Describes how widely e-Commerce is used, the primary sectors that sell through e-commerce, and how much product/service in each sector is sold through e-commerce versus brick-and-mortar retail. Includes what a company needs to know to take advantage of e-commerce in the local market and , reputable, prominent B2B websites.
Last Published: 8/1/2017

Overview
Indonesia's youth demographic – about 50% of the population is under 30 – are more technically skilled and will also positively affect the growth of e-commerce. It is forecasted that the number of e-commerce users will reach 39.3 million by 2020 with an average 12% year on year growth rate. In Indonesia's emerging market, the middle class is set to become the primary purchasing force as their income rises. By 2030, Indonesia's middle class is expected to expand to around 20 million households, with a disposable income of $11,300 per household – huge growth from the middle class that sat at 17 million households with $6,300 disposable income per household in 2014. With the rising purchasing power of the middle, the country’s e-commerce could offer a strong market for online shopping - current projections put the country’s online market at $130 billion by 2020.  In 2016 Indonesians spent about $228 per user on online shopping.

Current Market Trends
In a country of 255 million inhabitants with over 382 million active SIM cards, mobile devices are the main means with which Indonesians carry out e-commerce.  Air travel is increasingly being arranged through websites such as Tiket.com and Traveloka while accommodations are arranged through booking.com and even AirBnb.  According to AirBnb, arrivals in Indonesia have increased 94% in the last 12 months.  With major cities like Jakarta, Bandung and Surabaya experiencing traffic jams, this leaves its citizens often stuck in traffic for hours which leads many people to engage in online shopping and e-commerce to pass the time.  Another growing trend is for inhabitants in major cities to use applications such as Go-Jek to arrange for food delivery, cleaning service, massage, buying movie tickets, as well as its original purpose of ordering a motorbike or taxi for transportation.

Domestic eCommerce (B2C)
Indonesia online retailing is blossoming and has been the biggest in the region due to its hefty population despite having weak IT infrastructure. The market has witnessed a rise in the number of new local wholesalers selling products online.  Lazada, Blibli, Zalora, Bhinneka, MatahariMall, Traveloka, Tiket.com, Pegipegi are some of the leading online marketplaces in the country.

Cross-Border eCommerce
Despite having no local presence, Amazon and Ebay are the most popular B2C sites in Indonesia.

B2B eCommerce
The rapid growth in the online marketplace has attributed to the development of B2B eCommerce startup companies such as ralali.com and Bizzy.com.
 
eCommerce Intellectual Property Rights
E-commerce remains governed by a complex set of laws and regulations. Some laws and regulations that apply to the e-commerce sector include:

  • Law No. 11/2008 on electronic information and transactions.  This law, which was intended to promote open and fair electronic commerce, has been criticized as creating investor uncertainty by failing to define key terms.

  • Law No. 7 /2014 on trade.

  • Bank Indonesia Regulation No. 11/12/PBI/2009, as amended by Bank Indonesia Regulation No. 16/8/PBI 2014 regarding E-money.

  • Circulation Letter of Bank Indonesia No. 16/11/DKSP Year 2014 regarding E-money operations.

  • Minister of Communications and Information Regulation No. 23 of 2013 regarding Domain Name Management.

  • Law No. 8/1999 regarding Consumer Protection

 

Popular eCommerce Sites
Lazada.co.id, Tokopedia.com, Bukalapak.com, Elevania.co.id, Mataharimall.com, Blibli.com, Bhinneka.com, Zalora.co.id, Rakuten.com, Amazon.com, Ebay.com, Traveloka.com, Tiket.com, Pegipegi.com, Agoda.com.

Online Payment
Although the Indonesian e-commerce industry has been thriving, there is plenty of room for further growth, as it only accounts for less than 1% of the total Indonesian retail sales. In order to capitalize on this opportunity, issues with inadequate infrastructure, poor payment systems, and logistics have to be addressed. For instance, although the number of credit card users jumped 60% in the past five years to around 15 million, 70% of e-commerce payments are completed with bank transfers and only 15% with credit cards. And also, delivery is too slow and expensive due to challenging geography paired with poor infrastructure, and absence of high-tech logistics companies. This represents valuable opportunities for e-commerce technology, applications, and other supporting products and services.

Mobile eCommerce
Indonesia has established itself as one of Asia’s foremost mobile-first nations, with an Indonesian Internet Service Provider Association (APJII) report in 2016 that traffic from 63.1 million internet users (47.6% of total internet users) originated from mobile devices.  And according to reports from some online shopping malls, about 70% of the online shoppers shopped on their mobile devices like smartphones rather than desktop computers. The majority of the growth in revenue, however, can be explained by the increase in the average revenue per user.

Major Buying Holidays
Indonesia has many religious, traditional, and national holidays such as Chinese New Year, Eid Al Fitr, Christmas, Islamic New Year, Nyepi, Independence Day, and school holidays where many companies offer unique discounts and coupons.

Social Media
50% of the total population, 132.7 million people, is connected to the internet, making Indonesia the 5th largest market in the world.  The capital of Indonesia has been named the world’s number one “Tweeting City”, Indonesia has the 4th highest number of active Twitter users and the 4th highest number of Facebook users in the world.  Instagram, Whatsapp, Line and Path are some of the more popular platforms.  According to eMarketer, almost 90% of Indonesia’s social network users are under the age of 34 (54% of them between 16 and 24).

 

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



Indonesia eCommerce Industry Trade Development and Promotion eCommerce