1、Reaching new heights:Navigating the path to profitable growthReference2e-Conomy SEA is a multi-year research programme launched by Google and Temasek in 2016.Bain&Company joined the programme as lead research partner in 2019.The research leverages Temasek insights,Bain analysis,Google Trends,primary

2、 research,expert interviews,and industry sources to shed light on the digital economy in Southeast Asia(SEA).The information included in this report is sourced as Google,Temasek,and Bain,e-Conomy SEA 2023,unless otherwise specified.DisclaimerThe information in this report is provided on an as is bas

3、is.This document was produced by Google,Temasek,Bain,and other third parties involved as of the date of writing and is subject to change.It has been prepared solely for information purposes over a limited period of time to provide a perspective on the market.It is not intended for investment purpose

4、s.All financial analysis is derived or estimated by Bain analysis using both non-Google proprietary and publicly available information.Google has not supplied any additional data for financial analysis,nor does Google endorse any financial analysis made in the report.Where information has been obtai

5、ned from third-party sources and proprietary research,this is clearly referenced in the footnotes.Projected market and financial information,analyses,and conclusions contained in this report should not be construed as definitive forecasts or guarantees of future performance or results.Google,Temasek

6、,Bain,their respective affiliates,or any other third party involved make no representation or warranty,either express or implied,as to the accuracy or completeness of the information in the report and shall not be liable for any loss arising from the use of this report.SEAs Digital DecadeTowards asu

7、stainabledigital economy8th edition of e-Conomy SEA by Google,Temasek,Bain:Southeast Asias digital economy research programme320162017201920232020Unlocking the$200B opportunity in SEAUnprecedented growth for SEAs$50B internet economySwipe up and to the right:SEAs$100B internet economyAt full velocit

8、y:Resilient and racing aheadThrough the waves,towards a sea of opportunity20212022Roaring 20s:The SEA Digital DecadeReaching new heights:Navigating the path to profitable growth2018SEAs internet economy hits an inflection point2030e-Conomy SEA research methodologyTemasek insights4Bain analysisGoogle

9、 TrendsPrimary researchExpert interviews2&industry sourcesWith contributions fromNotes:All dollar amounts are in USD.Unless otherwise stated,all mentions of“Southeast Asia”or“SEA”in this report refer to these six markets:Indonesia,Malaysia,Philippines,Singapore,Thailand,and Vietnam.(1)Google commiss

10、ioned Kantar to run the e-Conomy SEA consumer survey.The research was conducted in metro and non-metro cities across Indonesia,Malaysia,Philippines,Singapore,Thailand,and Vietnam.Data collection ran from 10/08/2023 to 01/09/2023 via a 25-minute online survey.The survey was conducted among a total of

11、 n=7,881 respondents aged 18-64 who had made a transaction in at least one of the verticals covered within a specified period of time.Each respondent was allocated to a maximum of two verticals,out of eight verticals covered,based on least fill quota.(2)Bain and Temasek conducted interviews and a qu

12、antitative survey with SEA-focused venture capital investors from 06/2023 to 08/2023.e-Conomy SEA covers 6 countries in Southeast AsiaSource:World Bank 5VIETNAM99MPHILIPPINES117MMALAYSIA34MTHAILAND72MSINGAPORE6MINDONESIA278M605M total population across the countries and 5 leading sectors in the digi

13、tal economy6E-commerceMarketplaces Direct-to-consumerGroceriesOnline mediaAdvertisingGamingVideo-on-demandMusic-on-demandTransport&foodTransportFood deliveryOnline travelFlightsHotelsVacation rentalsFinancial servicesPaymentsLendingInsuranceInvestmentsNotes:E-commerce does not include informal comme

14、rce due to the lack of reliable data.Financial services are excluded from market sizing estimates due to differences in units of measurement compared to other leading sectors.70102030704Growing against global headwindsInvestors reset expectations Monetisation on the riseFinancial services at an infl

15、ection pointBridging the digital economic divide0506Engaging high value users The path forward:profitable growthContent8SEA has weathered global macroeconomic headwinds with more resilience compared to other regions around the world.Gross domestic product(GDP)growth remains above 4%,while inflation

16、has come down to 3%.Consumer confidence is starting to rebound in H2 2023 after falling to lower levels in H1 2023.Private funding in SEA has declined to its lowest level in six years,which is in line with global shifts towards higher costs of capital and issues across the funding lifecycle.Exits re

17、main top of mind as SEA funds have returned less capital to investors than funds focused on other regions.To leave the funding winter behind,SEA will need to prove its digital companies have a clear pathway to profitability,and investors have dependable exit pathways.Digital businesses have shifted

18、their focus to monetisation in a bid to achieve profitability targets.In 2023,the SEA digital economy is set to deliver$100B in revenue,growing at 27%CAGR since 2021 1.7X the rate of gross merchandise value(GMV)growth.E-commerce,travel,transport,and media contributed$70B in revenue.Remarkably,the fo

19、cus on monetisation has not come at the expense of consumer engagement and GMV growth.GMV is still expected to grow at 11%to$218B in 2023.Travel and transport are on track to exceed pre-pandemic heights in 2024,while e-commerce is showing resilience.Consumers are adopting digital financial services(

20、DFS)at a rapid pace.Cash is no longer king,as digital payments now make up more than 50%of the regions transactions.High interest rates are tailwinds to deposits and wealth management but pose challenges to lending.Non-performing loans remain under control.Sustainable business models are emerging am

21、ong pure-play fintechs,while traditional financial companies are accelerating the process of digitalisation to retain users.As businesses pursue an accelerated path to profitability,engaging high value users has become critical to achieve sustainable unit economics.The top 30%of SEA spenders account

22、 for more than 70%of digital economy spend and they can be found everywhere.This is accentuated in gaming,travel,and transport.In the longer term,companies will need to embrace a broader set of customers to continue growing in a sustainable way and unlock the regions full monetisation potential.Digi

23、tal inclusion has made inroads in the region over the past years.Connectivity has increased by as much as 3X since 2015 in some rural areas.Yet,as players focus on monetisation,consumers outside of metro cities are facing a widening digital economic divide.Ecosystem investments are required to bridg

24、e the gap,which will in turn support long-term digital economic growth.There remains significant headroom in SEA:favourable demographics,growing wealth,and an increasingly urbanised population set the stage for future digital economic growth.Competition is also expected to become more rational in th

25、e pursuit of sustained profitability.SEAs digital economy can reach its full potential given broadened digital economy participation,the emergence of nascent sectors,physical infrastructure investments,and policy and regulation at the regional level.Executive summary01020304050607Growing against glo

26、bal headwindsInvestors reset expectationsMonetisation on the riseFinancial services at an inflection pointEngaging high value usersBridging the digital economic divideThe path forward:profitable growthGrowing against global headwinds9SEA has weathered global macroeconomic headwinds with more resilie

27、nce compared to other regions around the world.10SEA has stood firm against global macroeconomic headwindsNotes:Data is as of July 2023.(1)SORA used as a proxy for Singapore interest rates.Sources:United Nations Population Division;S&P Global Market Intelligence;relevant central banks and monetary a

28、uthorities;Bain analysis11SEA GDP(YoY%)SEA inflation(YoY%)2025202220242023GDP growth has stayed relatively stable Inflation calms from post-pandemic peaksInterest rate increases have been relatively moderateChange in interest rates(%points,Jan 22-Jul 23)202020212025202220242023202020213.11.80.53.01.

29、34.3US fed funds rate increase4.7%5.7%4.5%4.2%-3.7%4.0%3.1%4.7%3.2%3.6%1.1.%2.0%SEAs economy sees encouraging upswings,especially in travel12Notes:FDI=foreign direct investment.(1)Compared to 2019.Sources:United Nations Conference on Trade and Development;Euromonitor;International Air Transport Asso

30、ciation;Destination Insights with Google;Bain analysisincrease in regional FDI inflowincrease in regional exportsrecovery in outbound passenger volumeincrease in travel demand+36%+32%80%+40%9.27.36.66.16.24.05.74.24.74.55.92.12.31.31.55.73.50.51.70.78.53.05.04.64.6SEAs GDP growth is forecast to keep

31、 up with the worlds fastest-growing economies13Real GDP growth rate(YoY%)20212022202320242025Note:Data is as of October 2023,and includes full-year estimates for 2023 and forecasts for 2024 and 2025.Sources:S&P Global Market Intelligence;Bain analysisUSAEUSEAChinaIndia5.16.76.02.04.73.64.78.04.12.78

32、.96.10.92.00.5Inflation remains under control compared to other regions14Inflation rate(YoY%)202120222023USAEUSEAChinaIndiaNote:Data is as of October 2023,and includes full-year estimates for 2023.Sources:S&P Global Market Intelligence;Bain analysisWe used search interest data to measure consumer co

33、nfidence in the economy.Factors include:Economic uncertainty searches(e.g.inflation,recession)Commodity price searches(e.g.gas prices)Job opportunity searches(e.g.new job openings)Job concern searches(e.g.unemployment)Finance and investment searches(e.g.investing strategies,mutual fund returns)A hig

34、her score indicates that consumers are more confident and have a more positive outlook on the economy.A lower score indicates that consumers are more worried and have a more negative outlook on the economy.Consumer confidence in the economy has begun to recover in Q3 2023 across most of the region15

35、Consumer Confidence BarometerQ120Q320Q121Q321Q122Q322Q123Q323Note:Data is as of August 2023.Data based on a three-month rolling window.Sources:The Consumer Confidence Barometer combines search interest data based on multiple economic indication searches,both positive and negative,to estimate consume

36、rs confidence in a countrys economic outlookQ120Q320Q121Q321Q122Q322Q123Q323Q120Q320Q121Q321Q122Q322Q123Q323Q120Q320Q121Q321Q122Q322Q123Q323Q120Q320Q121Q321Q122Q322Q123Q323Q120Q320Q121Q321Q122Q322Q123Q323Investors reset expectations1617Private funding in SEA has declined to its lowest level in six y

37、ears,which is in line with global shifts towards higher costs of capital and issues across the funding lifecycle.Exits remain top of mind as SEA funds have returned less capital than funds focused on other regions.Deal countFunding takes a dip after record highs in 2021The pace of funding in recent

38、years has been extraordinary:in 2016,we expected$40B$50B of investments that would take GMV to$200B in 2025.By 2022,the region had raised double that amount$101B as it hit the$200B GMV milestone three years ahead of schedule.Shift towards self-sufficiencyCompared to past highs,the pace of funding ha

39、s slowed to a six-year low also due to higher costs of capital.As investors recalibrate their expectations,digital players are looking to extend their runways by spending more efficiently,in favour of healthier long-term growth.Deal environment remains competitive As high-quality investments are rar

40、e in this environment,the competition for high-quality deals remains robust.Private funding reverts to 2017 levelsNote:Private funding value covers digital economy-related sectors,and excludes public financing deals e.g.PIPE,IPO,ICO.Source:Bain analysis18Private funding value($B)14125920168118581427

41、154622131227H1 22185326972080123384H1 23H2 228455642.3%1.4%1.2%3.0%2.4%3.5%3.6%Average 10-year US Treasury Rate201720182019202020212022Funding declines cut across all stages;late-stage deal flow slowed the mostNote:Private funding value excludes public financing deals e.g.PIPE,IPO,ICO,and undisclose

