Digital 2019 Spotlight: Ecommerce in Indonesia
GlobalWebIndex reports that Indonesia has the highest rate of ecommerce use of any country in the world, with 90 percent of the country’s internet users between the ages of 16 and 64 reporting that they already buy products and services online.
However, despite these high levels of use, the overall value of the ecommerce market in Indonesia remains relatively low.
Statista reports that the average Indonesian ecommerce shopper spent just US$89 on online consumer goods purchases last year, although this figure doesn’t include spend on travel or digital media.
But don’t let the country’s apparently smaller spending base fool you.
Statista also reports that more than 100 million Indonesians purchased consumer goods online in 2018, and the amount that they spent on grocery products surged by an impressive 30 percent year-on-year, putting the country firmly in the five fastest-growing online grocery markets in the world.
All of this points to a huge – and growing – opportunity.
Just before we take a closer look at that opportunity, you might want to explore the broader digital landscape in our complete Digital 2019 Indonesia report below, but read on for a closer look at what’s happening in Indonesia’s ecommerce sector.
Note: this article contains a number of updates to statistics featured in the report above. Also note that some of our data providers have recently changed their reporting methodologies, so some of the figures we reference in this article will not be directly comparable to figures published in the report embedded above, especially for internet and social media users.
Ecommerce in Indonesia
Indonesians spent US$20.3 billion online in 2018, an increase of US$3.3 billion – or 20 percent – compared to 2017.
Within that overall figure, US$9.5 billion went to online purchases of consumer goods like fashion, electronics, and groceries, while US$9.4 billion went to online travel purchases.
The remaining US1.4 billion went on digital media purchases, of which the lion’s share – US$850 million – went on video games
Despite already accounting for the largest share of existing consumer spend, the consumer goods sector is growing faster than the country’s internet economy as a whole.
Indonesians spent 23 percent more on online consumer goods purchases in 2018 compared to 2017, an increase of US$1.8 billion year on year.
The travel sector still enjoys strong double-digit growth too. Indonesians’ online travel spend increased by 17 percent during 2018, equating to an additional US$1.4 billion compared to 2017.
As we reported in our Southeast Asian regional overview, the digital media sector is growing more slowly, although spending on video games grew by 13 percent during 2018, despite already accounting for the largest share of sector value.
Local ecommerce retailers winning in Indonesia
The company’s mobile app also tops App Annie’s ranking of the country’s most-used shopping apps, which has particular significance when we consider that Indonesia’s ecommerce users are two and a half times more likely to make an online purchase using a mobile phone than a computer.
Southeast-Asian ecommerce powerhouse Shopee takes second spot in SimilarWeb’s ecommerce website rankings, with its local Indonesian website generating 88 million visits each month.
Shopee also takes second place in App Annie’s mobile shopping app rankings in Indonesia, ensuring the app’s top-two ranking across Southeast Asia as a whole.
Another Indonesian company – Bukalapak – comes third in both the mobile shopping app rankings and the transactional website rankings. The platform’s website sits just behind Shopee’s, with an average of 84 million visits per month between May and July 2019.
A local player dominates Indonesia’s online travel sector too, with Traveloka attracting an average of 38 million visits per month over the past 3 months.
And – perhaps unsurprisingly given the importance of local tastes and cultures that we explored in a previous article in this series – local players also dominate Indonesia’s online grocery market.
SimilarWeb’s data suggests that the largest dedicated grocery platform in Indonesia is Klikindomaret, although it’s worth stressing that many Indonesians will likely also buy groceries from ‘supersites’ like Tokopedia and Shopee.
However, note that these rankings are based on website visits or mobile app users, and are not necessarily representative of market share based on revenues.
Online grocery in Indonesia
Online grocery is the fastest-growing sector in Southeast Asia, so the category merits a closer look of its own.
Statista reports that online purchases of food and personal care products grew by 30 percent in Indonesia in 2018, to reach almost US$1.5 billion for the year.
Research firm IGD offers an even more bullish outlook for the future, forecasting that Indonesia will see compound annual growth rates (CAGR) in excess of 80 percent through to 2022.
Despite this strong growth, IGD reports that online shopping will still account for less than 2 percent of Indonesia’s total grocery spend by 2022, but this relatively modest start makes the country an even more appealing opportunity for companies hoping to deliver strong growth in the coming years.
However, growth should be seen in the perspective of current values. Grocery still accounts for the smallest share of online consumer goods spend in Indonesia, and – despite the impressive number of people shopping online overall – SimilarWeb reports that just two specialist grocery sites in Indonesia see more than 1 million visits each month: Klikindomaret and Alfacart.
But to add perspective to these numbers, it’s worth stressing that Indonesia’s relatively low levels of online grocery spending may be in part due to infrastructural challenges, and do not necessarily indicate a lack of willingness amongst Indonesian consumers to embrace online grocery shopping.
For context, IGD Asia reports that Indonesia’s total grocery market was worth US$133 billion in 2018, meaning that online grocery currently accounts for just 1.1 percent of total market spend.
Barriers to online grocery growth in the Indonesia
Indonesia’s geography represents a significant barrier to scaling success across the full archipelago. With more than 6,000 inhabited islands, delivery logistics in Indonesia are significantly more complex than they would be in almost any other country.
Fast delivery isn’t just about satisfying consumer impatience either. Building frequency in online grocery is often about delivering high quality fresh produce, but with meat, fish, fruit, and vegetables all at risk of perishing quickly in Indonesia’s tropical climate, short delivery times become a matter of necessity.
Payments continue to complicate the growth of the ecommerce sector in Indonesia too, with the World Bank reporting that barely 1 in 40 Indonesians owns a credit card.
What’s more, credit card penetration amongst women is even lower – just 2 percent, or 1 woman in 50 – which has particular significance in the grocery sector in Southeast Asia.
On a more nuanced note, SimilarWeb’s data also suggest that a number of Indonesian grocery platforms experience lower levels of website performance compared to their peers in other countries across the region.
In particular, a number of sites appear to experience bounce rates of up to 70 percent, which is surprising when we consider that grocery carts typically include multiple products, and therefore that shoppers will likely need to visit multiple product pages in order to complete their shopping.
This unexpected pattern is also evident in the number of page views per visit, with SimilarWeb’s data suggesting that various grocery sites see averages of just 2 pages per visit.
Average visit duration is also much shorter than might be expected, with typical sessions often lasting less than 2 minutes.
While these findings may be indicative of some interesting underlying trends – perhaps Indonesian shoppers are more likely to add individual items to their online grocery carts across a number of distinct sessions before checking out – there is also a chance that these metrics point to some more worrying issues, such as insufficient trust in online grocery shopping.
Ecommerce outlook: Indonesia
Despite the challenges outlined above, it’s clear from the country’s ecommerce adoption rates that the future of ecommerce in Indonesia looks promising.
However, logistical challenges – especially those relating to the country’s complex geography – mean it may take longer for ecommerce to reach critical mass across the whole country compared to some other Southeast-Asian nations.
Looking for more data on Indonesia? Check out all of our previous reports by clicking here.