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Six Strategies for Digital Growth in Southeast Asia
By Praneeth Yendamuri and Gino Dizon
The digital economy is booming in Southeast Asia ( SEA ). With 350 million digital consumers , SEA is set to leapfrog China , outpacing that country at a 1.6x growth rate and becoming the fastest-growing digital economy in Asia-Pacific . According to research conducted by Bain & Company and Meta , 78 % of consumers in SEA are now digital consumers , that is , those who have performed a commercial transaction online .
At the same time , brands are also facing obstacles as a result of commodity price increases , raw material shortages , and shipping / port capacity chokes that are beginning to impact their top line and margins . A poll conducted by Bain of Asia-Pacific consumer product leaders revealed their top three issues for 2022 : supply chain , inflation , and post-Covid consumer roadmaps . While solving for the here and now , savvy brands are building strategies around post-pandemic readiness . To reach these 350 million consumers in SEA , we see six crucial strategies . These ‘ Six Rs ’ can help maximise your brand success .
Rewrite your digital-first agenda
Most consumers are set in their online buying and browsing habits . Digital channels are increasingly playing a role in how consumers hear about products , evaluate products against the competition , and make purchases . Combined , these behaviours develop brand loyalty for consumers .
Digital is now the foundation for how the internal engine functions : core themes are supply chain , customers , consumer connection , employees , and workplace . Savvy brands are setting their digital ambitions for the coming three to five years , including a bold and realistic ambition for the digital domain . They assess “ digital maturity ” across different digital domains ; review and benchmark ongoing efforts and outcomes ; evaluate data , applications , technology architecture upgrades , assess investment requirements — both domain specific and transversal ; determine organizational gaps to fill to run digitalization at scale ( including changes in culture and capability ); and establish objectives and key results .
Rewire your supply chain / business model
Consumer product companies are experiencing inflation and supply chain challenges that are expected to increase or continue . The top two issues are inflation and supply chain resiliency . Savvy companies are addressing these issues pragmatically .
Regarding inflation , brands are exploring immediate opportunities to realize more net revenue per unit through a combination of revenue growth management levers , including price pack architecture , strategic pricing , trade terms , promo optimization , channel mix , etc . Brands are also exploring more structural and transformational change through design to value . Regarding supply chain , brands are solving for the immediate problem of freight and logistics by creating innovative mobility solutions and prioritizing hero SKUs while establishing greater transparency through control towers . Brands are also thinking about breaking the value chain by exploring local contract manufacturing operations by shipping bulk , if that is more feasible compared to container freight .
While for the longer term they are using a ‘ future back ’ approach to look at supply chain resilience , taking into account geopolitics , consumer intimacy , response time , tax regimes , and cost considerations .
Reimagine consumer engagement
E-commerce platforms are increasingly used for searches ; social channels are increasingly used as points of sale . While for digital consumers , end sales are still split between offline and online , we see digital channels far outpacing offline channels for brand discovery and consideration .
Given this phenomenon , common pitfalls for brands around commercial spends include the following :
• lack of visibility on how much is spent ; and a ‘ last-year-plus ’ mindset about allocating commercial spending
• not ROI-driven
• democratically allocating commercial spending across different subfunctions
• a siloed approach that doesn ’ t understand which touchpoints most influence the consumer ’ s path to purchase and how those touchpoints influence one another
Brands must independently reevaluate their commercial activities and reorient their marketing and trade spends to mirror this multichannel , multi-platform path to purchase . They must also create brand loyalty and differentiation with a unique , consistent , and engaging experience across their offline presence , social channels , website , and app .
Finally , brands must identify differences between offline channels vs . e-commerce and determine how they should guide internal processes , such as sales and operational planning , dashboards and KPIs , decision rights , and organisational structure .
Refresh product offerings
On average , digital consumers shop across 7.9 online websites or platforms — a 52 % increase from 2020 . Fifty-one per cent of consumers say they switched from their most purchased brands in the past three months . Price wasn ’ t the only reason they switched : Better product quality , better availability , and faster delivery times all contributed to switching brands .
Consumers increasingly demand ‘ right for me , right now ’ products , services , and experiences . But this contrasts with how the pandemic drove the need for affordability . Brands need to manage the growing gulf between consumer price inflation and product cost inflation simultaneously . Brands must manage this contrast while keeping their range simple with easy-to-understand propositions and price points , including carrying out ‘ revenue growth management ’ initiatives .
Re-envision sustainability
Listen to your customers ’ desire for sustainability . Right now , 80 % of SEA consumers will pay up to a 10 % premium for eco-friendly and socially conscious products , according to the research conducted by Bain & Company and Meta . A sustainable approach can guide all aspects of the business — from product design to supply chain and operations .
Ensure that your brand has adequate ESG-focused options in your product range and proposition . It is possible to make the supply chain more sustainable without compromising on cost efficiencies . And since many of your consumers are willing to bankroll your environmentally and socially friendly practices , promote your sustainable initiatives .
Realign to consumers ’ new hybrid lifestyle
Some pandemic-era trends are here to stay , including flexible working arrangements . Consumers want shopping options that are closer to home , especially in SEA countries with challenging transportation issues .
Your product offerings , marketing , and delivery options should cater to this new wave of homebodies . Redesign and customise a subset of your offerings especially for at-home consumption .
In conclusion , the Southeast Asian market has jumped to the top of the digital-first priority list . Demand is pulsing through the region and growing . Existing digital consumer trends are ready for immediate action , along with new trends created during the pandemic . In addition , brands need to combat supply chain related headwinds . The time is right to implement the ‘ Six Rs ’ to gain traction with these SEA consumers — now and in the future .
Praneeth Yendamuri is a Partner in Bain & Company based in Singapore and Gino Dizon is a Partner based in Manila .
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