42、d,growth,secondary or private equity deals.Source:Bain analysis19Early stage:Seed&Series AGrowth stage:Series B&CLate stage:Series D&E+2.11.23.63.6-68%H1 22H1 23H2 22H2 2110849144953581.41.14.34.5-76%H1 22H1 23H2 22H2 2110110046510.80.43.21.7-77%H1 22H1 23H2 22H2 211718114Deal countPrivate funding v

43、alue($B)CAGR-24%-66%-63%-79%-52%-87%Declines from 20212022 peaks have been common across SEASource:Bain analysis20Private funding value($B)3.2195.13.34.49.121H1 2222201.8H1 23H2 2271912751221H1 22222053H1 23H2 220.2191.00.80.40.921H1 2222200.20.2H1 23H2 220.9190.90.70.72.621H1 2222200.6H1 23H2 220.4

44、191.10.50.50.921H1 2222200.60.3H1 23H2 220.2191.30.30.50.621H1 2222201.0H1 23H2 220.40.20.1CAGRDeal countA growing portion of deal activity is funneled into nascent sectors,signalling that investors are diversifyingNote:(1)Nascent sectors include categories that are still relatively nascent in SEA s

45、uch as enterprise,healthtech,edtech,deeptech/AI,Web3/crypto,property,automotive,etc.Source:Bain analysis21201915462021H1 2022202220201853269720801233H1 2023H2 2022845564Food&transportDigital mediaE-commerceDFSTravelNascent sectors33%34%42%25%41%45%56%121227211384Sectors 1H of2H of1H of 2019202020212

46、022202220222023E-Commerce2,6392,5746,6354,2992,3991,900643transport4,1832,6103,20873046326719Leisure&Travel151316100161238Digital Media3232671,542991840151105Fintech1,7061,9036,4206,3404,1162,2241,093other3,0383,8908,8269,0975,3873,7112,38625%34%33%42%41%45%56%Private funding value($B)Investors are

47、facing difficulties across all stages of the investment lifecycle,with exits and distributions being top of mindSources:Bain SEA Venture Capital Investors Survey,Q3 2023;Bain analysis22Investors have been grappling with dim prospects over the past 12 monthsInvestors have been increasingly urged to r

48、ealise exits,deliver returns,and distribute capital87%64%88%of investors find that fundraising has become more challengingof investors have seen a drop in diligence and top-of-funnel activityof investors feel they are facing a more difficult exit environmentFunds that started in the mid-2010s are no

49、w in the late stages of harvesting,putting pressure on delivering returns50%of investors partially met or did not meet their divestment targetsRealising returns and distributions are a key fundraising challengeFunds face challenges in returning capital to investorsFund vintageFund ageSEA has lagged

50、other regions in investor returnsSEA-focused funds have seen significantly lower distributions to paid-in capital compared to funds that are focused on other regions,suggesting difficulty in realising returns for investors.Distributions limited by scarce IPOsDistributions have been concentrated on a

51、 few big-name listings,primarily on US exchanges.But this has been affected by interest rate hikes that have subsequently reduced IPO appetite and the number of listings on regional exchanges.Secondaries have seen valuation impactWhile valuation discounts for secondary sales have widened,the valuati

52、ons of quality companies secondaries have been comparatively more resilient.Note:(1)Includes VC and growth funds only.Source:Bain analysis23Median distribution to paid-in capital(X of paid-in capital)11.0X1.3X0.4X0.6X0.7XSEAChinaIndiaEuropeUS0.4X0.5X0.2XSEAChinaIndiaEuropeUS8-10 years2013-20155-7 ye

53、ars2016-20180.1X0.04X15.77.1Dry powder is still on the rise despite investors becoming increasingly cautious amidst limited opportunities24Dry powder at year-end($B)Notes:(1)Funds include both PE and VC funds.Dry powder refers to the amount of capital that has been committed minus the amount that ha

54、s been called for investment.Source:Preqin20222020201920182017202112.414.110.28.5Assurance that there are clear and feasible exit pathways for digital businesses,which could be in the form of a more conducive capital market environment and supportive regulationsTo exit this funding winter,digital bu

55、sinesses in SEA need to prove that quality deals with dependable exit pathways are readily available25Proven monetisation modelRealisable monetisation pathways and sustainable unit economics have become key requisites for SEAs digital businessesRealistic entry valuationsDigital companies should prov

56、e rational valuation multiples that are built on business and industry fundamentals,and that reflect the current macro environmentDependable exit pathwaysClear path to profitabilityEvery business needs to lay out a clear,realistic path to profitability and long-term financial sustainabilitySource:Ba

57、in SEA Venture Capital Investors Survey,Q3 2023Monetisation on the rise26Digital businesses have shifted their focus to monetisation in a bid to achieve profitability targets,and are starting to see success.At the same time,GMV continues its upward trajectory.27The digital economy has flourished on

58、top of widespread adoption;monetisation is now accelerating,with visible progress28Note:(1)Refers to percentage of total adult population.Sources:Google,Temasek,and Bain,e-Conomy SEA 2016-2022;Bain analysisSEA internet users(%)Users:Widespread internet penetration across SEAAs internet coverage expa

59、nded,the number of internet users grew commensurately.Engaging these users and turning them into active consumers of digital products and services are key to digital economic expansion.GMV:Resilient despite headwindsThe pandemic spurred incredible adoption over the past few years,especially in key s

60、ectors like e-commerce.Despite global headwinds,growth remains strong,though attention is shifting towards monetisation and profitability.Revenue:Monetisation continues at full speedDigital businesses have successfully monetised the SEA digital economy,whether through their core business model or ad

61、jacencies.Revenue growth should continue outpacing GMV growth as businesses expand their top-line.Consumers:High activation,increasing participationConsumers across SEA have readily adopted digital products and services as internet coverage expanded,but there is still headroom to grow and expand dep

62、th of participation in the digital economy,beyond metro cities and high value users.SEA internet consumers(%)SEA digital economy GMV($)SEA digital economy revenue($)202370%80%2023218B2023100B202350%60%Profit:Businesses inch closer to profitabilityThe focus on profitability is intensifying across all

63、 digital economy sectors.Businesses are taking steps to improve their efficiency,exploring new productivity drivers(such as AI)to achieve sustainable and profitable long-term growth.SEA digital economy profit($)2023As the focus shifts from growth at all costto profitable growth,new priorities are at

64、 play29Business objectivesSustainable balance of user acquisition with monetising interactionsCore metricsRevenue and EBITDA in addition to acquisition-focused metrics(e.g.monthly active users)Cost optimisationImproved unit economics through optimised spending,instead of pure revenue growthCompetiti

65、ve focusMore rational competition,instead of a win users at any cost mindsetNote:EBITDA=earnings before interest,taxes,depreciation,and amortisation.The region has reached a key milestone:$100B in revenue across all digital economy sectors or 8X over the past 8 years30SEA digital economy total reven

66、ue($B)Digital financial services1Core digital economy sectorsNote:(1)Includes revenue from payments(average merchant discount rates),lending(gross interest rates),insurance(annualised premium equivalent,APE,for life and gross written premiums,and GWP,for non-life insurance),and wealth(mutual funds m

67、anagement fees and platform fees).Source:Bain analysis44202220215720237020161008159128XDigital businesses derive revenue through direct sales,or by functioning as an intermediary platform31Note:OTA=online travel agency.Revenue is the price of the goods or services sold,or the underlying instrumentRe

68、venue to these third party(3P)intermediary platforms is a portion of the price of goods or services sold,or the underlying instrumentDirect revenue modelThird party platform modelB channelsAirline/hotelsown channelsE-commerce marketplacesOTA platformsOnline/gamepublishersE-commerceTravelFood deliver

69、yTransportOnline mediaDigital financial servicesInsurance,etc.Payments,etc.SellerConsumerSellerPlatformConsumerTwo key revenue modelsin the digital economyFood deliveryplatformsFchannelsTransportplatformsMedia platformsDouble-digit GMV and revenue growth Both GMV and revenue have grown at impressive

70、 double-digit rates for the past two years,suggesting that monetisation and overall market growth are not at odds.Revenue growth outpaced GMV growthAs monetisation accelerated around the region over the past two years,revenue is set to grow at 1.7X the rate of GMV.This focus on monetisation has been

71、 driven by the pursuit of financial sustainability and better unit economics across sectors.SEA consistently delivers on both GMV growth and revenue growth a remarkable feat Notes:GMV=gross merchandise value;CAGR=compound annual growth rate.Source:Bain analysis32GMV($B)Revenue($B)E-commerceTravelFoo

72、d&transportOnline media81811213016119520%11%16%20222025202320212022202320211922232430139218242643186295313416%91823445730%23%22241428702627%CAGR1123There is a trade-off between growth and profitability as new entrants gain ground33Non-groceryGrocery182415171201629711311213013918616%6%16%202220252023

73、202128182324%22%202220232021GMV1($B)Revenue2($B)CAGRNotes:(1)Gross merchandise value:total value of physical goods sold to consumers through organised e-commerce platforms,including the value of goods sold by merchants from their own inventories(first-party)or goods sold through the platform by inde

74、pendent sellers(third-party);(2)Revenue spans first-party and third-party sales.E-commerceFood deliveryTransportOnline mediaTravelMonetisation has increased with further headroom Revenue has grown faster than GMV as players increase take rates and expand to adjacent revenue streams(e.g.logistics,adv

75、ertising,etc.).This trend is expected to continue into the medium term.Despite the focus on monetisation,GMV continues to growGMV continues to grow even as players reduce discounts and promotions to increase net take rates.Market leaders have expressed willingness to begin re-investing profits to de

76、fend their market share.This is expected to drive high GMV growth in the medium term.New entrants driving some GMV growthNew entrants have grown rapidly,gaining market share at an incredible rate.They have also driven some overall market growth through shifting informal and unorganised forms of e-co

77、mmerce towards organised e-commerce platforms.Grocery e-commerce has potential upsideThe grocery category shows potential for growth given the sizable headroom and the efforts put into overcoming logistical and economic challenges.Commission rates have reached Chinas high-water marks Market leaders

78、have spearheaded 3.0%to 4.5%commission hikes in recent years,almost reaching Chinas high benchmarks.Given regional purchasing power,commissions are unlikely to increase further.Adjacent revenue streams serve as a long-term growth engineSelling additional services(e.g.advertising,delivery services,in

79、surance,etc.)has become an increasingly common way to bump up revenue per order and overall revenue growth.Advertising,specifically seller-funded in-app ads to raise brand awareness and drive orders,has proven successful and is expected to be core to future monetisation.Expanding width and depth of

80、user base is key to continued growthPlayers need to look beyond the high value segment and increase both the size and purchase frequency of their customer base to drive long-term growth and profitability.AI-driven recommendations can help increase customer basket size,which can drive improved unit e

81、conomics and economies of scale.Marketplace revenues have accelerated through higher commissions,ad sales,and logistics feesNotes:AI=artificial intelligence.(1)Also referred to as third-party platforms,or online platforms where sellers can set up stores to sell goods to buyers.Sources:We Are Social;

82、Bain analysis34E-commerce marketplace platform1 revenue growth drivers(%of growth)43%100%29%28%Commissions impact20212023revenue growthAdjacent revenue impactGMV impactE-commerceFood deliveryTransportOnline mediaTravelSearch interest surpasses pre-pandemic levels,pointing to continued growth as capa

