A whopping 60 million new digital consumers were added into Southeast Asia’s (SEA) internet economy since Covid-19 began, with 20 million people added in the first half of this year.
The growth is supporting the region’s internet economy to reach US$360 billion by 2025, Google, Temasek, and Bain & Company said in the sixth edition of the e-Conomy SEA report. The target is an upward revision from the previous US$300 billion forecast.
The region is also on track to become a US$1 trillion digital economy by 2030.
Support is seen from a fast-growing base of digital consumers and merchants, and an acceleration in e-commerce and food delivery.
Region has reached 440 million internet users
For 2021 alone, SEA is estimated to reach US$174 billion in gross merchandise value (GMV).
The region now has more than 440 million internet users. “Catalysed by the pandemic, existing digital consumers ventured further into online services, and started buying services in four new verticals since the outbreak began. Existing users are also relying more on digital services and spending more across most verticals,” the report read.
It also revealed that more SMEs are turning to digital platforms to survive the pandemic.
“Digital financial services emerged as critical enablers, with over 90 per cent digital merchants now accepting payments digitally. In the next five years, eight in 10 of those merchants anticipate more than half of their supply purchases and sales will come from online sources,” it said.
Among SEA’s internet users, eight out of 10 are digital consumers. The penetration is strongest in Singapore among other SEA nations, with 97 per cent of internet users who have made at least one purchase online.
Thailand and Malaysia are the next two countries with more internet users making at least one online purchase compared to other neighbours, at 90 per cent and 81 per cent, respectively.
Food delivery driving growth, while e-commerce continues to support
The food delivery sector emerged as a bright spot, growing 33 per cent year-on-year to reach US$12 billion in GMV.
It has now become the most penetrated digital service, with 71 per cent of all internet users ordering meals online at least once.
Meanwhile, e-commerce continues to strengthen in its pace. It is expected to propel the SEA internet economy forward in the next decade, Google, Temasek, and Bain & Company said.
“In a strong lead-up to 2030, e-commerce GMV could exceed US$120 billion by end 2021 (a near doubling from 2020) with the potential to reach US$234 billion by 2025.”
Funding resurgence and IPOs
Investments in SEA’s internet economy are expected to reach an all-time high in 2021.
Deal value came up to US$11.5 billion in the first half of the year, surpassing the US$11.6 billion for the entire 2020.
“Investors see SEA as a lucrative investment destination for the long-term, especially in sectors such as e-commerce and digital financial services, which continue to attract the majority of investments,” the report said.
It also noted that more tech companies are exploring initial public offerings as viable pathways to raise capital or allow early investors to monetise their holdings, especially in view of strong valuations and novel listing approaches such as special purpose acquisition companies (SPACs).
“We think this is only the beginning I would expect to see many more local listings of these unicorns or foreign listings in the US over the next 12 to 18 months,” said Rohit Sipahimalani, chief investment strategist; head of South East Asia, at Temasek.
Online travel expected to pick up, gaming on the rise
While online travel growth remains muted, it is likely to see a recovery in the medium-to-long-term, driven by pent-up demand and the vaccination progress.
The report also noted that online media witnessed a healthy 32 per cent growth to US$22 billion in 2021. In particular, Covid-19 ushered in a new generation of gamers, bringing with them a willingness to spend.
Featured Image Credit: Roads.sg, Mothership
Get $20 off your order on VP Label when you checkout with Pace and the code PACEVP20 (min spend $80). Discover and shop exciting homegrown brands now:
The post E-commerce and food delivery growth to propel SEA’s internet economy to reach US$360B by 2025 appeared first on Vulcan Post.