INDONESIA’S ONLINE RETAIL SPACE 3

Indonesia’s ecommerce space is a mix of marketplaces and direct selling websites. While big players like Amazon and Lazada remain popular, local sites such as Bhinneka and Tokopedia are also driving online retail sales with their focus on localized content.

SOCIAL COMMERCE TRENDS6

INCREASED INVESTMENTS IN INFRASTRUCTURE7

Facebook, Twitter and Google+ are the most frequently used platforms. The purchasing pattern on eCommerce websites are: Traditional eCommerce sites (20%), BBM groups (27%), online forums (26.6%) and social sites (26.4%). Therefore, a strong social commerce strategy is key for businesses entering the Indonesian market.

MarketplacesDirectSelling

In 2013, international marketplace Amazon was the most popular site despite having no local presence, pricing or logistics support. This, in addition to Indonesians’ preference for UK and US based sites, illustrates local online shoppers’ willingness to shop cross-border.

CROSS-BORDER ECOMMERCE8

Infrastructure is a key challenge for businesses in Indonesia. While both the private and public sector have been making investments in the country’s infrastructure, businesses need to be prepared for potential roadblocks, as is expected in developing markets.

In 2013, 74.6 million Indonesians were online, represent-ing a 29.8% internet penetration rate. This is expected to increase to 102.8 million in 2016. In 2012, 58.4% of internet users were between 12 to 34 years.

GROWTH IN INTERNET PENETRATION2

GETTING TO KNOW THE AVERAGE INDONESIAN SHOPPER4

Smartphone ownership doubled from 12% in March 2012 to 24% in March 2013, due to affordable devices and cheap mobile internet. With a mobile user base estimated to grow to 71 million by 2015, this represents a huge opportunity for mobile commerce.

According to a 2013 survey by the Indonesia Internet Service Provider Association, 34.6% of Indonesia’s online consumers are "afraid of fraud". Manual bank transfers (57%) are the most popular payment method, followed by Cash on Delivery (CoD) (28%), credit cards (7%) and other payment modes (8%). Only 4.5% of Indonesia's population have a credit card. To overcome this, businesses are getting innovative with payment methods. Some of the popular payment methods used are: Doku, Veritrans, iPayMu and indomog.

In 2012, online shoppers spent an average of USD $256. The most popular products being clothing and apparel (67.1%), shoes (20.2%) and bags (20%). Understanding local customers is the key to success as a localized strategy increases approachability and trust. Lazada Indonesia made the jump to top online retail site in 2014 after rebranding with native language marketing campaigns.

THE POTENTIAL OF MOBILE COMMERCE5

March2012

March2013

12%

24%

Indonesians spent USD $8.5 million in mobile commerce in 2013. They also spend an average of 181 minutes on their smartphones every day.

DIDYOU

KNOW?

20%

26.6% 27%

26.4%

BBMGroups

Online Forums

Traditional eCommerce

Sites

Social Sites

Manual BankTransfer

CoD

OtherPayment

Mode

CreditCards 57%

28%

7%8%

34.6% Of Customers

“Afraid of Fraud”.

34.6%

Clothing and Apparel

67.1%

Shoes

20.2%

Bags

20%

Most Popular Products in Indonesia

ONLINE PAYMENTS CHALLENGES AND PREFERENCES9Different Payment Modes

in Indonesia

Indonesia’s GDP is forecasted to grow at an average of 5.8% over 2013 – 2020. Its market is largely represented by small and medium businesses (SMBs) representing 99% of all companies in Indonesia. Online spending is predicted to increase by 40% in 2014 and 53% in 2015. While developed markets like the US see online sales around 5% of total retail revenue, Indonesia sees just 0.6% of the estimated USD 411.29 billion total retail spend for 2014, illustrating its growth potential.

ECONOMIC OVERVIEW AND GROWTH OF ECOMMERCE1

2013

2014

2015

2016 $4.49Billion

$3.56Billion

$2.6Billion

$1.8Billion2013 - 2020

5.8%GDP

Growth in Online Retail Sales

Smartphone Ownership in Indonesia

20122013 2016

29.8%

74.6Million

102.8Million

39.8% 58.4%

between 12 to34 years old

Asosiasi Penyelenggara Jasa Internet Indonesia, CNBC, Crawford & Company, ee, eMarketer, e27, Payvision, REDWING, Reuters,Tech in Asia, Vela Asia

SOURCES:

Indonesia 9 eCommerce Facts© 2014 Singapore Post Limited. All Rights Reserved.For more information, visit www.specommerce.com/knowledge-centre

Indonesia is on track to become the third largest consumer base in the world (after China and India) and the 7th largest economy worldwide. Affordable mobile internet, cheap smartphones and increased spending power of the middle class are driving the development of the eCommerce sector. However, consumers have yet to establish trust in online payment and businesses are also facing challenges associated with emerging markets.

9 eCommerce Facts

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