83、city increasesNotes:Search interest is used as a proxy for travel demand;SEA average is a simple average across the six markets.Source:Destination Insights with Google35SEA travel demand recovery(vs 2019 levels)Domestic-Air and accommodationInbound-AccommodationOutbound-AirDemand is a leading indica

84、tor for bookings Interest in international travel has revived to surpass interest in domestic travel over the past year,suggesting that there is latent demand waiting to be unlocked as international flight capacity opens up.2019Jan 2021Jan 2023Jan 2022Jan 2020E-commerceFood deliveryTransportOnline m

85、ediaTravelJan 2021Jan 2023Jan 2022Jan 2020Flight passenger volume is progressing towards pre-pandemic levelsNote:RPK=revenue passenger kilometres,a measure of total distance travelled by passengers who provide revenue.Source:IATA36Domestic RPK(indexed to Jan 2020)International RPK(indexed to Jan 202

86、0)Jan 2021Jan 2023Jan 2022Jan 20200%50%100%150%VietnamThailandPhilippinesMalaysiaIndonesia0%50%100%SingaporeE-commerceFood deliveryTransportOnline mediaTravelDomestic flights have recovered in some countriesInternational flights have recovered by 80%Flight passenger volume nears pre-pandemic levelsD

87、omestic flight volumes have mostly recovered Travel expected to fully recover by 2024Despite fervent revenge travel and increased domestic demand,overall travel GMV has yet to return to pre-pandemic levels.Ongoing tourism recovery should see travel exceed pre-pandemic levels sometime next year.Infla

88、tion accelerates revenue growthFlight ticket prices and room rates have been rising post-pandemic due to supply constraints.This has driven up revenue despite lower flight volumes and occupancy rates.Further growth headroom availableInternational tourism,including from China,remains well below pre-p

89、andemic levels,indicating significant headroom for growth as the broader market continues to recover.Increasing flight and accommodation capacity will also contribute to growth going forward.Full travel recovery is expected in 2024,with further headroom for growthGMV1($B)Revenue2($B)37E-commerceFood

90、 deliveryTransportOnline mediaTravel14Flights4Accommodation3103520305138183043118%63%21%2022202520232021241%57%202220232021GMV1($B)Revenue2($B)201932.1CAGR1439Notes:(1)Travel GMV consists of flights,hotels,and vacation rental bookings;(2)Revenue consists of both direct sales(first-party sales)and OT

91、A sales(third-party sales);(3)Accommodation includes online hotel and vacation rental bookings made for in-country stays;(4)Flights are all outbound flights booked online,both international and domestic.Source:Bain analysis38Flights serve as traffic driver for OTAsDespite flights representing about

92、half of travel GMV,they account for only 10-15%of revenues.OTAs are only able to apply a small commission(2-5%)due to a consolidated airline market,and competition between OTAs and airlines direct sales channels.Accommodation is the largest OTArevenue contributorIn a market where hotels fight for tr

93、avellers attention,OTAs are able to charge high commissions to give them an edge over their competitors.OTAs are shifting from a broker-style model(handing over reservations)to a merchant model(managing transactions)to increase their hold on hotel commissions.Vacation rentals are a small but growing

94、 segment,with hosts willing to pay high commissions to be featured on relevant platforms.Adjacent revenue streams provide long-term upside for OTAsPlatforms are increasingly offering a wide range of adjacent services,such as car rentals,airport transportation,and activity bookings.There are also add

95、-on services,such as travel insurance and no-penalty flight cancellations,which saw increased uptake during the pandemic and remain elevated today.In addition,they also offer advertising as a service to suppliers.This broad range of services is well-positioned to drive future growth for OTAs.OTA rev

96、enues are primarily driven by hotel commissionsNote:OTA=online travel agencies.Source:Bain analysis2023 OTA GMV and revenue($B)FlightsAccommodationAdjacent revenue streams45%55%45%55%10%15%80%85%0%10%2023 revenue 2023 GMVE-commerceFood deliveryTransportOnline mediaTravelConsumer demand remains stick

97、yDespite a return to in-person dining,higher food prices,and a pullback in promotions,GMV remains relatively stable as ordering habits remain sticky post-pandemic.Inflation driving up order valuesIncreases in food and fuel costs are driving up the cost of meals as well as the cost of delivery per or

98、der.This may impact demand in the longer term if higher costs persist.Headroom to grow beyond metro citiesAt the same time,players will need to scale their customer base.SEA remains underpenetrated,with food delivery as a percentage of total food service transactions at about half the level in China

99、.Unlocking this opportunity will require pushing beyond core high value users in metro cities.Consumer demand holds steady despite the return to in-person dining and increasing monetisation efforts20305131517162015%-4%12%2022202520232021149N/A60%202220232021GMV($B)Revenue($B)-0.020.50.8CAGRE-commerc

100、eFood deliveryTransportOnline mediaTravelNote:Revenue is net of partner incentives and consumer promotions.Source:Bain analysis39Improving unit economics towards profitabilityAfter years of focusing on user acquisition,players have turned to improving unit economics,and are now generating positive n

101、et revenue by optimising commissions and promotion spend the first step towards sustainable long-term profitability.Consolidation is also under way,favouring the largest players with the clearest paths to profitability.Limited headroom from commissions and incentivesCommissions and incentives have n

102、ow stabilised at levels on par with global benchmarks(take rates of 15%-20%)as competition rationalises.As such,these rates are unlikely to increase further,given the potential impact on partner supply and consumer demand.Focus on profitability and other revenue streamsAs overall take rates stabilis

103、e,players are increasingly exploring adjacent revenue streams(e.g.dine-in bookings,loyalty and subscription programs,etc.)to increase monetisation.Advertising is also a huge revenue pool,potentially reaching$100M ARR for some large players.In addition,players are increasing delivery productivity thr

104、ough AI-optimised order batching and route planning,and by optimising back-office costs.leads to a broader customer baseCost efficiencies allow players to provide differentiated and more affordable offerings(e.g.,economy delivery option with longer wait times)while maintaining margins.This enables t

105、hem to profitably scale up their customer base and drive future revenue growth.Revenue growth is driven by increased take rates in the short term,and growth of users and orders in the long termNotes:ARR=annual recurring revenue.Revenue is net of partner incentives and consumer promotions.Source:Bain

106、 analysis40Food delivery revenue drivers(%of total growth)49%100%46%Commissions impact20212023 revenue growthIncentives impactGMV impact4%E-commerceFood deliveryTransportOnline mediaTravelFull recovery expected by early 2024 Commuter demand has returned to pre-pandemic levels and beyond in most capi

107、tal cities.There is also rising demand for airport rides and transport to tourist destinations.Inflationary pressures driveincreased ride pricesIncreased vehicle and fuel costs have driven up average ride prices as platforms try to maintain drivers earnings.These increased costs have reduced driver

108、supply,putting additional upward pressure on prices.Monetisation successfuland continues to stabiliseRevenue growth has outpaced GMV growth as players optimise incentive spend.As take rates reach a steady state,this gap will begin to close.Immediate and futureheadroom for growth remainsRising income

109、 levels will support longer-term growth trends.The introduction of electric vehicles and autonomous driving will spur additional growth for this sector in the much longer term.Strong transport recovery with successful monetisation20305133.75.67.31050%30%18%2022202520232021143961%47%202220232021GMV($

110、B)Revenue1($B)0.50.71.141CAGR20197.8E-commerceFood deliveryTransportOnline mediaTravelNote:Revenue is net of partner incentives and consumer promotions.Source:Bain analysisMonetisation reaching a stable point The transport business model is reaching an equilibrium in terms of take rates.Despite some

111、 recent increases from service fees,commissions are already at a ceiling,with current rates comparable to global benchmarks(20%25%).Incentives have also been optimised to a point at which further reductions will negatively impact driver supply and consumer demand.Optimising the value proposition for

112、 usersAs the margin structure stabilises,the next test is whether players can scale up their customer base while maintaining profitability.Carpooling,affordable fleets,AI-powered routing and surge pricing,and proprietary mapping are being introduced to increase driver productivity and improve unit e

113、conomics.These improvements will help make transport services more accessible to a larger market.Establishing profitable expansion beyond metro citiesAs a result,players will be able to move into regions beyond capital cities,where lower density of demand and price points have traditionally made it

114、difficult to grow sustainably.This will help drive longer-term growth for the industry as a whole.Monetisation model has stabilised;affordability will unlock profitable expansion and long-term growthNote:Revenue is net of partner incentives and consumer promotions.Source:Bain analysisTransport reven

115、ue growth drivers19%100%78%Commissions impact20212023revenue growthIncentives impactGMV impact3%GMV increase is led by post-pandemic recoveryE-commerceFood deliveryTransportOnline mediaTravel42Resilience amidst advertiser cautionAds continue to grow,even as brands spend cautiously while making profi

116、tability optimisations.Short-form videos and marketplace ads are key growth drivers.AI continues to help enhance targeting and personalisation.New growth areas emergingThe return to offline activities and lower disposable incomes have softened in-app purchases in the short term.Casual games are emer

117、ging as a new pocket of growth as developers explore optimal monetisation models.Growth driven by adjacent trendsThe halo effect of live music events and the return of office commutes are driving growth in music-streaming despite price increases.A growing focus on wellness is also expected to have a

118、 positive impact on mood genre listening.Competition increases for watch timeGlobal streaming platforms compete with long-and short-form social media videos for users attention.They are balancing user acquisition through more affordable plans with increased monetisation through crackdowns on account

119、 sharing.Advertising and streaming will drivemarket growth in the long termNote:(1)For media,GMV is equal to revenue.Source:Bain analysisOnline media GMV($B)CAGRMusicAdsGamingVideoAdsGamingMusicVideo15%14%12%11%CAGR202320252030513222426347%10%15%2022202520232021E-commerceFood deliveryTransportOnline

120、 mediaTravel43Financial servicesat an inflection point44Consumers are adopting digital financial services(DFS)at a rapid pace;cash is no longer king.High interest rates are affecting DFS subsectors differently.Digital natives and traditional finance are engaged in heated competition.45DFS adoption c

121、ontinues to grow healthily in SEANotes:CAGR=compound annual growth rate.(1)Monthly active user(MAU)growth.Sources:US Federal Reserve;Bain analysis46SEA user growthEffective US fed funds rateDFS app usage continues to grow at a rapid pace while a once-in-a-decade Fed interest rate increase impacted u

122、nderlying financial services sectors differently2022202320214.3%0.1%0.1.%H1 2019H1 2023 CAGR Traditional banks+40%Digital banks+61%Pure-play fintechs+50%Growth in underlying lending and life insurance markets was muted due to rising interest rates.Deposits grew due to attractive rates.Asset values r

123、ebounded as the stock market picked up.47Irreversible offline-to-online behaviour shifts are driving continued growth in DFS adoption GTV1($B)Digital paymentsDigital lendingDigital insuranceDigital wealthAUM4($B)Loan book balance2($B)APE&GWP3($B)5493343915%40%31%4101.82.111%17%22%7.53.11.66021%26%29

124、%3001004048959123170885821%12%13%202220252023202120302100202220252023202120302022202520232021203020222025202320212030CAGRThe shift to digital has proven irreversible:offline,digital payments via QR codes are now widely accepted,while online,more payment methods have been integrated into the checkout

125、 flows of popular apps.There is tremendous growth despite the high interest rate environment.Non-performing loans(NPLs)have remained under control as fintech players continue to focus on credit management capabilities.Strong overall growth is driven primarily by non-life insurance,with support from

