Tech

Southeast Asia's online shopping boom is here to stay, even after the pandemic

Key Points
  • People in Southeast Asia are expected to continue shopping for groceries and other essential items online even after the coronavirus pandemic ends, according to research from consultancy Bain & Company and Facebook. 
  • A new report from the companies said e-commerce and other digital trends across the region were accelerated by the Covid-19 outbreak.
  • Southeast Asia's digital economy is a topic of tremendous importance to a lot of companies, including Facebook.
Orders from MarketFresh, a group of wet market stall owners, sit ready for delivery at the Tiong Bahru Market during the "circuit breaker" lockdown in Singapore, on Wednesday, May 20, 2020.
Lauryn Ishak | Bloomberg | Getty Images

Southeast Asian shoppers will likely continue buying groceries and other essential items online — even after the coronavirus pandemic ends, according to research from consultancy Bain & Company and Facebook

A new report from the two firms said e-commerce and other digital trends across the region were accelerated by the Covid-19 outbreak — the disease that has infected more than 7 million people worldwide. 

"Some of these trends are here to stay," Praneeth Yendamuri, a partner with Bain & Company based in Singapore.

"One of the trends we identified was essential online shopping, and that's here to stay," he told CNBC's "Street Signs" on Tuesday.

He explained that online groceries is a massive category that is relatively underpenetrated due to logistics and other reasons. But the sector grew nearly three times during the outbreak in Southeast Asia, and one in three users who were surveyed said they planned to continue buying their groceries over the internet in future, according to the report. 

Total grocery spend in Southeast Asia is roughly around $350 billion, and online grocery accounts for a fraction of that overall value, but it is gaining traction, according to industry experts.  

Alibaba-backed Lazada, which operates across the region, recently told CNBC its online grocery sales in Singapore jumped four times from early April — since the city-state introduced movement restrictions as the number of coronavirus cases intensified. 

Southeast Asia's digital economy is of tremendous importance to a lot of companies. Facebook recently invested an undisclosed sum into Indonesia's ride-hailing regional company Gojek

A commonly cited research from Google, Singapore state investor Temasek and Bain predicted that by 2025, the region's internet economy would grow to $300 billion. It will likely be driven by e-commerce, ride-hailing, and supported by a rise in digital payments.

There are more than 600 million people in the region and most of them have yet to come online. The penetration of smartphones and improved internet connectivity are speeding up digital access to them, making them a lucrative consumer base for tech companies like Facebook. 

New stay-at-home culture

Another trend likely to stay is around the use of new apps in areas such as digital and social commerce and video streaming, according to Yendamuri. That includes e-payments and digital wallet apps that provide contactless payment options to consumers who are going to remain cautious as countries lift their various degrees of national lockdowns, he said.  

Even after economies are fully reopened, people in Southeast Asia are 1.5 times less likely to go out in the future compared to their American counterparts, which would mark a massive culture shift in the region, according to the report. 

Telemedicine and digital health care services are also expected to remain in demand, with opportunities for companies and investors to capitalize on the trend, the report said. 

"A lot of consumers have used these services and find that the quality and the service levels they've gotten out of doing virtual checkups, consultations have actually worked for them," Yendamuri said. 

Tuesday's report from Bain and Facebook is based on YouGov survey data for April across the major Southeast Asian economies: Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam. It also includes interviews with business leaders and venture capitalists in the region.