Welcome, fellow netizens. You’ve reached Part 6 of our epic Digital 2020 blog series, where we use powerful new research by Hootsuite and We Are Social to take you on a grand tour of the boundary between modern society and the virtual universe. The first five blogs helped set the stage for today’s journey:
Part 1 – Exploring Our Digital Planet
Part 4 – Sleepless in Siam
Before anyone ever heard of COVID-19, taking a walk around the block or getting on public transport in Southeast Asia would deliver a predictable sight: People all around you, lost in their mobile devices. With over 400 million internet users and some of the most active online communities in the world, Southeast Asia has taken to the virtual world like a fish to water.
New data confirms what our eyes can already see, while adding another dimension. As you can imagine, Southeast Asia is indeed fertile soil for businesses looking to bring their online products and services to the region. What’s surprising is how much room is still out there to grow.
A time to plant seeds
The Coronavirus pandemic has kept most of us at home, closing down offices and storefronts alike. For the business world, the present moment represents a natural time to shift focus inward. Some companies are able to continue doing business online, even in the current climate; others can do little to attract customers right now, meaning that their time would be better spent preparing for the future.
The effectiveness of that preparation depends on how clearly and accurately a given business can look ahead. Three key data sets are particularly relevant here: Internet access, the growth of the middle class, and literacy.
Southeast Asia is home to 655 million people. As we can see below, fully one-third of this number does not yet have a regular connection to the internet. These totals, compiled from Digital 2020 Report data, mean that 220 million new people will potentially be entering the region’s digital market in the coming years – giving marketers ample reason to begin building their digital presence now.
As any seasoned investor knows, brand awareness and credibility are far easier to establish for companies that get in on the ground floor of a new market. The alternative is to wait until your potential customers have already established a relationship with one of your competitors, and then try to steal them away – a far more difficult prospect.
A second map, this one charting the growth of the internet population by region, confirms that Southeast Asia is indeed on a comfortable upward trajectory. While Europe and North America are approaching market saturation, Southeast Asia still has plenty of room to grow.
The above data points to Southeast Asia as one of the best places to invest in digitally-powered business growth. As we will see, although other regions on these maps may seem to represent equally promising markets, they nevertheless suffer from critical drawbacks.
Some parts of the world with fast-rising internet numbers, like Africa and Southern Asia, are also saddled with a large amount of linguistic diversity, sub-par business infrastructure, and relatively low levels of literacy (~70% or under). Meanwhile, Southeast Asia’s literacy rates are well above 90%, the business climate is solid, and foreign investment is increasing rapidly. Countries like Vietnam and Indonesia have fast-growing middle classes, while Cambodia, Laos, and Myanmar also show excellent GDP growth on average.
This combination of factors leaves plenty of room for growth in the Southeast Asian internet community. As regional economies continue to modernize, huge crowds of people will join the online space. Companies looking to establish themselves online (or expand into other parts of the region) would do well to plant their seeds now. Their foresight will put them in an excellent position to thrive when the economy opens back up and Southeast Asia’s internet market begins its rapid rise once again.
Of course, the digital world is a pretty big place. In order to reach the right audience, you’ll first need to know more about the sectors that are benefitting most from this growth.
Southeast Asia’s blooming internet economy
Even as traditional businesses wilt during the COVID-19 pandemic, people staying at home have given an extra boost to the internet economy. Moreover, with 5G preparing to supercharge the region’s already-fast connection speeds, the digital world here is looking as lively as ever. Smartphones and data packages have also become much more affordable lately, allowing people with lower income to gain access to the online space.
Recent years have already brought significant change to this area. In the last four years, Southeast Asia added 100 million new internet users. The region’s internet economy, which was valued at $72 billion in 2018, already surpassed $100 billion by the end of 2019. That number is expected to triple in value, rising to $300 billion by 2025. Regardless of the emptying city streets outside, the digital world is as active as ever.
The lesson is made even clearer when we look closely at individual countries. As the fourth most populous country in the world, Indonesia is the largest contributor to Southeast Asia’s internet economy. Total sales in its digital sector alone (e-commerce, ride-hailing, online media, and online travel) are worth around $40 billion per year. Impressive as it is today, this number is expected to triple in size over the next five years, reaching a value of $133 billion.
Thailand is the region’s second-largest contributor in terms of internet economy, with its annual sales valued at $16 billion. That number is projected to rise at a rate similar to Indonesia’s, reaching $50 billion by the middle of this decade. Indeed, all of the largest digital payment sectors in the region are set to at least double by 2025, if not triple:
Focusing in on Southeast Asia’s e-commerce sector alone, growth has skyrocketed in recent years – a trend poised to continue in dramatic fashion. Back in 2015, the entire e-commerce market was worth just $5.5 billion. By 2019, that number had increased nearly sevenfold, to $38.2 billion. By 2025, it is expected to quadruple again, to $153 billion.
The growth in ride-hailing and food delivery services is another sign of the times. From total sales of $2.9 billion in 2015, to $12.7 billion in 2019, to $40 billion expected in 2025, this combined service offering is yet another area where building a strong online presence across the region can pay massive dividends. If any more proof were needed about the region’s embrace of all things digital, one need only consider that in Vietnam, the internet economy alone provided 5% of the entire country’s 2019 GDP.
As the current COVID-19 pandemic situation continues, e-commerce and assorted online services will only become more popular.
Making the right investment
Statistics like these can give a good idea of your sales potential, but our experience as a creative agency in Bangkok shows that success is anything but a numbers game. In the long run, clicks and likes are a poor reflection of actual brand effectiveness, because they have a hard time measuring how deeply you have made an impression on your target audience.
Cute but empty content tends to boost engagement numbers, but it also fades from the mind as soon as the next distraction appears. Quality, creativity, and original ideas count for far more, because they embody the essence of brand building. As we’ve discussed previously, audiences will ultimately choose real connections over superficial ones any day of the week.
New technology can greatly facilitate this effort. E-commerce giants like Shopee and Lazada have led the way for innovation in the sector and have achieved amazing results. They host quizzes, Wheel of Fortune-style games, and other interactive content. Participants earn coins that can be redeemed for product discounts. This gamification of mobile shopping apps has gained plenty of traction among Southeast Asian netizens, and it is just one of many promising new marketing concepts.
Large corporations like Ikea and Nike have likewise begun using technology to provide a whole new shopping experience to their online customers. Knowing that younger generations expect speed and convenience when it comes to online shopping, these brands have found a way to spare their shoppers the process of trial and error. They accomplish this feat by leveraging augmented reality (AR) to let users place virtual furniture in their home, or virtually try on their clothing items, before deciding to buy.
With business infrastructure improving, audiences growing, and 5G on the way, near-future marketing possibilities with a digital agency in Thailand are looking better than ever. Sow your online seeds now – and before long, your company will enjoy its biggest-ever harvest.
A final note about Southeast Asia: Although only 66% of its people are active online, the total number of mobile connections is twice as high. Given that the necessary hardware is already in the hands of the people, that last step of actually getting online would seem to be imminent. We’ve put together a world map, based on data from the Digital 2020 Report, to help you see how Southeast Asia’s mobile market penetration compares to that of other regions of the world:
Featured map: Mobile Connectivity by Region
See how Southeast Asia’s remarkable embrace of mobile devices compares to trends in other areas of the world. Note that some numbers are over 100%, as the number of mobile connections in a region is greater than the total population.