126、country-specific government policies,such as subsidised personal accident and health insurance.Growth is strong due to the increase in digital offerings from traditional banks and adoption of new fintech and digital banking platforms.PaymentsLendingInsuranceWealthNotes:(1)Gross transaction value(GTV

127、)for digital payments includes the value of credit,debit,prepaid card,account-to-account(A2A),and e-wallet transactions;(2)Loan book balance for digital lending includes end-of-year balance for consumer loans(excluding credit card and mortgage)and SME loans;(3)APE&GWP for digital insurance includes

128、APE for life insurance and health under life insurance policies and GWP for non-life insurance;(4)Assets under management(AUM)for digital wealth includes end-of-year mutual fund AUM balance.Source:Bain analysisNotes:(1)Digital GTV(gross transaction value)includes credit,debit,prepaid card,account-to

129、-account(A2A),and e-wallet;(2)Digital loan book includes end-of-year balance for consumer loan(excluding credit card and mortgage)and SME loan;(3)Digital insurance includes life insurance(in annual premium equivalent,APE)and non-life insurance(in gross written premiums,GWP),which differs from last y

130、ears report,which included health as GWP(whereas health under life policies is now consolidated under life insurance APE);(4)Digital assets under management(AUM)includes end-of-year mutual fund AUM balance.Source:Bain analysis48Lending is the single biggest driver of DFS revenue Notes:(1)Revenue is

131、measured using different metrics for each DFS sector.Lending:average effective interest rates plus servicing fees;Payment:merchant fees(based on merchant discount rates);Insurance:annual premium equivalent for life insurance and gross written premium for non-life insurance;Wealth:annual management f

132、ees and platform fees.Source:Bain analysisInsuranceWealthRevenue1($B)Account-to-account&e-walletPaymentsLending952023202120.5197211533%30CAGR2021-202314%31%12%46%CAGRPaymentsLendingInsuranceWealthRevenue growth is largely driven by underlying volume growth.Still in its early stages,the sectorhas see

133、n some fee upside from mix shifts given the faster rate of growth in emerging markets.However,monetisation has remained nominal as platforms are still in a user acquisition phase.The insurance market remains relatively underpenetrated,but digital distribution channels are gaining momentum and growth

134、 can be expected,particularly in the non-life insurance space.Merchant discount rates(MDRs)have been on the decline and are expected to continue causing revenue growth to trail gross transaction value.This is driven by a combination of merchants moving towards channels with lower MDRs,and government

135、s capping rates on some channels.Lending is the largest contributor to DFS revenue,and gross revenue(primarily from interest income and fees)has risen sharply due to high lending rates.On the flip side,the cost of funds has surged,while NPLs remain under control.Cash is no longer king;digital paymen

136、t adoption drives GTV and revenue growthNote:(1)Cards include credit cards,debit cards,and prepaid cards.Source:Bain analysis49Account-to-account&e-walletCardsDigital payments have crossed the halfway markCash is no longer king,as digital payments now make up 50%of total transaction value.The shift

137、away from cash is expected to continue as digital channels become the dominant means of payment across SEA.MDR is in tight focusMerchants and platforms are increasingly looking for ways to reduce costs,and are incentivising users towards account-to-account(A2A)or e-wallet payments with lower MDRs(e.

138、g.discounts for the use of A2A payments).A2A is gaining traction,withstrong long-term outlook A2A and e-wallet channels are gaining traction off the back of government regulations encouraging the adoption of these payment channels(e.g.QRIS).447550316402512681392456708858959123121%12%13%2022202520232

139、02180013002100203052%45%50%56%34%GTV($B)Revenue($B)-0.55.31.8Payment volume impactMerchant discount rate impact2021revenue6.72023 revenueCAGR56%Cash to total GTV52%50%45%34%PaymentsInsuranceWealthLendingGrowing preference for digital channelsWhile high interest rates are keeping the overall loan boo

140、k relatively flat,digital lending is growing as consumers shift online.Shifting consumer preferences are also prompting the rapid popularisation of buy-now-pay-later(BNPL)services,the digitalisation of traditional financial services players,the rise of digital banks,and governments to push for digit

141、al innovation in the lending space,such as Vietnams fintech sandboxes.Strong lending rates help drive revenue growthDigital lenders are taking advantage of higher lending rates,leading to revenue growth.Meanwhile,consumer demand remains high as underbanked consumers and small businesses are particip

142、ating more meaningfully in the digital economy.Regulatory oversight is tighteningHigh lending rates come with a higher cost of risk.With NPLs under control,fintech players are working on strengthening their credit capabilities,though questionable collection practices are also on the rise.Governments

143、 are putting more robust measures in place to protect consumers,most notably in Indonesia.The country has introduced new capital and equity regulations,in parallel with an ongoing revamp of licensing requirements and lending limits.Digital loans grew rapidly despite the sharp increase in lending rat

144、esNotes:(1)Digital loan book excludes credit card and mortgage.SME=small-and-medium enterprises.Source:Bain analysis50ConsumerSMEDigital loan book balance1($B)Revenue($B)CAGR5.68.94.6Loan volume impactLendingrateimpact2021revenue19.02023 revenue124879343940486010021%26%29%202220252023202175225300203

145、02169PaymentsInsuranceWealthLending0.6Non-lifeLifeDigital penetration is picking up with micro-insuranceDigital insurance accounts for a small portion of the overall insurance market.Insurtech companies are offering cheaper,pay-as-you-use insurance products to lower-income segments of the population

146、.AI-driven premium calculations help optimise prices for consumers.These products are also more accessible and convenient for the user(e.g.users can pay premiums via mobile bills)and can be purchased on mobile devices.Life and property insurance are least digitalised,offering long-term headroom for

147、growth.Embedded products expand across platformsTraditional issuers are forming partnerships with consumer platforms to offer insurance products embedded with partner offerings.For example,transport platforms are offering trip insurance to users and auto insurance to drivers.Travel insurance has bec

148、ome ubiquitous among OTAs and airline apps,and second-hand auto marketplaces now offer vehicle insurance.Adoption of digital insurance continues,but market penetration remains lowNotes:APE=annualised premium equivalent;GWP=gross written premium;OTA=online travel agency;(1)APE for life insurance and

149、GWP for non-life insurance;different approach to last years split of life(APE),health(GWP),and general(GWP)to life(APE)and non-life(GWP)where health premium is consolidated into life insurance premium(APE instead of GWP).We are assuming APE and GWP are equivalent to revenue for this sector.Source:Ba

150、in analysis51APE&GWP($B)CAGR0.71.42.21.11.21.61.82.13.111%17%22%20222025202320212.55.07.520301.00.6PaymentsInsuranceWealthLendingIncreasing openness to digitalacross segmentsCustomers across the wealth spectrum are becoming increasingly open to using digital self-services to manage their portfolios.

151、Adoption growth is not limited to the masses,but also among high-net-worth customers.In the long run,digital adoption should continue growing as young,digitally-savvy users build up their wealth.Traditional financial institutions are moving towards digital engagementBeyond fintech platforms,traditio

152、nal financial institutions are investing in simplified digital wealth offerings,and most have shifted client engagements online or adopted a hybrid model of offline advisory with online self-service.Some are also integrating AI into investment planning tools to improve the customer journey.Continued

153、 digital adoption to fuelfuture AUM and revenue growthRevenue growth has stayed relatively in line with volume growth and will likely remain so,as fees are expected to remain stagnant.Digital AUM is expected to increase alongside digital opennessNote:AUM=assets under management;(1)AUM represents wea

154、lth of all online mutual funds in the region.Source:Bain analysis52Digital AUM($B)Revenue($B)CAGR0.50.3VolumeimpactFeesimpact2021revenue0.82023 revenue3439549315%40%31%202220252023202141020300.0PaymentsInsuranceWealthLendingSurvival of the fittest among pure-play fintechs,while traditional banks acc

155、elerate digitalisation efforts to retain high value usersPure-play fintechsStrong traction,particularly in digital wealth and digital lending53Pure-play fintechs have seen success in lending to the underbanked segment and establishing a strong foothold via BNPL,with stronger credit scoring and under

156、writing capabilities.Robo-advisory players have also seen strong traction,attracting customers through simplified offerings.The decline in funding has led to a survival of the fittest situation,as players are compelled to focus on profitability.Those that are unable to compete for investor funding r

157、isk mergers or closure.Established financial services institutionsRapid digitalisation driving momentum in digital payments and wealthEstablished financial services institutions have been successful and quick to transition their large existing customer bases to digitalised services.They have benefit

158、ed from countries adopting national real-time payment rails and mobile banking.Digital lending sees more traction in developed markets compared to emerging markets.Digital wealth is gaining traction as user engagement increases,and there is significant headroom for future adoption.Established consum

159、er playersLimited traction in payments;little activity to enter other DFSTraditional consumer companies(e.g.telcos,consumer retail)have found limited success in digital financial services.They are leveraging their customer base to drive digital payments but have not been as successful compared to co

160、nsumer tech platforms,with more limited activity in expanding into other financial services offerings.These traditional consumer companies are choosing to refocus on their core businesses.Digital banksStill nascent,but with significant potential Pure-play digital banks have significant potential to

161、capture digital natives and the underbanked population.Adoption has generally been strong across new digital banks.Most players are taking a cautious approach to growth as regulatory constraints have introduced some friction.Consumer tech platformsStrong payments traction but limited success expandi

162、ng to other DFSE-wallets have been a traditional stronghold due to their existing user base,but the space is seeing increasing competition from national real-time payment rails.There has been limited success in cross-selling other financial products.Embedded insurance is a potential growth avenue fo

163、r these players,with most establishing partnerships to sell insurance products alongside their regular products and services.Just launchingStableWeakerStrongerEngaging high value users 5455As businesses pursue an accelerated path to profitability,engaging high value users has become critical to achi

164、eve sustainable unit economics.Over the long term,significant growth headroom lies in onboarding all Southeast Asians onto the digital economy.High value users(HVUs)are defined as the top 30%of online spenders1 with an outsized contribution to digital economy spendNotes:(1)Based on absolute online s

165、pend on digital services from the Google-commissioned Kantar e-Conomy SEA consumer survey,excluding digital financial services(DFS);(2)Includes e-commerce,groceries,transport,food delivery,gaming,streaming,and travel;(3)Average composition across SEA;(4)Affluent=high income;(5)Includes 35 metro loca

166、tions surveyed out of 196 locations surveyed across SEA.Source:Google-commissioned Kantar e-Conomy SEA consumer survey,ID,MY,PH,SG,TH,VN,2023,online survey among 18-64 internet users and digital economy spenders,10/08/2023-01/09/2023(n=2,368 HVU,n=5,513 non-HVU).Question A2,S3,S7:“Please estimate ho

167、w much you think you spend online in an average month across the below digital activities.”“In what region/area do you live?”“Which of the following best describes your regular monthly household income situation before tax?”56Digital economy spenders1 in SEABased on total online spend across 7 verti

168、cals2UserProportionHVUs can be found anywhere While many top online spenders or HVUs are higher-income,close to half are low-to medium-income consumers.They are also likely to be represented in both major and non-major metros,just as lower spenders are.Lastly,this report will also delve into how usa

