Indonesian E-commerce Economy

Oleh: Teddy Indira Budiwan, S.Psi., MM (Faculty Member of International Marketing)

Indonesia e-commerce growth has not shown any indication of slowing down, currently producing about 140 Trillion Rupiahs (about 10 Billion US Dollar) annually in revenue [1]. Indonesia’s e-commerce market is expected to be 53 Billion USD [2], [3], more than the rest of Southeast Asia countries combined.

According to a report by Google and Temasek, in 2018, the Southeast Asia internet economy is estimated to be about 72 Billion USD, with 23 Billion USD from e-commerce (100% growth from the previous year), and Indonesia being the major of the bulk [2]. Indonesia e-commerce economy is estimated to grow up to 100 Billion US Dollar in 2025 [2].

Figure 1 SEA Internet Economy Market Size (Gross Market Value) in $B

Source: Think with Google

24 Billion US Dollar have been raised through the internet deal since 2015. 16 Billion US Dollar have been invested in 9 SEA unicorns, of which five are Indonesian. Lazada is backed by Alibaba, Tokopedia by Alibaba and Softbank Group’s Vision Fund. Another major e-commerce player in Indonesia is Shopee, backed by Tencent Group.

Figure 2 9 SEA Unicorns

Source: Think with Google

The top e-commerce sites by traffic are Lazada, Tokopedia, and Bukalapak [4]. Amazon is supposedly planning to enter the Indonesian market as well [3].

Figure 3 Top 10 e-commerce sites by monthly traffic by 2018

Source: Statista

Other industries related to this economy is also influenced. Among them is the logistics industry. They are have had a growth of 12%. Special interest in this industry would be the same day delivery, as PWC reported that consumers would pay extra for them [5]. Another industry is fintech. Digital payment is the largest segment of fintech, totaling in value of 32 Million US Dollar [6]. Albeit having 180 million people unbanked, Indonesia is growing fast in financial inclusion, raking to about 49% in 2017, having saving accounts 10% higher than average among the developing countries [7]. The retail industry is also changing, by adapting technology in their operations. One of the changes includes using mobile devices as touch points in ordering. The Association for Indonesian Retailer (APRINDO) noted 90% of its member has changed their business from offline to online. The remaining 10% are retailers in rural areas that are still comfortable doing business conventionally. The change was heavily influenced by the change in consumer behavior [8].

References

[1]         G. Kharisma, “Dampak E-commerce di Indonesia: Logistik Tumbuh, Ritel Bertransformasi,” Tech in Asia, 2019. [Online]. Available: https://id.techinasia.com/dampak-e-commerce-indonesia.

[2]         W. S. Rajan Anandan, Rohit Sipahimalani, Samuele Saini, Srikanth Aryasomayajula, “e-Conomy SEA 2018: Southeast Asia’s internet economy hits an inflection point,” Think with Google, 2018. [Online]. Available: https://www.thinkwithgoogle.com/intl/en-apac/tools-resources/research-studies/e-conomy-sea-2018-southeast-asias-internet-economy-hits-inflection-point/.

[3]         W. Suzuki and J. Suzuki, “Indonesia’s Tokopedia beefs up one-day delivery, holding off Amazon,” Nikkei Asian Review, 2019. [Online]. Available: https://asia.nikkei.com/Editor-s-Picks/Interview/Indonesia-s-Tokopedia-beefs-up-one-day-delivery-holding-off-Amazon.

[4]         Statista, “Top 10 e-commerce sites in Indonesia in 2018,” Statista, 2019. [Online]. Available: https://www.statista.com/statistics/869700/indonesia-top-10-e-commerce-sites/.

[5]         PWC, “Signed, sealed, delivered (and regularly returned),” PWC, 2018. [Online]. Available: https://www.pwc.com/gx/en/retail-consumer/assets/delivery-expectations-global-consumer-insights-survey.pdf.

[6]         Statista, “Fintech Indonesia,” Statista, 2019. [Online]. Available: https://www.statista.com/outlook/295/120/fintech/indonesia.

[7]         Safrezi Fitra, “Fintech Lending in Indonesia Remains Attractive for Investors – Katadata News,” Kata Data, 2019. [Online]. Available: https://en.katadata.co.id/in-depth/2019/01/07/fintech-lending-in-indonesia-remains-attractive-for-investors. [Accessed: 02-Jul-2019].

[8]         T. Bosnia, “90% Anggota APRINDO Beralih ke Online,” CNN Indonesia, 2018. [Online]. Available: https://www.cnbcindonesia.com/lifestyle/20180111175322-33-1270/90-anggota-aprindo-beralih-ke-online.