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“We are at what is sometimes called the sweet spot of consumption,” observes Dr Santitarn Sathirathai, Chief Economist at leading consumer internet company Sea Group, during a recent webinar organised by the Singapore Economic Development Board.
As long-term consumption growth converges with accelerated digitalisation, Southeast Asia’s consumer markets have reached an inflection point, offering exciting opportunities. During the webinar, speakers discussed how businesses can better understand the SEA consumer and capitalise on growth in dynamic regional markets.
The archetype of the SEA consumer — young urbanising, rising spending power, and digitally-savvy
What are the consumption trends shaping SEA?
The archetypal SEA consumer offers clues on persistent regional trends that businesses can look out for. “Four things characterise SEA’s consumers – young, urbanising, rising spending power, and digitally-savvy – making this a very exciting region for growth,” shares Dr Sathirathai.
Rapid urbanisation of the region, especially in second- and third-tier cities, is bolstering consumption appetites. “Don’t underestimate the power of people outside major capital cities, as that’s a big growth driver,” notes Dr Sathirathai.
Consumption is shifting online, giving businesses a platform to reach new customer segments
With digitalisation, access to global brands has also increased, alongside growing aspirations for cosmopolitan lifestyles. “This is a tremendous opportunity for companies and brands to reach customers more easily,” says Ms Candice Ong, Chief Commercial Officer of ShopBack, a cashback reward programme with over 20 million users across Asia Pacific.
Compounded by COVID-19, consumption has shifted online like never before. Sea Group’s study with the World Economic Forum reveals that during the pandemic, 87 per cent of youth in SEA increased their use of digital apps, while 42 per cent increased online shopping activities.
“All businesses need to incorporate some shape or form of technology in their value chain.”
Mr Patrick Yip
Founding Partner, Intudo Ventures
SEA’s digitalisation push also looks set to last. “A majority of 72 per cent of respondents say that this is going to be a permanent change for them,” notes Dr Sathirathai.
Hear from industry luminaries about innovations, supply chain strategies, startup trends and changing consumption behaviours in our webinar recordings
a. Go hyper-local to reach diverse consumers
To make headway in this fast-growing space, companies must cater to SEA’s diverse markets, each with its own distinct demographics and purchasing patterns
Hyper-localisation has helped platforms such as Shopee connect with diverse markets with distinct preferences
A key business strategy is to focus on a “huge degree of localisation,” urges Dr Sathirathai. Sea Group’s e-commerce platform Shopee, for instance, has developed six versions of its app for markets across the region, uniquely optimised to suit local languages, content preferences, and user experiences.
Shopee drives effective hyper-localisation from its base in Singapore, which offers ready access to the region. “Airport infrastructure has been tremendously convenient for companies based in Singapore to be able to reach different markets easily and reliably,” remarks Ms Ong.
Singapore’s talent pool also enables businesses to bring in wide-ranging ideas and customise them for specific countries. “Singapore has global talents, world class ideas, as well as education, regulatory and policy frameworks, which makes it very easy for businesses to operate,” notes Dr Sathirathai.
“At the same time, Singapore is local enough,” he adds. “It has very close relationships with all the SEA economies so that people here know the different cultures and have interactions and networks across these countries.”
b. Create new experiences for the discovery generation
Businesses need to go beyond transactional relationships and create social experiences to engage with the discovery generation
As digitalisation fuels demand for new e-commerce experiences, constant innovation is key in meeting consumer expectations, the panellists stressed. “You must cater to what Facebook and Bain call the discovery generation, who are looking to discover what they want to buy,” says Dr Sathirathai.
Beyond just product browsing, SEA consumers seek social connectivity while shopping online.
“What we learnt from the early days is that shopping is a very social experience for people in SEA,” explains Dr Sathirathai. “People don’t want to just go in to buy a pair of jeans and get out. They want to talk to the sellers and chit-chat like they do in markets and malls.”
A key strategy is to build e-commerce platforms that facilitate conversations between consumers and sellers, such as livestreaming or chat functions.
When sellers started hosting livestream talk shows to connect with consumers, Sea Group created an ecosystem around the experience, adding features to click and buy directly from videos. “Experiences are critically important in driving purchase decisions,” says Dr Sathirathai.
Consumers’ desire for interactivity and fun shopping also incentivises businesses to integrate entertainment features such as gamification. On their part, ShopBack has experimented with TikTok to introduce new products, with encouraging results.“Entertainment and shopping are definitely getting a lot more intertwined,” affirms Ms Ong.
With customer preferences evolving, businesses exploring new innovative digital products and collaborations are finding Singapore’s density of regional headquarters (RHQs) an advantage.
Ms Ong adds that being located close to the RHQs of tech giants facilitates ShopBack’s collaborations with the likes of Google and Facebook, allowing easy beta testing of products.
“It is much easier to reach out to collaborators for business deals to go through. I can’t understate how important that is for speed,” emphasises Ms Ong.
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An opportunity not to be missed
The future of SEA’s consumption, panellists agree, is digital. The region’s digital economy is the world’s fastest-growing, expected to burgeon to over US$300 billion (S$405 billion) by 2025. This consumption potential is what digital-ready businesses are vying for.
“In terms of digital space, e-commerce is really a platform I would say no brands at this juncture can ignore.”
Ms Candice Ong
Chief Commercial Officer, ShopBack
As consumption goes online, innovative companies are finding new ways to support sellers and reach buyers. For instance, Shopee University trains sellers to use various tools available on the Shopee app to market their products.
Even the most traditional business can leverage the interest in social media. “Social media consumption and exploration of new mediums for entertainment really saw an uptake of interest during the COVID-19 period,” shares Ms Ong. “In Singapore, you even see wet market sellers using livestreams to peddle their goods effectively.”
With consumers embracing e-commerce and their appetites for novel shopping experiences whetted, businesses must keep up with the SEA consumer — or risk missing out on the growth opportunities that await them.