169、ge behaviour differs between HVUs and non-HVUs.SpendProportionIncomeDemographic3,%who are affluent4GeographyDemographic3,%who reside inmetro cities5What we discoveredTop30%Next70%HVUHigh value users Non-HVUNon-high value usersHigherLower 52%23%76%65%HVUs account for nearly three-quarters of digital

170、economy spend157Proportion of digital economy spend by HVUsBased on total online spend2 per userNotes:(1)Based on absolute online spend on digital services from the Google-commissioned Kantar e-Conomy SEA consumer survey;(2)Excludes digital financial services.Source:Google-commissioned Kantar e-Cono

171、my SEA consumer survey,ID,MY,PH,SG,TH,VN,2023,online survey among 18-64 internet users and digital economy spenders,10/08/2023-01/09/2023(n=1,300 per country,n=7,881 in total;HVU per country at least n=390,n=2,368 HVU in total).Question A2:“Please estimate how much you think you spend online in an a

172、verage month across the below digital activities.”78%Average75%74%69%70%73%73%Online spend concentration is highest in discretionary spending verticals Essential categories,including groceries,food delivery,and e-commerce,see HVUs outspending non-HVUs by 5 to 6X.The ratio increases significantly for

173、 higher discretionary spend verticals,like transport and gaming.Going forward,the spend gap between HVUs and non-HVUs will likely widenHVUs spend has been on the upswing,and this is likely to continue.Their spend increased the most on food delivery and groceries over the last year,but travel and e-c

174、ommerce is where they expect to be spending more in the next 12 months,reflecting growing consumer optimism.HVUs spend more than 6X the amount non-HVUs spend online,and are more likely to increase spending over time58HVU spend vs non-HVU spendE-commerceStreaming2TravelTransportGamingChange in spendB

175、ased on average online vertical spend per userAveraged across verticals1 per userNon-HVUHVUNotes:(1)Excludes digital financial services(DFS);(2)Streaming includes both video-on-demand and music-on-demand.(3)Based on aggregate HVU user spend/aggregate non-HVU user spend,across all 7 categories.Source

176、:Google-commissioned Kantar e-Conomy SEA consumer survey,ID,MY,PH,SG,TH,VN,2023,online survey among 18-64 internet users and digital economy spenders,10/08/2023-01/09/2023(Spend ratio n=2,368 HVU,n=5,513 non-HVU;for spend change,HVU per vertical at least n=1,724,and non-HVU per vertical at least n=2

177、,623).Question A2,A5,A7:“Please estimate how much you think you spend online in an average month across the below digital activities.”“Comparing this year to the previous year,how has your spend for the following digital behaviours changed?”“Thinking about the upcoming year,how do you think your spe

178、nd for the following digital behaviours will change?”GroceriesFood delivery6.5Xweighted average311.0X10.1X7.0X6.9X6.1X5.7X5.2XIncreased spend over past 12 monthsIntend to increase spend over next 12 months52%34%50%33%12%9%4.76.2HVU spend is significantly higher across all channels54%of HVUs total sp

179、end happens online,compared to 43%2 for non-HVUs.Beyond online spend,HVUs also spend more offline:4X compared to non-HVUs.Overall,HVUs spend 5X compared to non-HVUs.HVUs spend across more verticals onlineHVUs tend to spend across more verticals than non-HVUs,though their spend propensity compared to

180、 non-HVUs is highest for streaming3,travel,and transport.HVUs spend more across different channels and across a higher number of verticals59Online vs offline spend1Usage across verticals1Indexed to average HVU total spendAverage number of verticals in which users spend online,7 being the maximumNote

181、s:(1)Excludes digital financial services(DFS);(2)Based on non-HVU online spend(9%)/total spend(21%),indexed to average HVU total spend;(3)Streaming includes both video-on-demand and music-on-demand.Source:Google-commissioned Kantar e-Conomy SEA consumer survey,ID,MY,PH,SG,TH,VN,2023,online survey am

182、ong 18-64 internet users and digital economy spenders,10/08/2023-01/09/2023(n=2,368 HVU,n=5,513 non-HVU).Question A2,A2a:“Please estimate how much you think you spend online in an average month across the below digital activities.”“Please estimate how much you think you spend offline/in-store in an

183、average month across the below activities,please only consider times you spent in-person,in-store or over the phone.”HVUNon-HVUOnlineOffline46%HVUNon-HVU54%5XA HVU in one vertical is likely to be a HVU in othersAcross the board,the likelihood that a HVU in one vertical is also a HVU in another verti

184、cal is over 40%.HVUs in food delivery are the most likely to cross verticals,whereas travel has the lowest replicability.High cross-vertical usage is observed across related verticalsA HVU in e-commerce is quite likely to also be a HVU in groceries,and vice versa.The same goes for HVUs in gaming and

185、 streaming1.HVUs tend to be high spenders across verticals,especially among related sectors60Note:(1)Streaming includes both video-on-demand and music-on-demand.Source:Google-commissioned Kantar e-Conomy SEA consumer survey,ID,MY,PH,SG,TH,VN,2023,online survey among 18-64 internet users and digital

186、economy spenders,10/08/2023-01/09/2023(HVU per vertical at least n=1,951).Question A2:“Please estimate how much you think you spend online in an average month across the below digital activities.“HVU spend correlation across verticalsBased on online spend in a verticalE-commerce100%63%55%56%50%52%50

187、%Groceries58%100%56%59%51%54%52%Transport51%57%100%58%56%58%52%Food delivery58%66%64%100%49%55%56%Gaming44%49%52%42%100%62%44%Streaming146%52%55%47%63%100%48%Travel44%50%49%47%44%47%100%E-commerceGroceriesTransportFood deliveryGamingStreaming1TravelLow correlationHigh correlation40414344454748495152

188、535556575960647284100HVUs are frequent online purchasers,but high expectations mean 1 in 2 would switch platforms for a better experienceNotes:(1)Streaming includes both video-on-demand and music-on-demand.(2)Includes only video-on-demand.Source:Google-commissioned Kantar e-Conomy SEA consumer surve

189、y,ID,MY,PH,SG,TH,VN,2023,online survey among 18-64 internet users and digital economy spenders,10/08/2023-01/09/2023(Online purchase frequency HVU per vertical at least n=1,724,and non-HVU per vertical at least n=2,623;for alternative platform switching,HVU per vertical at least n=501).Question A1,V

190、21:“Thinking about the last year,how often do you typically do the following activities online?”“When it comes to buying for the following digital activity,please select the statement most applicable to you.”61Online purchase frequency(%)HVUs who seek an alternative platform when one fails to meet t

191、heir expectationsBased on online spend within verticalBased on online spend within vertical9688Food deliveryTransportStreaming1Groceries75707853896744%52%Streaming2Food deliveryGroceriesTransport48%50%51%E-commerceNon-HVUHVU8581GamingE-commerceTravel92838876Every weekEvery monthEvery 6 monthsE-comme

192、rcePriceConvenienceGroceriesPriceConvenienceTransportPriceSpeedFood deliveryPriceValue at a fair priceGamingPriceQualityStreaming1PriceA platform that suits my needs44%36%43%39%47%35%78%64%65%57%59%49%HVUs are more inclined to value non-price benefitsMore so than non-HVUs,many HVUs value the superio

193、r experience and convenience of purchasing digitally,which lead to higher online spending and frequency of usage.Across verticals,HVUs tend to care less about price than non-HVUs when shopping online62Note:(1)Streaming includes both video-on-demand and music-on-demand.Source:Google-commissioned Kant

194、ar e-Conomy SEA consumer survey,ID,MY,PH,SG,TH,VN,2023,online survey among 18-64 internet users and digital economy spenders,10/08/2023-01/09/2023 (HVU per vertical at least n=501,non-HVU per vertical at least n=880).Question V21:“When it comes to buying for the following digital activity,please sel

195、ect the statement most applicable to you.”Importance of price against other factors when shopping onlineBased on online spend within verticalNon-HVUHVUMost important attribute other than price56%64%41%51%35%43%22%36%53%65%57%61%E-commerceGroceriesTransportFood deliveryGamingStreaming1TravelHVUs choo

196、se the platform with the best deals Across verticals,HVUs show a high propensity to use multiple digital platforms and switch between them to find more reasonable prices or fees.As they spend more overall,they are motivated to get the most out of their spending.However,getting the best price is key

197、to keeping HVUs loyal to a platform63Note:(1)Streaming includes both video-on-demand and music-on-demand.Source:Google-commissioned Kantar e-Conomy SEA consumer survey,ID,MY,PH,SG,TH,VN,2023,online survey among 18-64 internet users and digital economy spenders,10/08/2023-01/09/2023(HVU per vertical

198、at least n=501).Question V17:“Thinking about buying for the following digital activity,which of the reasons below are most likely to influence your decision to switch your final channel for a transaction?”%of HVUs who cite price as reason to switch digital platformsBased on online spend within verti

199、cal56%46%61%56%58%54%56%In e-commerce,groceries,and food deliveryDelivery issues,including slow delivery and high delivery costs,are top barriers.Inability to guarantee a products authenticity or quality is a key hindrance in e-commerce and groceries.Minimum order requirements in food delivery is al

200、so a common constraint.A preference to see or touch the product has been holding non-HVUs back.In transport,gaming,streaming1,and travelHigh prices are the top barrier in transport,gaming,and streaming.Inaccurate or long wait times are a perennial issue for transport consumers.Hidden transaction fee

201、s and online security concerns are common issues among travelers.Streaming incurs a recurring cost,which they prefer to save.An inability to compete with high spending gamers deters non-HVUs from gaming.Ensuring a reliable and accessible online experience can overcome barriers and spur higher usage

202、and spend64Top barriers to spending more online Note:(1)Streaming includes both video-on-demand and music-on-demand.Source:Google-commissioned Kantar e-Conomy SEA consumer survey,ID,MY,PH,SG,TH,VN,2023,online survey among 18-64 internet users and digital economy spenders,10/08/2023-01/09/2023(HVU pe

203、r vertical at least n=501,non-HVU per vertical at least n=835)Question V16:“Thinking about buying for the following digital activity,what are some of the barriers from spending more online?”Based on online spend within verticalDistinct barriers among non-HVUsCommon barriers among all usersHVUs could

204、 be spending more across all categories The biggest potential uplifts are in categories where major barriers are more addressable:groceries,gaming1,e-commerce,and food delivery.These are largely related to distribution,supply,or security issues from purchasing online.The growth opportunity for non-H

205、VUs is 1.9X that of HVUsNon-HVUs would spend more online or start spending online if key barriers were resolved.However,non-HVUs also face barriers,such as needing to touch and feel products,which may require creative workarounds.Addressing barriers to online spending can be a significant opportunit

206、y for digital players,with higher uplifts expected for non-HVUs65Note:(1)Only includes purchase of games and not in-game purchases.Source:Google-commissioned Kantar e-Conomy SEA consumer survey,ID,MY,PH,SG,TH,VN,2023,online survey among 18-64 internet users and digital economy spenders,10/08/2023-01

207、/09/2023(HVU per vertical at least n=501,non-HVU per vertical at least n=726)Question V16a:“Earlier you mentioned that you spend the following in an average month when buying for the following digital activity.If all your barriers were removed,how much of your total would you spend online?”%increase

208、 in online spend if major online barriers were removed Based on online spend within verticalNon-HVUHVU50107Food deliveryTransportGroceries355840722135Gaming1E-commerceTravel41724692+39%HVU average+73%Non-HVU averageFor non-HVUs who only purchase offline:lower prices,trust in the platform,and ease of

