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E-COMMERCE IN INDONESIA
Bali, 3 May 2017 WORKSHOPIndonesia ICT Reseller Channel Summit 2017
By Jeffrey Bahar, Spire Research and Consulting
A. OVERVIEW OF INDONESIA RETAIL INDUSTRY
+256 MILLION POPULATION
67%* UPPER MIDDLE TO HIGH
$324 BILLIONTOTAL RETAIL SALES
CLASS POPULATION
Indonesia Demographic Overview
* People with more than 60 million income per annum
Source: Deloitte, OECD, Nielsen, Others
3% 2% 2%8% 7% 7%
25%28% 29%
2006 2011 2020
Percentage Change in Disposable Household Income in the Low, Middle,
and High Income in Indonesia
Lower Income Middle Income High Income
22%
27%
5%
6%
2015 2016
FoodBeverages
5% 3%
8% 9%
14%
3%
2015 2016
Welfare & SavingLeisure & HolidayCredit Card
10% 9%
12% 11
%
2015 2016
Housing & Utilities
Transportation
Overall Expenditures Across the Three Consumer Product Clusters (2015 – 2016)
6%
12%
2%
“48% of Indonesia’s total spending on fast moving
consumer goods comes from the middle class.”
DAY 1
Top 5 Countries in 2016 Global Retail Development Index
2016Rank
Country Market Size* (25%)
Country Risk** (25%)
Market Saturation
(25%)
Time Pressure
*** (25%)
GRDI Score
Population (Million)
GDP per Capita,
PPP
National Retail
Sales ($ Billion)
1 China 100 61.2 36.2 92.5 72.5 1,370 14,190 3,046
2 India 53.7 54.3 75.8 100 71 1,314 6,209 1,009
3 Malaysia 81.2 83.4 23.5 50.4 59.6 31 26,141 93
4 Kazakhstan 56.4 37.3 61.9 70.2 56.5 18 24,346 48
5 Indonesia 64.3 38.9 50.2 68.9 55.6 256 11,112 324
Source : AT Kearney
* 0 = low attractiveness, 100 = high attractiveness** 0 = high risk, 100 = low risk*** 0 = no time pressure, 100 = urgency to enter
DAY 1
Types and Number of Retail Stores in Indonesia (2016)
2.3 mioSTORES
TraditionalRetail
Modern Retail (Minimarket)
Modern Retail (Supermarket)
19,440 STORES
12,210 STORES
20%
12.50%10% 9.50% 8.00%
10% 10%
2.40%6.00% 5.60% 5% 4.80% 5% 5.40%
2011 2012 2013 2014 2015 2016F 2017F
Growth of Modern Retail Turnover in Indonesia
Growth Rate GDP Growth
Share and Growth Rate of Modern Retail in Indonesia
Source : Indonesia Trade Ministry, Spire Research and Consulting
DKI Jakarta38.1%
Sumatera8.2%
West Java14.08% Central Java
10.2%East Java
12.12%
Spread of Modern Retail in Indonesia
Source : IFC B2B Payment Assessment, 2015
Total Value of Traditional Retail Channel Transactions in Indonesia
Type of goodsfor sale
Ready to drink (100%)
Instant beverages tea, coffee (96%)
Mineral waterin gallon (42%)
Toiletries (99%)
Household care (93%)Medicine/ drugs(87%)
Beauty treatments(71%) Food including
Instant noodle, canned food (100%)
LPG (45%)
Other Basic Needs/Sembako not includingrice(95%)
Mobile phone credit(pulsa) (18%)
Rice (55%)
Others (27%)
Source : Spire Research and Consulting
Types of Goods for Sale in Indonesia Traditional Retail
B. E-COMMERCEIN INDONESIA
88.1 million internet user (34% population)
75 million smartphone user (29.2% population)
308.2 million mobile phone user (121% population)
3 hour/day, average of internet access via mobile device
3 million fixed broadband user (1.5% population)
2 hours 25 minutes/day, average of social media usage
74 million social media user (29% population)
69 million facebook user
50 million twitter user
Indonesia Digital Landscape (2016)
Source : Spire Research and Consulting
Source : Spire Research and Consulting
Number of Online Shoppers in Indonesia
Online sales Transaction VS Retail Sales In Indonesia (2013-2016F)
YearOnline Sales Estimate(Billion USD)
Retail Sales Estimate(Billion USD)
Online Sales As a Percentage of Retail Sales
2013 1,8 363,4 0,50%2014 2,6 411,3 0,63%2015 3,6 473,9 0,76%2016 4,5 543,1 0,83%
The growth of online shopper at17.27% from 2013 to 2016 givessignificant effect on the salespercentage of onlinetransactions.With CAGR at 25.74% for overthe four years, Indonesia isbecoming the potential marketin E- Commerce industry.
