards convenience, and better value in terms of services—nowhere is this more accurate than in commerce.
Since mobile internet users are such a significant proportion of the internet-using population in Southeast Asia, the internet economy has been growing exponentially. In 2018, the Internet economy generated an impressive $72 billion USD—more than double the $32 billion USD in 2015. As of late 2019, Southeast Asia’s Internet economy is worth a whopping $100 billion USD and is expected to grow another 300% by 2025 to $300 billion USD. Between 2015 and 2019, the number of internet users in Southeast Asia grew by 100 million, with the majority of those being young people between the ages of 15 and 19.
The relative youth of the population, combined with the expanding internet connectivity and wealth in the region, makes it a particularly attractive area for investors. Between 2015 and 2019, over $37 billion USD has been invested in Southeast Asia’s internet economy, with two-thirds of all investment dollars raised since 2016 going directly to either ridesharing or commerce companies.
Internet economies are growing across the region at a break-neck pace with no indication of slowing down. Vietnam and Indonesia have above and beyond the fastest growing internet economies, with an impressive growth rate of 40% annually, while Malaysia, Thailand, Singapore and the Philippines hold steady between 20% and 30%—slow for the region, but far outpacing the rest of the world.
Areas of expansion
One problem that commerce in Southeast Asia will need to face in the coming years is the dearth of customers with bank accounts. Today, only about one-quarter of Southeast Asians have sufficient access to financial services. Inclusivity will be key to scaling growth in the commerce industry.
Companies are now competing with each other for user engagement, as opposed to gaining new customers. User engagement is keeping people on a particular platform for as long as possible. There are many strategies to do this—from gamification and promotions to expanding across multiple industries.
Currently, more than 50% of the internet economy is within seven metropolitan areas that altogether only add up to 15% of the region’s population. Residents of these metro areas are six times as likely to purchase items online than their rural counterparts, but this will undoubtedly change as connectivity continues to expand. The inability to deliver to more rural parts of these countries has been a significant roadblock until now, but with greater internet connectivity, many startups, as well as established players, view this underserved segment of the market as an opportunity. Since the internet economy has the potential to grow twice as fast outside of major metropolitan areas, online shopping trends will likely better reflect the overall population as the infrastructure and technology evolves.
To remain competitive, commerce companies will have to be ready to adapt to the ever-growing and changing marketplace. Automation and integration are going to be crucial to meet those goals. That is why working with CrescoData may be the right solution for your business. CrescoData’s Commerce-in-the-Cloud Suite can connect Channel API’s with no coding required so that you can focus your time on innovation rather than maintenance. With just one integration, you can have access to over 70 commerce channels thanks to CrescoData’s industry-leading technology. CrescoData is a customer-centric, technology-driven business that aims to assist commercial market leaders in meeting the rapidly expanding needs of consumers around the world. Get in touch today to see how CrescoData can help your business grow.