209、 use can change behaviour66Top reasons to start spending online1(%share of fully offline non-HVUs)Note:(1)Excludes digital financial services(DFS),averaged response per non-HVU who currently do not spend online in one or more verticals.Source:Google-commissioned Kantar e-Conomy SEA consumer survey,I

210、D,MY,PH,SG,TH,VN,2023,online survey among 18-64 internet users and digital economy spenders,10/08/2023-01/09/2023(n=2,706 non-HVU;n=462 to 646 responses for Ride Hailing,Food Delivery,and Groceries;n=1,006 to 1,704 responses for Gaming,Streaming,and Travel;n=150 responses for Ecommerce;across all ve

211、rticals,across all verticals,differences from the average are negligible and not statistically significant,with notable exception to groceries which was higher than average,and where speed of delivery is more important.Question A8:“Earlier you mentioned that you have never done the following online

212、activities.What would entice you to do the following activities online?”15%14%12%12%12%12%Based on online spend within vertical18%If I can get the same products or service online but at lower pricesIf I trust the platform or appIf the platform or app is easy to useIf more products or services are av

213、ailable on platforms or appsIf my friends and family do itIf there is a variety of payment optionsIf I can get the product or service fasterBridging the digital economic divide67Digital inclusion has made inroads in the region over the past years.Yet,as players focus on monetisation,consumers outsid

214、e of metro cities are facing a widening digital economic divide.68Last year,we outlined four enablers for a sustainable digital economy;this year,we deep dive on digital inclusion69Path to profitable growthThe digital economy is on the path to profitable growth,with 32%of GMV transactions captured a

215、s revenue.Sectors that have proven to be profitable in the past will likely see a reinvigoration of growth.Digital inclusionConnectivity continues to make inroads,with more users now online.However,profitability puts short-term pressure on digital participation,as it remains challenging to operate e

216、fficiently beyond metro cities.Data infrastructure and regulationImprovements in infrastructure and security continue,with responsible artificial intelligence(AI)guidelines coming into focus.Rather than a reactive measure to ethical concerns,this could be a potential source of competitive advantage.

217、Environment,Social,GovernanceESG has temporarily taken a back seat as players double down on profitability metrics.Rising costs are also widening the consumer say-do gap,despite the general rise in ESG awareness.Source:Bain analysisTowards a sustainable digital economyDigital populationDigital consu

218、mersTotal populationAn effort to provide all segments of society with equitable access to digital technologies so everyone can participate meaningfully in the digital economy.Active involvement in the digital economy through consumption of products or services across sectors of the digital economy(i

219、ncluding content and entertainment).70Digital economic growth happens as a result of digital inclusion and the active participation of digital usersDigital inclusion1Digital participation271SEA has seen good progress on digital inclusion,making inroads into rural areas to bridge connectivity gapsSom

220、e metro cities are nearing the digital penetration saturation pointWith the commoditisation of 4G networks,falling costs of data and mobile devices,and rising smartphone ownership,digital penetration has reached an all-time high across major metro cities like Bangkok,Kuala Lumpur,and Jakarta.Clear s

221、ignals that the urban and rural connectivity gap is narrowingYears of investment in connectivity infrastructure are finally bearing fruit,as more last mile challenges have been addressed across the region.Rural Indonesia,the Philippines,and Vietnam still have headroom for improvement.Source:ITU;Worl

222、d Telecommunications/ICT Indicator Database%households with internet access(urban vs rural)418976976492428649892074RuralUrban2.2x1.3x1.4x3.7x1.8x2x2015202272We assessed demand and supply at a provincial level to understand the digital economic divideDemandSupplyProxy:Indexed search interest per capi

223、ta1 at a provincial levelProxy:Number of delivery drop-off points per 1,000 residents2 at a provincial level The digital economic divideA growing gap between demand and supply for digital services can result in a digital economic divide.Areas beyond metros are particularly vulnerable given the chall

224、enging unit economics and lower purchasing power.While consumers in these areas might have access to the internet,they are not able to participate and contribute to the digital economy meaningfully.Notes:(1)An indication of how much e-commerce demand there is,calculated based on the e-commerce-relat

225、ed search interest indexed to census population per province,indexed at the country level;(2)An indication of the e-commerce fulfillment coverage,calculated based on the concentration of courier,delivery,freight forwarding,mailing,and shipping services within provinces,indexed at country level.Sourc

226、es:Google internal data,ID,MY,PH,TH,VN,Jan-Jul 2022 vs Jan-Jul 2023;Province GDP&Population;Google Maps data,ID,MY,PH,TH,VN,as of September 2023;WorldPop&Landscan Population;Bain analysise-Conomy Opportunity IndexNotes:(1)An indication of how much e-commerce demand there is,calculated based on the e

227、-commerce-related search interest indexed to census population per province,indexed at the country level;(2)An indication of the e-commerce fulfillment coverage,calculated based on the concentration of courier,delivery,freight forwarding,mailing,and shipping services within provinces,indexed at coun

228、try level.(3)Areas that have not met the minimum supply(search interest)and demand(drop off points)thresholds have not been included in the analysis.Simplified illustrative maps are not representative of administrative borders and territories for which data is not availableSources:Google internal da

229、ta,ID,MY,PH,TH,VN,Jan-Jul 2022 vs Jan-Jul 2023;Province GDP&Population;Google Maps data,ID,MY,PH,TH,VN,as of Sep 2023;WorldPop&Landscan Population;Bain analysis73The current demand and supply gap outlines a potential risk of a digital economic divide in the e-commerce sectorJakartaJakartaE-commerce:

230、Demand12023 indexed search interest per capitaE-commerce:Supply22023 drop-off points per capitaLow retail demand High retail demand Low drop-off densityHigh drop-off densityKuala LumpurKuala LumpurBangkokBangkokManilaManilaHanoiHanoiHCM CityHCM City1.26X1.98XThe gap could widen further if players fo

231、cus solely on monetisation74Ratio of metro to non-metro online spend per user1Note:(1)Excludes Singapore.Source:Google-commissioned Kantar e-Conomy SEA consumer survey,ID,MY,PH,SG,TH,VN,2023,online survey among 18-64 internet users and digital economy spenders,10/08/2023-01/09/2023(n=4,052 metro,n=2

232、,526 non-metro).Question S3,A2:“In what region/area do you live?”“Please estimate how much you think you spend online in an average month across the below digital activities.”GroceriesFood deliveryTransportGamingTravelStreaming1.37X1.37X1.52X1.59X1.17XE-commerceAverage:1.5XAddressing these gaps is t

233、he collective responsibility of all stakeholders75Investors Take a digital inclusion and a participation lens when evaluating new opportunities,while also optimising for the companys offerings and unit economics Encourage portfolio companies to support digital inclusion and address digital participa

234、tion issuesGovernmentNonprofits/NGOs Identify and call attention to digitally excluded populations to drive action across all stakeholders Support businesses and governments in their identification of gaps across society Execute targeted education programs to ensure these populations become more dig

235、itally literateDigital businesses Design new innovations,products,and services that facilitate wider digital participation(e.g.easier to use or more affordable products)Build trust with consumers outside of metro cities(e.g.cash on delivery services,refund policies,etc.)Roll out education initiative

236、s to improve digital and financial literacy to enable individuals to participate meaningfully and safely in the digital economy Invest in connectivity and physical infrastructure to support digital inclusion and accessibility of digital services Upskill MSMEs to help them use digital tools(e.g.AI to

237、 improve efficiency)to scale services and improve reach76Inventory management:Optimised inventory levels reduce storage and inventory costs,ensuring that products are available based on predicted demand while minimising wastage.Route optimisation:Driver schedules and routes can be further optimised

238、to maximise driver and vehicle utilisation,reduce fuel costs,and minimise the time customers spend waiting or travelling.Customer service:AI-powered chatbots and virtual assistants can provide 24/7 customer support and answer customer queries quickly and efficiently.Personalised content recommendati

239、ons:AI-driven video,song,or article recommendations can help consumers find relevant content much more quickly,improving their overall engagement.Fraud detection and prevention:Understanding individual buying behaviour or access patterns to detect and prevent credit card fraud or identity theft,incr

240、easing security for consumers and merchants.Digital businesses can explore AI-driven use cases to benefit consumers and themselvesA policy agenda for responsible progress in AI development:Digital businesses and governments can explore the application of new technologies,such as AI,to support these

241、effortsInvest in innovation and competitivenessInvest in AI research,create shared AI research resources,and establish public-private partnerships to build and maintain high-quality datasets.Create a pipeline of AI-ready talentExpand pre-tertiary STEM and digital training programmes,fund more resear

242、ch fellowships to promote AI and technology literacy,and expand relevant tertiary education programs(puter science and AI-related curricula).Encourage upgrading AI skills in the workforce through micro-certifications and e-learning.Promote balanced legal frameworks for AI innovationDevelop privacy l

243、aws to protect personal information and enable trusted cross-border data flows.Develop copyright systems enabling appropriate and fair use of copyrighted content,while giving publishers and content creators choice and control over the reproduction of their works.Promote globally-interoperable AI gov

244、ernance frameworksDevelop common standards,shared best practices,and proportional risk-based regulation through a multi-stakeholder approach to ensure that AI technologies are developed and deployed responsibly.Not exhaustiveConsumers digital literacy(i.e.their familiarity with digital services and

245、ability to protect themselves online)needs to be improved to foster trust and drive demand.To encourage digital participation,challenges need to be addressed with each of the driversNotes:Metro is based on the weighted average across SEA capitals(Singapore as a whole,Bangkok,Kuala Lumpur,Manila,Jaka

246、rta,and Hanoi).Drop-off points refer to the points to drop off delivery parcels to logistics companies and is a proxy to how well an area is served by digital services.Sources:World Bank;Government statistics;UN;UNICEF;AIIB;Google Maps;Bain analysis77Digital literacyDrop-off points MetroNon-metro23%

247、38%0.52MetroNon-metroDigital literacy is necessary to foster trust Cost-efficient supply models must be created To facilitate digital participation,players need to identify business models that deliver better unit economics while serving a broader set of consumers.Road density0.62.2MetroNon-metroPhy

248、sical infrastructure can improve cost-to-serveInvestments in physical infrastructure are needed to make serving additional areas more cost-effective for businesses.Per 10,000 populationKilometres per square kilometreThe path forward:profitable growth78There remains significant headroom in SEA for fu

249、ture digital economic growth.SEA is forging ahead towards its long-term ambitions,without losing sight of profitable growth.79Despite the ebbs and flows,SEA has substantial headroom for long-term growthNotes:Data is as of August 2023.(1)Population age 15+;(2)Urban population refers to people living

250、in urban areas,as defined by national statistical offices.Sources:United Nations Population Division;S&P Global Market Intelligence;World Bank;Bain analysis80Working population growth rate1(2023-2028 CAGR)GDP per capita(000 USD,2022)Growing working populationRoom for income growthRemaining urbanisat

251、ion potentialCurrent urban population2(%of total population)0.7%1.1%0.1%0.0%SEAChinaIndiaEUUS-0.5%83%54%65%76%36%SEAChinaIndiaEUUS765.313382.4SEAChinaIndiaEUUSThe digital economy will continue to be a major growth driver in SEASource:Bain analysis81Digital economy GMV vs GDP growth2023-20252025-2030

