|Digital ecosystem participation is new game-changer in Southeast Asia |
A digital ecosystem is an interconnected set that fulfils consumer needs in one integrated experience, comprising businesses across different sectors that collectively offer a broad range of products and services.
The EY report revealed that collaborative consumption and the shared economy have been on the rise in Southeast Asia, driven by the region’s average internet penetration of 63 per cent and a growing tech-savvy middle-class that is rapidly moving up the socioeconomic ladder. This is paving the way for shared models across different sectors such as mobility, travel, hospitality, and real estate.
Liew Nam Soon, EY Asean regional managing partner, said, “Consumer-focused digital ecosystems are forming across Southeast Asia to deliver value at unprecedented speed and scale, in response to digital disruptions and accelerated by the pandemic. There is rapid growth of startups and digital natives, of which some offer services through an integrated experience – ride-hailing, food delivery, grocery, logistics, healthcare, lifestyle, and financial services."
He added that, “Today’s consumers expect speed, responsiveness, and access with a hyper-personalised experience. Digital ecosystems help companies create value through revenue growth, new market access, decreased customer acquisition costs, and ultimately strengthened customer relationships.”
As a result, super apps like Grab and MoMo are attracting the attention of investors, having witnessed investments worth $43 billion between 2016 and 2019. Further, the growing digital ecosystems in Southeast Asia have the potential to generate revenues of $23 billion by 2025, from about $4 billion in 2019.
Recognising the opportunities in the digital ecosystem, traditional players are leveraging partnerships and strategic alliances to share resources, data, and capabilities to create digital ecosystems to compete with others.
Between 2016 and 2020, Southeast Asia witnessed technology transactions worth $408.5 billion. Mobile applications, cloud computing, and analytics, among others, were the tech areas that saw the most investments.
Joongshik Wang, EY-Parthenon Asean leader emphasised, “Being a part of a digital ecosystem allows businesses to leverage the network and create a competitive advantage. However, to do so, companies must get their digital transformation strategy and capabilities right. The question is whether they should design or join a digital ecosystem, and there are three strategic choices that businesses can undertake: buy, build, and partner."
Wang further explained, “While established, traditional firms – given their large user base, reach, and capital assets – are well-placed to orchestrate a digital ecosystem, they are often outpaced by emerging startups that are ahead in digital adoption. Most traditional firms have been focusing on their core business and may be hesitant to build a platform-based business due to legacy systems and corporate culture. Thus, traditional firms are turning towards collaborating with e-commerce and last-mile platforms to offer digitalised, streamlined, and omnichannel experiences to their customers.”