Roaring 20s: The SEA Digital Decade
40M new internet users came online in 2021, bringing the internet penetration in Southeast Asia (SEA) to 75%. Consumption of digital services remains strong more than a year into the pandemic - a trend that will likely continue.1
The internet economy continues to attract new consumers more than a year into the pandemic.1
Amongst SEA’s internet users, 8 out of 10 are digital consumers.2
60M new digital consumers joined the internet economy since the pandemic started. 20M joined in H1 2021.3
The internet economy has seen increased spend and frequency of use amongst existing consumers.
Existing consumers are purchasing in nearly 4 more digital services than they did before the pandemic.4
6 in 10 existing users of groceries and food delivery increased usage and spend vs. pre-COVID.5
The consumer shift is permanent - satisfied users intend to continue using digital services.
8 in 10 digital consumers are satisfied with their digital services.6
9 out of 10 new users in 2020 continue to use them in 2021.7
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Underpinned by the extraordinary shift in consumer consumption, SEA’s SMEs have been adopting technology with fervour.
In our inaugural feature on Southeast Asian SMEs, we profiled ~3,000 digital merchants.
Digital merchants: B2C businesses, mostly < 100 employees, with online sales in the past year.8
Most have a positive view of digital platforms, but profitability remains a top concern.
1 in 3 digital merchants believe they would not have survived COVID-19 if not for digital platforms.9
1 in 3 digital merchants cited “too expensive” as the top barrier for digital platform adoption.10
Digital financial services are critical enablers.
9 in 10 digital merchants now accept digital payments.11
The majority of merchants who use digital financial services intend to continue or increase usage.12
Digital merchants are embracing end-to-end digitalisation efforts through usage of digital tools.
Digital marketing tools see the largest increase in usage as merchants vie for attention online.13
In the next 5 years, 8 in 10 merchants anticipate >50% of their sales will come from online sources.14
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SEA’s internet economy was resilient in 2020, but 2021’s revitalisation has propelled the region upwards to >$170B GMV.15
With all SEA markets exhibiting double-digit growth, SEA's 2025 GMV is propelled upwards.
The region is now poised to surpass previous estimates and reach $360B GMV by 2025.16
A continued surge in e-commerce is driving most of the year’s market growth.
e-Commerce GMV grew +62% YoY.17
All digital financial services are flourishing, especially digital lending.
Consumer e-wallet usage has surged 45% compared to pre-COVID periods.18
Strong recovery in digital lending, underpinned by low non-performing loans and economic rebound.19
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In 2021, investments in SEA’s internet economy hit an all-time high despite the pandemic. The race to public markets is heating up but remains fraught with questions.
2021 on track to be SEA’s busiest deal year in recent times.
The H1 2021 deal value is already on track to surpass the 2020 full year value.20
Record-high dry powder poised to spur more deal activity in 2021 and beyond.
Dry powder in the region remains elevated at $14B.21
e-Commerce and digital financial services continue to attract the lion's share of investment dollars.
Rocketing deal values in e-commerce are mainly driven by logistics.22
Digital financial services steam ahead: H1 2021 deal values have surpassed those of full year 2020.23
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SEA is entering the ‘Digital Decade’. Seismic shifts in consumer and merchant behaviour mean its internet economy could reach $1T GMV by 2030. Talent remains critical to success, with new enablers.
The 'Digital Decade': by 2030, SEA's internet economy could reach $1T GMV.24
As online shopping becomes the norm for consumers, e-commerce could comprise >2/3 of SEA's 2030 GMV.25
Indonesia's 2030 GMV alone could be 2X SEA's GMV today.26
Marked upswing in key growth drivers, but talent continues to be a challenge.
Shortage of technical talent reiterates the need to invest in a reliable pipeline of talent.27
Entering SEA's 'Digital Decade', new enablers will drive growth in the internet economy.
Future enablers need multilateral solutions between consumers, merchants, platforms, and regulators.
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e-Conomy SEA is a multi-year research programme launched by Google and Temasek in 2016. Bain & Company joined the programme as lead research partner in 2019. The research leverages primary research, Temasek insights, Bain analysis, Google Trends, expert interviews and industry sources to shed light on the internet economy in Southeast Asia. The information included in this report is sourced as “Google, Temasek and Bain, e-Conomy SEA 2021”, unless otherwise specified.
The information in this report is provided on an “as is” basis. This document was produced by Google, Temasek, Bain and other third parties involved as of the date of writing and is subject to change. It has been prepared solely for information purposes over a limited period of time to provide a perspective on the market. It is not intended for investment purposes. Google internal data was not used in the development of this report. Google does not endorse any of the financial analysis in this report. Projected market and financial information, analyses, and conclusions contained herein should not be construed as definitive forecasts or guarantees of future performance or results.
Google, Temasek, Bain, or any of their affiliates or any third party involved makes no representation or warranty, either expressed or implied, as to the accuracy or completeness of the information in the report and shall not be liable for any loss arising from the use hereof.
All dollar amounts in this report are in USD.
