What Industry is Indonesian E-commerce Affecting?

17 Jul 2019

Article

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

Indonesia has around 140-150 million users in the e-commerce market, expected to be in the 240 million marks around 2023 [1], [2]. It is also noted that most of the users are of the age of 25 – 34 yo (41.6% of the users). Indonesian e-commerce consumers are equally distributed among the low income, middle and high, as well as between male to female, 52% to 47% respectively. In a country with 56% urbanization, Indonesia has seen 56% internet penetration, 133% mobile penetration, 56% active social media users, and 48% mobile social media users.

Figure 1 Indonesian E-commerce Users by Age

Source: Statista

Indonesia has seen a significant impact on the e-commerce trend. According to a statement from the Indonesian E-commerce Association (idEA), the offline retailer who refused to embrace the digital platform will be the first to be replaced by the trend [3]. For the usual vendor in Pasar Baru, this can lead to around 60% of the 10 Million Rupiahs daily revenue [4].

The next to be affected are large retailers. Some large retailers have taken some measures in downsizing the current outlets [5], Matahari with 80 on the last 2 years and 219 in total by the end of 2018 [6].

The traditional media will be the next party influenced. This is because large brands are shifting from advertising based to transaction based.

Banks are also influenced by the trend. IdEA predicts Go-Pay to be the largest consumer bank in the near future[3]. Currently, e-wallet and cards are competing as the main payment types with trends on cards and cash on delivery (COD) decreasing and bank transfer and e-wallet increasing.

Figure 2 Payment Type in E-commerce

Source: Statista

Not all offline retailers succumb to the might of the e-commerce economy. A statement from the Indonesian Retailer Association (APRINDO) reveals that amid the e-commerce boom, modern retail still sees growth, in hypermarket, supermarket, even in minimarket [7]. The numbers supporting the growth are the Consumer Trust Index being above 100, the Real Sales Index (IPR) above 100, and the inflation rate being well under control at 3.1 – 3.2%. The Real Sales Index data reveals the growing consumption rate.

Figure 3 Retail Sales Index

Source: CNBC Indonesia

There are several challenges that the retail industry will have to face, namely to cater to the ever-changing consumer needs, to retain consumer’s loyalty, to manage internal communication, to manage the employees’ performance, to keep up with the digital race, and to come up with the best technological solution for the retail industry [8].

Reference:

[1] Statista, “eCommerce Indonesia,” Statista, 2019. [Online]. Available: https://www.statista.com/outlook/243/120/ecommerce/indonesia.

[2] We are Social, “Digital 2019 Indonesia,” We Are Social, 2019. [Online]. Available: https://datareportal.com/reports/digital-2019-indonesia.

[3] H. Kusuma, “Tak Hanya Ritel, Ini Sektor yang Akan Tergerus Online,” detikFinance, 2017. [Online]. Available: https://finance.detik.com/berita-ekonomi-bisnis/d-3701300/tak-hanya-ritel-ini-sektor-yang-akan-tergerus-online.

[4] I. Supriyatna and D. K. Hapsari, “Dulu Ramai, Kini Pasar Baru Sepi Tergerus Online Shop,” Suara.com, 2018. [Online]. Available: https://www.suara.com/bisnis/2018/12/06/092232/dulu-ramai-kini-pasar-baru-sepi-tergerus-online-shop.

[5] Nurmayanti, “Akui Tutup 6 Toko Giant, Ini Penjelasan Direksi Hero,” Liputan 6, 2019. [Online]. Available: https://www.liputan6.com/bisnis/read/3997508/akui-tutup-6-toko-giant-ini-penjelasan-direksi-hero?related=dable&utm_expid=.9Z4i5ypGQeGiS7w9arwTvQ.1&utm_referrer=https%3A%2F%2Fwww.liputan6.com%2Fbisnis%2Fread%2F4010237%2Fpengusaha-bantah-toko-ritel-tergerus. [Accessed: 13-Jul-2019].

[6] Novita Sari Simamora, “Matahari Putra Prima (MPPA) Tutup 80 Gerai dalam 2 Tahun Terakhir,” Bisnis.com, 2019. [Online]. Available: https://market.bisnis.com/read/20190219/192/890473/matahari-putra-prima-mppa-tutup-80-gerai-dalam-2-tahun-terakhir. [Accessed: 13-Jul-2019].

[7] T. Kurnia, “Pengusaha Bantah Toko Ritel Tergerus E-Commerce, Ini Buktinya,” Liputan 6, 2019. [Online]. Available: https://www.liputan6.com/bisnis/read/4010237/pengusaha-bantah-toko-ritel-tergerus-e-commerce-ini-buktinya?related=dable&utm_expid=.9Z4i5ypGQeGiS7w9arwTvQ.1&utm_referrer=https%3A%2F%2Fwww.google.com%2F.

[8] K. Anindita, “6 Tantangan Besar dalam Industri Retail dan Solusi untuk Menghadapinya,” Business Tech, 2018. [Online]. Available: https://www.hashmicro.com/id/blog/6-tantangan-besar-dalam-industri-retail/.