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5 key takeaways from Grab and Bain’s report on Southeast Asia’s platform economy

Grab has launched a nonprofit think tank known as the Tech for Good Institute (TFGI) to advance research and dialog on Southeast Asia’s digital economy, the company announced on Monday. Along with its launch, TFGI released its first report, “Platform Economy: Southeast Asia’s Digital Growth Catalyst,” in partnership with Bain & Company. The report focuses on online-to-offline (O2O) opportunities and developments in the region.

TFGI and Bain define O2O platforms as tech-powered platforms that facilitate transactions with both online and offline components and require both physical and digital infrastructure to function. The report’s authors examined O2O models in six Southeast Asian countries—Singapore, Indonesia, Malaysia, Vietnam, Thailand, and the Philippines. They specifically looked at O2O operations in the context of e-commerce, transportation and ride-hailing, food delivery, and digital financial services.

The report included analysis by Bain, surveys with consumers and MSMEs in the six countries, Grab’s insights and data, as well as interviews with a number of experts from major industry players, such as Ant Group, FinAccel, Microsoft, MUFG Bank, and Ovo.

“O2O platforms have been a core part of Southeast Asia’s growth. These companies have helped bridge both physical and digital infrastructure gaps that have persisted in the region for years. Therefore, most of Southeast Asia’s technology unicorns today are O2O platforms in nature, a trend that is unlike that of the US and Europe,” said Florian Hoppe, Bain & Company partner and head of Asia Pacific digital practice, in a statement. Here are five key takeaways from the report by TFGI and Bain & Company.

#1. More than 77% of Southeast Asian internet users utilize O2O platforms

Out of the region’s 400 million people who are online, approximately 110 million people use only one O2O service, 85 million use two services, and 115 million use more than three services. In all, 78% of surveyed consumers said these services have a positive impact on their quality of life, reflecting the potential for broader coverage by O2O operators.

#2. One in five MSMEs are on O2O platforms

Among the businesses that utilize O2O services, 85% were able to tap into a new customer base, and 50% said they have seen a bump in revenues after using the platforms. Tech platforms also provide small businesses with better access to financing, as 74% of MSMEs that use digital lending were previously unable to secure loans from conventional banks or lenders.

#3. Low spending

While O2O adoption has grown among consumers and MSMEs, the region’s online spending is still low. Online food delivery and e-commerce accounted for only 8% of total retail sales in 2020. In comparison, online retail transactions were 24.9% of China’s total retail sales in 2020, according to Statista. This means there’s still plenty of room for O2O companies to grow in Southeast Asia.

#4. Users expect to remain on O2O platforms post-pandemic

Surveys say that one in three users only started to use O2O services during the pandemic, and nine out of ten will continue using these services in the future.

#5. Fostering talent in the regional tech ecosystem

Homegrown first-generation tech companies like Grab, Sea, GoTo, Lazada, and Zalora have employed more than 120,000 people since their inception in the early 2010s. Their alumni have gone on to establish over 1,000 new startups. One notable example is Nathanael Faibis, who founded health tech startup Alodokter in 2014, around a year after he left Lazada as regional head for production and UX. Another is Alamanda Shantika, former vice president of Gojek, who now runs her own educational company focusing on tech, Binar Academy.

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Khamila Mulia
Khamila Mulia
Khamila Mulia is a seasoned tech journalist of KrASIA based in Indonesia, covering the vibrant innovation ecosystem in Southeast Asia.

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