252、13%15%Expected nominal GDP CAGRExpected digital economy CAGR9%10%2023-20252025-20308%14%8%7%2023-20252025-203018%20%12%8%2023-20252025-20308%13%5%6%2023-20252025-203013%17%6%5%2023-20252025-203017%20%11%10%The digital economy is expected to continue growing faster than GDP and will continue to be a

253、major growth driver across the regionGMV will continue its upward trajectory through the rest of the decadeNotes:GMV projections from 2021 to 2030 exclude digital financial services due to differences in GMV definition;2030 projection includes ballpark estimates for nascent sectors such as healthtec

254、h,edtech,AI,etc.Source:Bain analysis82Digital economy GMV($B)CAGR20%8%15%2022202520232021203016%7%14%31%13%20%32%12%13%2%16%17%38%19%20%8210963762330192220222025202320212030243517223043182590-200364930312229152020222025202320212030202220252023202120302022202520232021203020222025202320212030100-16540

255、-65210-36045-7080-150The digital economy will continue to be a major growth driver across the regionSEAs digital economy is on track to reach its long-term ambitionsAmbitious growth is still within reach for SEAs digital economyThese developments have the potential to be game-changing as SEA navigat

256、es the path to profitable growthNotes:GMV projections from 2021 to 2030 exclude digital financial services due to differences in GMV definition;2030 projection includes ballpark estimates for nascent sectors such as healthtech,edtech,AI,etc.Source:Bain analysis83GMV($B)Long-term market growth prospe

257、cts remain strong$1T GMV is within reach provided these come to fruition21830016219520222025202320216002030$1TIncludes nascent sectorsSEA remains on track to reach its long-term ambitions,while still achieving strong revenue growth around the regionStep-changes can take SEA to new heights of$1T GMVw

258、hile still achieving strong revenue growth around the regionStep-changes will make$1T GMV achievable,while still delivering strong revenue growthMore profitable sectors as companies focus on unit economicsAs companies adjust their monetisation models and focus on increasing efficiency(e.g.through th

259、e implementation of AI-driven use cases),profitability will improve across the board,driving up the availability of resources for market growth and the attractiveness of different digital economy sectors.More digital businesses as offline and nascent sectors cross the thresholdSectors beyond those c

260、overed in this report can drive substantial growth in the digital economy as their adoption reaches critical mass.For example,the emergence of nascent sectors,such as online grocery,healthtech,edtech,property and car sales all hold potential to drive GMV growth in the longer term.More digital consum

261、ers through bridging the divide in digital economy participationDirectly addressing barriers to participation in the digital economy will accelerate the rate of consumer adoption across the region.By tapping into this latent demand,the growth of digital penetration can be increased significantly.Mor

262、e geographic coverage as infrastructure expands beyond metrosInvestments in digital and physical infrastructure,as well as economic development plans,can help make it feasible for digital businesses to extend services to areas outside metro cities where demand for digital products and services is gr

263、owing.The right investments will lower cost-to-serve and accelerate digital penetration.More interconnected regional activities through trade and digital agreementsThe development and harmonisation of relevant policies and agreements across ASEAN will benefit both businesses and consumers.Trade and

264、data governance agreements,as well as infrastructure policies and standards,will remove barriers to cross-border digital economy activity and stoke growth across the region.Country spotlight:Indonesia84Indonesia85Growth and inflation are expected to normaliseAs the economy normalises,Indonesias GDP

265、growth will likely moderate from 2022s inflation highs.Fortunately,inflation is easing more quickly than expected as input prices ease and government interventions take effect.Indonesia is still expected to grow faster than the regional average and drive a significant portion of digital economy grow

266、th.Sticky customers make up forthe loss of price-sensitive users E-commerce,food delivery,and transport players have reduced the number of promotions and incentives on offer in view of balancing growth and profitability.Growth has slowed as price-sensitive consumers seek alternative options,but suff

267、icient numbers have stuck around,offsetting slower market growth with higher net revenue growth.Mobility restrictions finally removed at the end of 2022As pandemic-related mobility restrictions lifted at the end of 2022,there was a resurgence in offline activities.Various digital economy sectors,inc

268、luding food delivery and e-commerce,are seeing growth dwindle,but transport is thriving.Travel is also seeing encouraging upswings,both from a domestic demand and business travel perspective.Regulators will drive thetrajectory of the digital economyRegulators heavily influence the direction of key d

269、igital economy sectors.On one hand,nationwide digital payments standards and frameworks have sparked a steep incline in digital payments adoption.On the other hand,a new rule banning e-commerce imports below$100 to support local merchants may have a negative impact on the overall market.Country over

270、viewSticky customers make up forthe loss of price sensitive users E-commerce,food delivery,and transport players have reduced the number of promotions and incentives on offer in view of balancing growth and profitability.Growth has slowed as price sensitive consumers seek alternative options,but suf

271、ficient numbers have stuck around,offsetting slower market growth with higher net revenue growth.Regulators will drive thetrajectory of the digital economyRegulators heavily influence the direction of key digital economy sectors.On one hand,nationwide digital payments standards and frameworks have s

272、parked a steep incline in digital payments adoption.On the other hand,a new rule banning e-commerce imports below$100 to support local merchants may have a negative impact on the overall market.Indonesia86Transport&foodOnline media15%-8%13%20222025202320212030FoodTransportE-commerceOnline travel3669

273、%68%21%1592202220252023202120306282485820%7%15%2022202520232021160203082109637620%8%15%2022202520232021203078792078666%5%12%2022202520232021152030Despite ripples from macro headwinds,Indonesia is expected to bounce back and reach$110B in 2025,largely fueled by e-commerceSource:Bain analysisOverall d

274、igital economyGMV($B)CAGR210-360IndonesiaNotes:(1)An indication of how much e-commerce demand there is,calculated based on the e-commerce-related search interest indexed to census population per province,indexed at the country level;(2)An indication of the e-commerce fulfillment coverage,calculated

275、based on the concentration of courier,delivery,freight forwarding,mailing,and shipping services within provinces,indexed at country level.(3)Areas that have not met the minimum supply(search interest)and demand(drop off points)thresholds have not been included in the analysis.Simplified illustrative

276、 maps are not representative of administrative borders and territories for which data is not availableSource:Google internal data,ID,Jan-Jul 2022 vs Jan-Jul 2023;Province GDP&Population;Google Maps data,ID,as of September 2023;WorldPop&Landscan Population;Bain AnalysisJakartaJakarta87Jakarta leads i

277、n digital participation;gaps widen beyond capital E-commerce:Demand12023 indexed search interest per capitaE-commerce:Supply22023 drop-off points per capitaLow retail demand High retail demand Low drop-off densityHigh drop-off densityIndonesia88DFS:Lending and wealth expected to rise rapidly from a

278、low baseCAGR22%10%15%Digital payments31341723428620222025202320212030Digital lending85%27%50%20222025202320212030615354031%104%39%Digital wealth4712202220252023202140203029%32%27%20222025202320212030Digital insurance0.20.21.00.30.1GTV1($B)Loan book balance2($B)AUM4($B)APE&GWP3($B)Notes:(1)Gross tran

279、saction value(GTV)for digital payments includes the value of credit,debit,prepaid card,account-to-account(A2A),and e-wallet transactions;(2)Loan book balance for digital lending includes end-of-year balance for consumer loans(excluding credit card and mortgage)and SME loans;(3)APE&GWP for digital in

280、surance includes APE for life insurance and health under life insurance policies and GWP for non-life insurance;(4)Assets under management(AUM)for digital wealth includes end-of-year mutual fund AUM balance.Source:Bain analysis 760IndonesiaHVUs spend 6.8X vs non-HVUs;highest delta in travelNotes:HVU

281、=high value users.(1)Average composition across SEA;(2)Affluent=High income;Metro mainstream=Age 30 and above&medium income;Young digital natives=Age 18-29&medium income;On budget=low income;(3)Excludes digital financial services(DFS).(4)Based on aggregate HVU user spend/aggregate non-HVU user spend

282、,across all 7 categories.Source:Google-commissioned Kantar e-Conomy SEA consumer survey,ID,MY,PH,SG,TH,VN,2023,online survey among 18-64 internet users and digital economy spenders,10/08/2023-01/09/2023(n=1,302 Indonesia)Question S7,S3,A2,A5,A7:“Which of the following best describes your regular mon

283、thly household income situation before tax?”“In what region/area do you live?”“Please estimate how much you think you spend online in an average month across the below digital activities.”“Comparing this year to the previous year,how has your spend for the following digital behaviours changed?”“Thin

284、king about the upcoming year,how do you think your spend for the following digital behaviours will change?”89HVU composition1 by demographic2(%)HVU vs non-HVU online spendChange in spend(%)E-commerceGamingStreamingGroceriesTravelFood deliveryTransport6.8Xweighted average4Non-HVUHVUMetro2343Non-metro

285、77575915AffluentMetro mainstreamYoung digital nativesOn a budget21301834221HVU composition1 by geography(%)Increased spend over past 12 months5337Intend to increase spend over next 12 months513410.4X7.2X6.6X6.3X6.0X5.8X5.6XBased on total online spend3 per userAveraged across verticals3 per userBased

286、 on average online vertical spend per userBased on total online spend3 per userIndonesia90Deal countPrivate funding value($B)355437649501302199100Digital mediaTransport&foodE-commerceDFSTravelNascent sectors13.24.49.15.13.31.80.420192021H1 202220222020H1 2023H2 2022Funding dropped sharply across sec

287、tors to less than$1B in H1 2023Sectors 1H of2H of1H of 2019202020212022202220222023Total(B)3.24.49.15.13.31.80.4E-Commerce2771,3953,527989764225110Food&Transport1,8711,6072,884757321Travel2827910001Digital Media33392131581481021Fintech3916161,2932,6511,4521,19832Others5955031,1421,231870362251Note:(

288、1)Nascent sectors include categories that are still relatively nascent in SEA such as enterprise,healthtech,edtech,deeptech/AI,Web3/crypto,property,automotive,etc.Source:Bain analysisCountry spotlight:Malaysia91MalaysiaDigital payments continues to be a focus areaCash is no longer king in Malaysia a

289、s QR codes and other forms of digital payments become ubiquitous.The government has supported e-wallet adoption,distributing benefits to lower-income communities through e-wallets.Other digital financial services such as lending,insurance,and investment have also seen increased adoption,driven by lo

290、cal and regional pure-play fintechs and financial institutions.92Domestic demand stands resilient despite external headwindsHousehold spending is on the rise,in tandem with employment and wages.As a result,domestic demand will drive economic growth in the market.However,investments in Malaysian digi

291、tal companies decline to the lowest levels in years,in line with regional and global trends,suggesting slower growth in the near term for the digital economy.The return to offline routines has not shaken up sticky digital behaviours Foot traffic in shopping malls has recovered or,in some areas,even

292、exceeded pre-pandemic levels.The food and beverage industry is experiencing a similar uptick.But even with this resurgence,Malaysian consumers have held onto the habits that make their lives easier,like e-commerce and food delivery.Return of tourism touplift economic growthWhile tourism levels have

293、been slower to recover,the pace of recovery is expected to accelerate and is likely to exceed government targets by year end.Outbound travel demand remains elevated,providing support for continued recovery and near-term growth in the digital travel industry.Online transport services like ride-hailin

