Powered by rapid adoption of smartphones and internet, as well as changing consumer preferences, the Southeast Asian internet economy has hit the $100 billion milestone. According to a report by e-Conomy SEA Swipe up and to the right: Southeast Asia’s $100 billion Internet economy, the internet economy has leapt nearly 40 per cent from last year to exceed $100 billion in gross merchandise value (GMV) in 2019 across the Online Travel, e-Commerce, Online Media and Ride Hailing sectors.
With a 33 per cent compounded annual growth rate (CAGR), the value of the internet economy has more than tripled between 2015 – 2019, says the report. At this rate, the Southeast Asian internet economy is expected to hit $300 billion by 2025. Analsyts, through the report, have observed that e-commerce has grown rapidly. In 2015, about 49 million people bought or sold items online, and today, that number has tripled to 150 million people. Demand for Ride Hailing services has also exploded. The number of active users has grown five times, with more than 40 million users today from a just eight million in 2015.
The report says that e-Commerce and Ride Hailing, which includes Food Delivery services, are experiencing an explosion in demand. This is attributed to the rapid adoption and fundamental shifts in consumer behavior. As such e-Commerce and Ride Hailing have become an integral part of daily life for millions of Southeast Asians, especially those living in metropolitan cities. They offer convenience, value and access to services and products that were previously difficult to obtain. The wide accessibility and affordability of Ride Hailing services in crowded metropolitan areas are pushing many people to rethink the need to own vehicles. This is especially true for crowded cities like Bangkok, Kuala Lumpur and Jakarta where private vehicle ownership is costly, and contributes to air pollution and frustrating traffic jams.
The same is for food delivery services. Consumers rely on food delivery services for meals that they would otherwise have to cook at home or buy from food vendors. The report says that for an emerging and increasingly time-conscious middle class, the convenience of having hot food delivered right to the doorstep is highly valued. In regards to e-Commerce, the report highlights that previously, consumers used to go online sporadically for discounts on big-ticket items like electronics. But today’s shoppers are turning to the internet for more frequent purchases of lower-cost items, including groceries, personal care and apparel.
Spike in mobile internet use in the Southeast Asian region has prompted more ride hailing and food delivery startups. More startups and businesses are coming online to gain consumers in the mobile internet users. As such companies are building more engaging user experiences for the simple reason that higher engagement is seen as a precursor to business growth.