e-Conomy SEA 2023: A Deep Dive into High-Value User Dynamics

The Southeast Asian digital economy looks well on its way to reaching new heights. While grappling with various macroeconomic challenges, Southeast Asian businesses have adopted a sustainable and self-reliant approach to growth. This has positioned the region to hit a revenue of $100 billion by the end of 2023, growing 1.7X as quickly as gross merchandise value over the past two years.

This is a clear indication of Southeast Asia’s resilience and potential for growth. With an increasingly expanding internet penetration that currently ranges between 70-80%, the ease of access to digital services will further boost consumption among the increasingly wealthy and urbanized population of this region. However, for that to happen, businesses will have to improve their unit economics.

To that end, Google has published its latest e-Conomy SEA 2023 report in association with Temasek and Bain, which shows that optimizing one’s engagement with high-value users could be an important way of enhancing their unit economics. The report focuses on users across six Southeast Asian markets namely Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam.

Here are the major insights from the report.

Who Are High-Value Users And Why Are They Important?

High-value users, constituting the top 30% of online spenders, contribute over 70% to the total digital economy expenditure. Moreover, nearly half of them intend to boost their online spending in the coming year, underscoring their significance as a primary focus for marketers striving for profitable growth.

The diversity within the high-value user category is noteworthy, with 52% being affluent and the remainder primarily middle-income. Additionally, a substantial portion, almost a quarter, resides in non-metro cities, expanding their reach across varied demographics. This diverse high-value user pool establishes them as part of your audience, regardless of the specific customer demographic you target. Consequently, you possess the means for monetization, given that these users spend 6.5 times more online than their regular consumer counterparts.

To leverage these insights and unlock profitable growth, businesses can consider two strategic approaches.

High-Value User Retention By Meeting Expectations

A significant survey finding from the report highlights that when dealing with high-value users, brands need to be prepared to either improve or face potential consequences. The report reveals that 49% of these customers will start exploring alternative shopping options if a digital platform fails to meet their expectations. These users seek benefits beyond the sticker price, emphasizing aspects like convenience when signing up for and continuing to use e-commerce and online grocery platforms.

Also, high-value users prioritize robust after-sales support. Across all seven surveyed verticals, including e-commerce, groceries, transport, and food delivery, the report indicates that these users consistently provided the lowest satisfaction scores for post-purchase services such as returns and refunds, warranty, and loyalty rewards. Providing high-value users with compelling reasons to return involves enhancing post-purchase support, ranging from delivery and pickups to returns and refunds.

Moreover, marketers need to reduce delivery friction by allowing users to choose their preferred delivery method. Additionally, the report suggests enabling free and fast shipping annotations on Shopping ads, Buy on Google listings, and free product listings. Marketers must also implement features like pickup later for Shopping ads to facilitate in-store collection.

Furthermore, clear communication of return and refund policies in Shopping ads and free listings can go a long way in instilling confidence in high-value users and encouraging them to complete their purchases. In fact, reminding users of these value-added features can promote repeat purchases.

Raising High-Value Users’ Spending By Reinforcing Motivations

An additional noteworthy discovery from the survey emphasizes that high-value users exhibit a willingness to pay more and, overall, demonstrate increased spending habits. This presents a substantial opportunity for enhanced monetization and substantial potential for profitable growth.

High-value users express a readiness to pay, on average, up to 53% more for features such as premium e-commerce and food delivery products, exclusive perks related to transportation services, a strong brand reputation in the grocery sector, and robust data privacy measures in investment platforms. Furthermore, they are inclined to spend an average of 39% more across the seven verticals if obstacles to online spending are eliminated, with the most significant upticks expected in groceries, gaming, e-commerce, and food delivery.

The survey identifies various barriers to increased spending among high-value users. Notably, 16% of those not currently engaged in online spending for one or more of the seven verticals would commence if the digital platform or app becomes user-friendly. Additionally, 15% of users would increase spending if a broader array of products or services were available on platforms or apps. Hindrances like minimum and/or high fees, hidden charges (especially in travel services), and prolonged wait times for transport and delivery services also impede high-value users from spending more.

Therefore, marketers should not only eliminate barriers to increased online spending and implement features that drive spending but also actively promote these features to high-value users. This strategic approach serves to provide them with confidence cues, signaling elements that shape their trust in the brand and motivate them to invest more and spend more overall.

This was best exemplified by Lazada, which employed Search ads and Performance Max in its 6.6 sales campaign, showcasing a vast product assortment and emphasizing fast, free delivery, exclusive discounts, and stackable deals through AI-powered ad solutions. The campaign further utilized impactful ad formats, including skippable in-stream ads, bumper ads, and Discovery ads, resulting in a notable outcome of 23% more orders and 16% more buyers.

Wrapping Up

The digital economy of Southeast Asia (SEA) stands at a strategic crossroads, poised for remarkable growth. As SEA's digital landscape continues to evolve, a focused commitment to understanding and catering to the needs of high-value users will undoubtedly be a catalyst for sustained and prosperous growth, setting the stage for an exciting and thriving future.

To delve deeper into the findings of the report, download the full report by clicking here.