On Indonesia’s Growing E-Commerce Market

It is estimated that Indonesia will gain around 50 million new internet users annually; this makes sense since the country’s population already has one of the highest rates of social media use in the world. Also, with the swift infrastructural development seen in the booming economy of Indonesia, it is no wonder that the country’s approximately 260 million citizens have seen an exponential increase in online activity. With mobile devices being the most used pathway for internet access in the country, Indonesia has cultivated a high potential for investment due to its large population and growing digital infrastructure. Though the emerging county is still at an early stage in its digital development, it is currently among the most important global markets for e-commerce.

Through the McKinsey Report, we can see that e-commerce has brought in over 5 billion dollars through e-tailing businesses such as local giants Tokopedia, Bukalapak, Shopee and Lazada. In addition to that, around 3 billion dollars have been earned through informal trade, which entails the buying and selling of products by way of non-formal means, which could include through social media platforms, and other mediums such as Facebook.

 


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E-Commerce Consumer Behavior: According to the Experts

According to research conducted by the Kredivo and Katadata Insight Center regarding the report “Indonesia E-Commerce Consumer Behavior in 2019”, fashion products remain the most popular sector and are in high demand from users of e-commerce services in Indonesia, both in terms of frequency and number of transactions, with the year of 2019 alone saw up to 30 percent of total transactions constitute purchases of fashion items, of which both genders hold an equal share in the purchasing behavior. The research also shows an increase in the average number of e-commerce transactions per month from the first quarter to the last quarter of 2019, showing a large portion of the population having a deep belief in the abilities of the e-commerce industry. This increase reached its highest point in December, showing the number of transactions being 22 percent more significant than the average number of monthly transactions.

This increased confidence in online shopping has also made consumers feel more secure when making large transactions. This can be seen in the increase of the average transaction values from the years 2018 to 2019 in 13 product categories, such as computers and accessories. In addition, this positive trend in confidence has also continued into the first half of 2020. Kredivo’s internal data pointed to the continued increase in the frequency of purchases in regards to e-commerce, especially commodities. This indicates that people have continued to put their trust in e-commerce, despite the pandemic.

From the research, it was found that each e-commerce brand held a different position in the eyes of the general public, and that more than half of consumers shopped in more than one market, regardless of their age group or income. Female consumers displayed a higher level of brand loyalty whereas 30 percent of female consumers tended to stay within a market compared to male consumers.

Predictions of the Near Future

It is predicted that Indonesia’s e-commerce market may grow to $ 300 billion by 2025, if the country’s digital ecosystem can adapt itself into a fully integrated quantum commerce environment. Mohammed Sirajuddeen, Director for the Global Management Consulting Firm Accenture, explained in his keynote presentation during the two-day Future Commerce Indonesia 2019 that this prediction is bold and significantly larger than Google’s widely accepted growth projection of $ 100 billion by 2025, which is a statistic that is based on a typical growth rate level.

Though developing a “quantum commerce” environment sounds like an overly futuristic or even far fetched term, China has been highlighted as a noted example of a properly integrated digital ecosystem that is already in existence, one that Indonesia should look to as a benchmark if it is ever to achieve the global trade prominence on the level of that aforementioned country. China’s digital environment is made up of four key structural elements: electronic marketplaces, some of which include TMall & JD.com, social media platforms such as WeChat & Weibo, and also electronic payment platforms such as AliPay.

Read Also: The Internet of Behavior: Where Psychology & Technology Intersect

Work Remotely With LOGIQUE Digital Indonesia

If you have digital marketing or web development skills and want to work remotely, consider joining Logique Digital Indonesia. Currently, we have job vacancies open for several positions. Please visit the Logique career page to find a position that matches your skill set and experience.

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