Asean Internet Economy Worth $50 Billion

Southeast Asia’s digital economy is now worth more than $50 billion, but remains highly fragmented with multiple players battling for the increasingly lucrative region.

Fuelled largely by strong demand in the travel and e-commerce industries, the region had emerged as a hotly contested battleground for both large global players from the US and China as well local players with expanding footprint, zdnet reported.

According to Bain & Company’s Digital Acceleration in Southeast Asia report, travel and tourism was the leading driver of the region’s digital economy, accounting for $22 billion of the total digital spend in 2016. The e-commerce sector generated $15 billion, while media and entertainment churned $3 billion and digital advertising—on websites, in-app, and search—was worth $2 billion.

The findings were based on various researches including a survey that polled 2,400 consumers across six Southeast Asian markets: Singapore, Malaysia, Thailand, Vietnam, Indonesia and the Philippines.

Bain estimated that the region now is home to 230 million “online engaged consumers”, most of whom use digital for social and entertainment. In fact, with the exception of Singapore, 91% of consumers said they either made a purchase using social media or were influenced by the platform to make a purchase. This figure was 79% in Singapore.

“Social is fast becoming a robust channel in its own right as users rely on it to find products, interact with sellers, and ultimately make a purchase,” the report stated, noting that 85% of respondents across the region used social and messaging apps multiple times a day.

There also were 120 million mobile gamers, with the region’s games sector accounting for $2 billion of overall digital spend.

Some 300 million owned a smartphone, driven by widespread availability of low-priced phones that had, in turn, boosted connectivity across Southeast Asia. Indonesia, for instance, had 48 times more users connected to mobile than fixed broadband.

According to Bain, there were more than 7,000 startups in Southeast Asia, with new businesses registered every day, and consumers had multiple platforms from which to choose to fulfill their daily needs.

The e-commerce sector, for instance, comprised different key players in each of the six regional markets where Qoo10, Carousell, Amazon, and Lazada were among sites Singapore respondents most frequented in the past six months, while their Indonesian counterparts visited Tokopedia, Bukalapak, OLX, and Elevenia.

The fragmented market landscape, though, had enabled local players to successfully compete and gained an edge over their global competitors in some industries, Bain said. It pointed to the likes of e-commerce sites Sea and Lazada as well as ride-hailing player Grab that had emerged as strong players with “massive funding scale”.