Google commissioned Dynata to run a SEA-6 Digital Merchant Survey, and Kantar to run the e-Conomy SEA consumer survey. Both research studies were conducted in Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam. Fieldwork for the consumer research ran from 16/07/2021 - 16/08/2021 online via a 25-minute Computer Assisted Web Interview survey with a total of 9,402 respondents interviewed. Fieldwork for the merchant research ran from 04/08/2021 - 16/08/2021 online with a total of 3,036 respondents surveyed. The 2020 GMV numbers have also been updated with more up-to-date estimates.
Source: Statista; Google, Temasek and Bain, e-Conomy SEA 2020; Google-commissioned Kantar SEA e-Conomy Research 2021.
Source: Google-commissioned Kantar SEA e-Conomy Research 2021.
S4. Which of the following online activities have you done before and when did you first start doing them?
Base: SEA adult internet users n=17,839. Population source from Statista
Note: A ‘digital consumer’ is defined as any internet user who has paid for an online service in any vertical before or after the pandemic.
Source: Statista; Google, Temasek and Bain, e-Conomy SEA 2020; Google-commissioned Kantar SEA e-Conomy Research 2021.
Note: A ‘digital consumer’ is defined as any internet user who has paid for an online service in any vertical before or after the pandemic.
Source: Google-commissioned Kantar SEA e-Conomy Research 2021.
S4. Which of the following online activities have you done before and when did you first start doing them?
Base: SEA pre-pandemic users n=14,617.
Source: Google-commissioned Kantar SEA e-Conomy Research 2021.
Qb1a. Compared to BEFORE the COVID-19 pandemic began (February 2020), how frequently do you NOW do the following online activities?
QB2a. Compared to BEFORE the COVID-19 pandemic began (February 2020), how much money do you NOW spend on these online activities in an average transaction?
Base: Pre-pandemic users SEA, varies by vertical from n=2,844 to n=4,539.
Source: Google-commissioned Kantar SEA e-Conomy Research 2021.
SA2. How satisfied or dissatisfied were you with the following when [VERTICAL] online in 2021? Base: All SEA users; base varies by vertical from n=1,232 to n=8,954.
Source: Google-commissioned Kantar SEA e-Conomy Research 2021.
Qb1b. Thinking about your current habits throughout 2021 so far, how often do you typically do the following activities?
Base: SEA new users 2020, total base varies by vertical from n=1,610 to n=2,462.
Source: Google-commissioned Dynata SEA-6 Digital Merchant Survey 2021 (n=3,036).
Note: 'Consumer services' refers to merchants in beauty & spa, home repair and maintenance, laundry, etc. 95% of SMEs surveyed have more than 20% of sales from online channels.
Source: Google-commissioned Dynata SEA-6 Digital Merchant Survey 2021 (n=3,036).
Q11. What are the biggest benefits to your company from your experience using digital platforms? of which 35% selected “My company would not have survived the COVID-19 pandemic without selling on digital platforms”.
Source: Google-commissioned Dynata SEA-6 Digital Merchant Survey 2021 (n=3,036).
Q18. What do you think can be improved about [digital platforms selected]?
Source: Google-commissioned Dynata SEA-6 Digital Merchant Survey 2021 (n=3,036).
Source: Google-commissioned Dynata SEA-6 Digital Merchant Survey 2021 (n=3,036).
Q28. How do you think your company’s usage of digital financial services will change in the next 1-2 years (post COVID-19 pandemic)?
Source: Google-commissioned Dynata SEA-6 Digital Merchant Survey 2021 (n=3,036).
Q21b: How do you think your company’s usage of digital tools will change in the next 5 years?
Source: Google-commissioned Dynata SEA-6 Digital Merchant Survey 2021 (n=3,036).
Q14: What percentage of your company’s total sales do you think will come from online channels (from digital platforms) in the next 5 years?
Source: Bain analysis.
Note: GMV = Gross Merchandise Value.
Source: Bain analysis.
Note: CAGR = Compounded Annual Growth Rate.
Source: Bain analysis.
Source: Source: Bain analysis; App Annie (Monthly Active Users. Markets: MY, ID, TH, SG, VN, PH. Timeframe: Jan 2018 to Sep 2021).
Apps included: GoBiz (merchant app for Gojek), GrabMerchant, Ovo Merchant, PayPal Business, SGQR Notification.
Source: Bain analysis.
Source: Industry reports; VC partners; Bain analysis.
Note: Deals include investments by venture capital, private equity and strategic investors.
Source: Preqin; VC partners.
Note: Non-exhaustive - only includes dry powder funds that are headquartered in SEA. Funds include both private equity and venture capital funds. 'Dry powder' refers to the amount of capital that has been committed to a fund minus the amount that has been called by the fund for investment.
Source: Industry reports, VC partners, Bain analysis.
Note: Companies with business in more than one category are classified under ‘Others’, unless they have a main service in another category.
Source: Industry reports, VC partners, Bain analysis.
Source: Bain analysis.
Source: Bain analysis.
Source: Bain analysis.
Source: Bain analysis.