As a region, Southeast Asia has fared comparatively well with regard to dealing with the impact of the COVID-19 pandemic. However, at a national level, economies in the region have struggled with the quarantines that have caused business shakeout and accelerated digital adoption among both companies and consumers. While the International Monetary Fund (IMF) has predicted a bounce back for Southeast Asia in 2021, recovery is still a long way away.

To help spur businesses in the region to look past the seemingly gloomy horizon and prepare for recovery, Deloitte Southeast Asia recently invited seven Southeast Asian startups, as part of our Innovation Month 2020 event in October, to share their stories and strategies for adaptability and resilience.

Here are some lessons learned from the sessions.

Enabling struggling businesses

The potential of e-commerce in Southeast Asia is widely known; indeed, Southeast Asia’s digital economy is projected to reach USD 200 billion by 2025. This has shown no signs of slowing down—according to a study by Google and Temasek, 40 million users joined the internet in 2020 alone, compared to 100 million between 2015 and 2019. This is in large part due to COVID-19, which has led to an increase in digital consumption.

Logistics startup Ninja Van’s CEO, Chang Wen Lai puts it succinctly when he shared his story, “Lockdowns have shifted perception of e-commerce from luxury to necessity—what we are seeing is a behavioral change; consumers are realizing that buying items online is not just cheaper and more convenient, but there is also a wider selection of goods.”

The logistic sector is just one sector that had to change its business models to meet this increasing demand for online products. With the safety measures and guidelines enforced on businesses due to the pandemic, there were plenty of labor and workforce challenges for companies in this sector.

Ninja Van, for example, had to decentralize its main hubs, adding micro-stations to provide more localized and comprehensive coverage across its regional network.

As businesses think of how to transform, there will be some that will struggle to get online. Dependency on online services has grown exponentially over a short period, and small to medium businesses have come to the realization that embracing digitalization is no longer an option, but a matter of survival. To that end, we have seen the likes of Grab and GoJek announcing programs aimed at helping small businesses in the ‘New Normal’.

Similarly, KiotViet’s comprehensive offline and online solutions are well-positioned to help Vietnam’s smaller merchants bridge their digital gaps. The company works with SMEs across industries, including retail and food & beverage (F&B) outlets, to connect them with their customers online.

A study done by Deloitte on the impact of COVID-19 on industries in Singapore lists accommodation and food services as the most impacted and the highest priority for transformation.

Oddle, a Singapore-based online food ordering platform strives to alleviate the burden placed on restaurants in these harsh times. Originally just an idea by CEO Jonathan Lim to bring his food business online, Oddle is now not only the first-mover for island-wide food delivery in Singapore, but it also brings restaurants to consumers in innovative ways.

To help restaurants survive and recovery from COVID-19, Oddle has used its data to identify the best locations for restaurant partners to open cloud kitchens to serve delivery crowds, advised restaurants on menu redesign and bundling attractive offers, as well as offered fine dining options at a lower price point, delivered straight to customers. “We have a vested interest in seeing restaurants succeed, and it is our goal to empower everyone in the F&B ecosystem,” said Jonathan at his sharing session.

Empowering on-demand workers

When the pandemic took a serious turn, some Southeast Asian governments provided substantial government support to stave off retrenchments and keep employment going. However, there is a limit to what governments can do to cushion a weakening job market. Between people losing their jobs and companies looking to cut back on costs, alternative, on-demand work platforms such as GoGet in Malaysia, and MyKuya in the Philippines, are starting to gain traction.

Having just landed a USD 2 million Series A round, GoGet is finding themselves very much in the thick of competition, with Malaysia being no stranger to the gig economy scene. GoGet offers a range of on-demand services such as deliveries, sales agents, and warehouse helpers, and has seen its network of gig workers almost double to 20,000 amid surging demand for casual work. Its suite of ad-hoc services is proving essential to 300,000 independent users and over 5,000 business partners, including e-commerce giant Lazada, fulfilling their surging manpower requirements.

GoGet also supports workers and businesses in terms of worker protection—this is particularly for those who are part of or engage with the gig economy. For example, they offer remote training to new workers to keep up with the constantly evolving job requirements. “Our mission is to ensure businesses continue to survive, adapt and excel with flexible manpower solutions, even with the pressures of cost-cutting,” remarked Faisal Hassan, Head of Business Development at GoGet during his session. “Additionally, in times where people need to keep their livelihoods, we hope our platform can enable them to sustain themselves.”

Among the Southeast Asia countries, the Philippines remains one of the hardest-hit by the pandemic. The enhanced community quarantine imposed by the government has led to new demands such as for personal shoppers. MyKuya offers a mobile application that connects businesses and manpower providers to clients in Mega Manila. With half of the application’s 100,000 customer signups only taking place after the community quarantine back in March 2020, MyKuya has been increasingly focused on grocery deliveries and messenger services. With job security remains uncertain during these times, on-demand work platforms like MyKuya may provide a lifeline for many.

Reaching consumers directly  

The pandemic has not only increased demand for e-commerce, it has also radically changed the sector’s operations model, from supply chain and inventory management to fulfillment and delivery. These changes have made traditional B2B businesses sit up and think of how to innovate and find new ways to engage the increasingly tech-savvy Southeast Asian population.

The construction industry, unsurprisingly, is one of the industries that has been hugely affected by the pandemic, with companies struggling to get back on track. This being said, there are success stories emerging as well. In Thailand, OneStockHome has continued to do well—by evolving with its consumer base and shifting its workflows rapidly to maintain its status as Thailand’s go-to platform for building materials. Originally a B2B integration platform for the procurement of construction materials, the company has now shifted its focus to its online application, allowing businesses and consumers easy access to a wide array of building materials at fair and competitive prices.

In Indonesia, agriculture is one of the key sectors, employing around 40 million Indonesians with over 90% of them smallholder farmers. Such farmers have typically found it harder to tap into the opportunities resulting from Indonesia’s economic growth over the past few years. Farmers in the rural regions rely mostly on traditional markets, and the large-scale social restrictions due to the pandemic are making it increasingly difficult and costly for them to deliver their produce to these markets.

TaniHub Group is a social impact and agriculture start-up that emphasizes ‘Agriculture for Everyone’, and it provides smallholder farmers access to funds, technology, and a platform for them to sell their produce. Prior to the pandemic, Tanihub’s online marketplace was largely reliant on B2B purchases from wholesalers and supermarkets. The shift to online purchasing by households changed that, and the success of Tanihub’s direct-to-consumer business has prompted the founders to consider expansion into other parts of Indonesia.

In response to the pandemic, the TaniHub Group has also mandated plenty of safety measures among its helpers who handle the food, ensuring that fresh produce is not infected or tampered with. Having partnered with over 30,000 smallholder farmers and operating over five distribution hubs, the company is responding well to the unique demands caused by the pandemic, experiencing an overall growth surge of approximately 250%.

Responding to the pandemic together

We are in the early days of the “New Normal”, in which the effect of the pandemic has forced many businesses to relook how they should operate.  As we continuously adapt to evolving conditions and define new business priorities, the above stories of resilience and adaptability are a reassuring sign that our economies will emerge to be better, albeit a little bruised. With governments cushioning the impact of the pandemic and businesses forging the way forward, 2020 will be remembered for how we came together in the face of a crisis.

 

About the authors:

Richard Mackender leads Deloitte Southeast Asia Innovation, a cross-function, cross-country unit dedicated to driving innovation as a long-term value creator across Deloittes Southeast Asia operations. This article was co-written with Tan Shuo Yan and Lim Shu Jun, members of the team.