294、g are also benefiting from the trend.Country overviewMalaysia93Transport&foodOnline media36%16%13%20222025202320212030FoodTransportE-commerceOnline travel34148%49%28%1071202220252023202120302330192216%7%14%20222025202320212030131613134%-4%10%20222025202320212520302334534334%7%14%20222025202320215203

295、0Online travel recovery drives the digital economy to$23B in 2023,and e-commerce acceleration required to hit$30B by 2025Source:Bain analysisGMV($B)CAGROverall digital economy45-70BAIN FACTCHECK CHANGES INCORPORATEDMalaysiaKuala LumpurNotes:(1)An indication of how much e-commerce demand there is,cal

296、culated based on the e-commerce-related search interest indexed to census population per province,indexed at the country level;(2)An indication of the e-commerce fulfillment coverage,calculated based on the concentration of courier,delivery,freight forwarding,mailing,and shipping services within pro

297、vinces,indexed at country level.(3)Areas that have not met the minimum supply(search interest)and demand(drop off points)thresholds have not been included in the analysis.Simplified illustrative maps are not representative of administrative borders and territories for which data is not availableSour

298、ce:Google internal data,MY,Jan-Jul 2022 vs Jan-Jul 2023;Province GDP&Population;Google Maps data,MY,as of September 2023;WorldPop&Landscan Population;Bain AnalysisKuala Lumpur94Kuala Lumpur leads in digital participation;gaps widen beyond SelangorE-commerce:Demand1E-commerce:Supply2Low retail demand

299、 High retail demand Low drop-off densityHigh drop-off density2023 indexed search interest per capita2023,drop-off points per capitaMalaysia95DFS continues its upward trend,largely supported by the governments push for digital payments adoptionNotes:(1)Gross transaction value(GTV)for digital payments

300、 includes the value of credit,debit,prepaid card,account-to-account(A2A),and e-wallet transactions;(2)Loan book balance for digital lending includes end-of-year balance for consumer loans(excluding credit card and mortgage)and SME loans;(3)APE&GWP for digital insurance includes APE for life insuranc

301、e and health under life insurance policies and GWP for non-life insurance;(4)Assets under management(AUM)for digital wealth includes end-of-year mutual fund AUM balance.Source:Bain analysisCAGR24%9%12%GTV1($B)Digital payments16520712315220222025202320212030Digital lendingLoan book balance2($B)35%25%

302、27%202220252023202120301016686040%61%35%Digital wealthAUM4($B)101957202220252023202180203014%22%22%20222025202320212030Digital insuranceAPE&GWP3($B)0.40.51.50.70.3 330MalaysiaHVUs spend 5.3X vs non-HVUs;even distribution of HVU demographics96Notes:HVU=high value users.(1)Average composition across S

303、EA;(2)Affluent=High income;Metro mainstream=Age 30 and above&medium income;Young digital natives=Age 18-29&medium income;On budget=low income;(3)Excludes digital financial services(DFS).(4)Based on aggregate HVU user spend/aggregate non-HVU user spend,across all 7 categories.Source:Google-commission

304、ed Kantar e-Conomy SEA consumer survey,ID,MY,PH,SG,TH,VN,2023,online survey among 18-64 internet users and digital economy spenders,10/08/2023-01/09/2023(n=1,300 Malaysia)Question S7,S3,A2,A5,A7:“Which of the following best describes your regular monthly household income situation before tax?”“In wh

305、at region/area do you live?”“Please estimate how much you think you spend online in an average month across the below digital activities.”“Comparing this year to the previous year,how has your spend for the following digital behaviours changed?”“Thinking about the upcoming year,how do you think your

306、 spend for the following digital behaviours will change?”HVU composition1 by demographic2(%)HVU vs non-HVU online spendChange in spend(%)Non-HVUHVUHVU composition1 by geography(%)Based on total online spend3 per userAveraged across verticals3 per userBased on average online vertical spend per userBa

307、sed on total online spend3 per user4024AffluentMetro mainstreamYoung digital nativesOn a budget3540201951655644536E-commerceGroceriesStreamingTravelGamingTransportFood delivery5.3Xweighted average413.4X5.5X5.5X5.1X5.0X4.4X3.8XIncreased spend over past 12 months4531Intend to increase spend over next

308、12 months4429MetroNon-metroMalaysia97Deal countPrivate funding value($B)1472022361597782470.40.50.91.10.50.60.220192021H1 202220222020H1 2023H2 2022Funding declines across the board,including in previously popular sectors like e-commerce and DFSNote:(1)Nascent sectors include categories that are sti

309、ll relatively nascent in SEA such as enterprise,healthtech,edtech,deeptech/AI,Web3/crypto,property,automotive,etc.Source:Bain analysisDigital mediaTransport&foodE-commerceDFSTravelNascent sectors1Country spotlight:Philippines9899Healthy expansion set to continueIn addition to rising domestic demand,

310、a recovery in the services sector(including services exports)will drive growth over the medium to long term.Meanwhile,private consumption will see an uptick driven by lower unemployment rate,increased remittances from overseas,and tourism recovery.The country is expected to reach upper-middle income

311、 status by 2025,further supporting healthy digital economy growth.Infrastructure investment to fuel transport growth in outer citiesBoth domestic and regional transport providers are expanding to outer cities to fuel long-term growth.To capture these segments,businesses have started growing their tw

312、o-wheeler offerings as a more affordable alternative.Sustained infrastructure investments are expected to support this by making transport more efficient and accessible in these regions.Foreseeable high growth given emerging digital participationWhile internet users in the Philippines are amongst th

313、e most engaged in the world,digital participation across sectors remains lower.This signals sizable headroom for digital economic growth over the medium to long term as incomes grow.E-commerce is also expected to benefit from the shift of informal,unorganised commerce to organised e-commerce platfor

314、ms.PhilippinesCountry overviewE-wallet and account-to-account(A2A)nab the largest share of growthAs digital payments gain traction,e-wallet and A2A payment rails will see the fastest growth due to lower costs to merchants.Informal A2A payments,in particular,are expected to grow in merchant adoption

315、as they look to sidestep formally registration of business accounts with digital payments providers.Philippines100Transport&foodOnline media37%16%19%20222025202320212030FoodTransportE-commerceOnline travel13207%88%18%540.5202220252023202120302435172231%13%20%202220252023202120301624121529%5%21%20222

316、025202320216020302223535338%13%19%2022202520232021102030Source:Bain analysisGMV($B)CAGROverall digital economyPhilippines is expected to continue its double-digit climb towards$35B by 2025,largely fueled by e-commerceDouble-digit growth towards$35B by 2025 expected in the Philippines,largely fueled

317、by e-commerce80-150Philippines101Metro Manila leads in digital participation;gap widens beyond capitalManilaNotes:(1)An indication of how much e-commerce demand there is,calculated based on the e-commerce-related search interest indexed to census population per province,indexed at the country level;

318、(2)An indication of the e-commerce fulfillment coverage,calculated based on the concentration of courier,delivery,freight forwarding,mailing,and shipping services within provinces,indexed at country level.(3)Areas that have not met the minimum supply(search interest)and demand(drop off points)thresh

319、olds have not been included in the analysis.Simplified illustrative maps are not representative of administrative borders and territories for which data is not availableSource:Google internal data,PH,Jan-Jul 2022 vs Jan-Jul 2023;Province GDP&Population;Google Maps data,PH,as of September 2023;WorldP

320、op&Landscan Population;Bain AnalysisManilaBAIN FACTCHECK CHANGES INCORPORATEDE-commerce:Demand1E-commerce:Supply2Low retail demand High retail demand Low drop-off densityHigh drop-off density2023 indexed search interest per capita2023,drop-off points per capitaPhilippinesSteep DFS growth projected t

321、o continue from a low baseCAGR16%17%16%Digital payments93126698020222025202320212030Digital lending58%48%49%2022202520232021203037122063%378%62%Digital wealth1400202220252023202130203021%37%30%20222025202320212030Digital insurance0.10.10.50.10.0GTV1($B)Loan book balance2($B)AUM4($B)APE&GWP3($B)Notes

322、:(1)Gross transaction value(GTV)for digital payments includes the value of credit,debit,prepaid card,account-to-account(A2A),and e-wallet transactions;(2)Loan book balance for digital lending includes end-of-year balance for consumer loans(excluding credit card and mortgage)and SME loans;(3)APE&GWP

323、for digital insurance includes APE for life insurance and health under life insurance policies and GWP for non-life insurance;(4)Assets under management(AUM)for digital wealth includes end-of-year mutual fund AUM balance.Source:Bain analysis102 220PhilippinesHVUs spend 6.3X vs non-HVUs;transport is

324、a key differentiator103Non-HVUHVUNotes:HVU=high value users.(1)Average composition across SEA;(2)Affluent=High income;Metro mainstream=Age 30 and above&medium income;Young digital natives=Age 18-29&medium income;On budget=low income;(3)Excludes digital financial services(DFS).(4)Based on aggregate H

325、VU user spend/aggregate non-HVU user spend,across all 7 categories.Source:Google-commissioned Kantar e-Conomy SEA consumer survey,ID,MY,PH,SG,TH,VN,2023,online survey among 18-64 internet users and digital economy spenders,10/08/2023-01/09/2023(n=1,302 Philippines)Question S7,S3,A2,A5,A7:“Which of t

326、he following best describes your regular monthly household income situation before tax?”“In what region/area do you live?”“Please estimate how much you think you spend online in an average month across the below digital activities.”“Comparing this year to the previous year,how has your spend for the

327、 following digital behaviours changed?”“Thinking about the upcoming year,how do you think your spend for the following digital behaviours will change?”HVU composition1 by demographic2(%)HVU vs non-HVU online spendChange in spend(%)HVU composition1 by geography(%)Based on total online spend3 per user

328、Averaged across verticals3 per userBased on average online vertical spend per userBased on total online spend3 per user5926AffluentMetro mainstreamYoung digital nativesOn abudget1828141293416278473StreamingGroceriesTravelGamingTransportE-commerceFood delivery6.3Xweighted average421.8X11.0X8.0X5.2X4.

329、7X3.9X3.7XIncreased spend over past 12 months3926Intend to increase spend over next 12 months3727MetroNon-metroPhilippines104Deal countPrivate funding value($B)7273125106683823Digital mediaTransport&foodE-commerceDFSTravelNascent sectors120192021H1 202220222020H1 2023H2 2022Funding dropped substanti

330、ally from pandemic highs,including previous heavyweight DFS0.20.40.91.00.80.20.2Note:(1)Nascent sectors include categories that are still relatively nascent in SEA such as enterprise,healthtech,edtech,deeptech/AI,Web3/crypto,property,automotive,etc.Source:Bain analysisCountry spotlight:Singapore1051

331、06Low but steady growth,with the digital economy in the front seatWeaker domestic demand and higher costs of living have squeezed discretionary income.Nonetheless,the country has managed to avoid recession,with both the consumer and tourism sectors expected to pick up.In the long term,the ageing pop

332、ulation and relatively developed economy is expected to maintain course.The digital economy will continue to drive a growth premium versus GDP.Reaffirming status as a regional hub with international travel recoverySingapores star status as a business and transit hub set the pace for its strong trave

333、l recovery.Of all SEA economies,Singapore saw the swiftest bounce back in travel.The country has also established itself as a hub for major concerts,events and business conferences,all which play a key role in attracting tourists into the region.High penetration across digital economy sectorsSingapore is home to the highest digital penetration in SEA,across multiple digital economy sectors.Given t