November 25, 2020

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Malaysia has SEA’S highest number of digital natives

The year’s end will see the number of digital consumers in Southeast Asia reach 310 million. Currently, Malaysia is the country with the largest population of digital users.

A new joint study from an American global management consultancy and the world’s largest social media platform entitled Digital Consumers of Tomorrow, Here Today reportedly surveyed online users in Southeast Asia (SEA) to study their purchasing behaviour. One of the noteworthy findings is that the events of 2020 have inadvertently accelerated the growth of Southeast Asia’s (SEA) digital economy.

SEA had been initially projected to reach 310 million digital users by the end of 2025, in two parties’ 2019 digital consumer report, Riding the Digital Wave. Instead, the pandemic and its consequent effects have seen online behaviour in the region far outstripping the initial forecasts, to the extent the five-year expectation is now set to be reached by the end of this year.

For the first time, this will place SEA’s collective online retail market penetration ahead of India’s. Moreover, seven out of every 10 (or 70%) consumers in SEA that is 15 years old or older will complete a digital transaction by the end of the year.

Of that online purchasing age group of 15 years and above, Malaysia has the highest percentage of digital consumers in one country, with a clear majority of 83% have bought at least one item online in the past year.

Additionally, social distancing and other limitations that prevent physical contact in 2020 have had the added impact of swinging 48% out of the 83% in Malaysia into becoming first-time digital shoppers, further propelling Malaysia toward being the SEA nation with the highest digital penetration.

The report also found that online retail gross merchandise value (GMV) in Malaysia is expected to double from US$4 billion (RM16.6 billion) to approximately US$9 billion by 2025. In the meantime, Malaysians are spending more online and are buying from more segments online with an average of 5 categories purchased from in 2020, up from 3.8 categories in 2019.

Further, for the first time since 2018, online grocery purchases more than doubled its growth (2.2x) in Malaysia in 2020, causing the country managing director of the social media platform’s Malaysia branch to remark that the upswing in Malaysian digital adoption had never been more pronounced as it was in 2020.

In Malaysia alone, the company is expecting approximately 4 million new digital consumers in 2020. Online is no longer just one of many channels, for many businesses, it has become their main channel. It is crucial for businesses to connect with consumers in frictionless ways and to replicate in-person interactions through social platforms, messaging, and short videos as much as possible to drive discovery and loyalty.

A partner at the global management consultancy firm noted that, on the other hand, the digital consumption behaviour in fast-growing SEA is developing quickly, with online spending now expected to triple by 2025 to close to US$150 billion.

The rise of digital consumers in the SEA region has accelerated at a white-knuckle pace, and their discovery habits are changing. Reinforcing brand reliability and standing out from the crowd matters now more than ever, as consumers are more open to switching brands and rely more on e-commerce platforms.