E-Commerce Development in Indonesia
2013201420152016
4.6 mio
5.9 mio
7.4 mio
8.7 mio
DAY 1
Image Source: Flexy (www.flexy.com.br)
Basic Diagram of E-Commerce
4
2
2.7
7.6
9.6
15.9
17.2
20
20.7
5
4
4
4
22
12
18
15
20.5
Others
Automotive Accessories
Health Supplement
Sports and Entertainment
Books
Beauty Products
Electronics and Gadgets
Gaming Products andServices
Fashion Products
Q3 2015
Q1 2016
Types of Product Bought via E-Commerce
Source : Spire Research and ConsultingDAY 1
34.47%
65.53%
Grocery Purchase via Mobile App
Yes No
Usage of On-Demand Service in Indonesia
Source : Livingsocial
10.73%
10.73%
27.12%
38.70%
42.09%
49.15%
61.30%
Other SupermarketApps
HappyFresh
Klikindomaret
Bukalapak
AlfaCart
Tokopedia
Lazada
Where Do People Order Their Grocery Online?
DAY 1
Free shipping
Exclusive items or deals
Product warranty
Safe and simple payment methods
Trust issue on product quality
No hands on experience before
buying
High shipping cost and slow delivery
time
Unreliable payment method
Shoppers Likes and Dislikes in Online Shopping
DAY 1
C. INDONESIA E-PAY LANDSCAPE
Source: Asosiasi Penyelenggara Jasa Internet Indonesia, LivingSocial
1%
2.30%
2.70%
7%
24%
33%
67.40%
Mobile Money
Rekber
PayPal
Debit Card
Credit Card
Internet Banking
SMS Banking
Online Payment Methods Used by Indonesia User as of 2015
Used Electronic Payment Method in Indonesia
17%
10.42%
12.46%
28%
69%
I have never paidfor an on-demand
service
Other e-moneyservices (Android
Pay, PayPal,KasPay, etc)
Credit Card
In-apps e-money(Go-Pay,
GrabPay, etc)
Cash
Payment Methods Used to Pay for On-Demand Services (2016)
DAY 1
Mobile Money / Mobile Payment
Jak CardBank DKI
Bank Mandiri
Indomaret Card
Gaz Card
E-Toll Card
E-Cash
Bank BCA
Flazz Card
Mega Cash
Mega Virtual
Tap Cash
Brizzi
BBM MoneyBank Permata
CIMB Niaga Rekening Ponsel
Nobu Bank Nobu E-Money
Bank BRI
Bank BNI
Bank Mega
1
t-cash
Indosat Dompetku
XL Axiata XL Tunai
Smartfren Uangku
Telkom
I-Vas
Flexi Cash
Skye Sab
Binus Easy Transaction
Skye Mobile Money
FinChannel
Mynt e-moneyArtajasa
Doku WalletNusa Satu Inti Artha
Finnet Indonesia
Witami Tunai Mandiri Witami Tunai
mVcommerce Ponsel & Instan Pay
2
3
4
5
6
9
7
10
Bank Institution Telco Provider
1
2
3
4
5
3rd Party Payment Service Provider
1
2
3
4
5
6
(Dismissed in 2015)
Source : Spire research and Consulting, gathered from many sources
BCA SakukuBTPN WOWBTPN
8
Landscape of Mobile Payment Aggregator in Indonesia (1)
Bank DKI
1
UniqKu
DAY 1
Some card based e-money players have launched the web based and mobile application to support the behavior of banking people who is getting mobile, as well as support the growing
number of smartphone penetration and the increasing trend of online transaction
Card Web Based, USSD, SMS
Mobile AppsMost of the transaction of e-money happened on the merchant will usually be handled only by the same acquirer (on-us), since the e-money (card base) instrument have not implemented interoperability
All transaction of mobile operators’ service is delivered through its dedicated network, and could be accessed either through UMB or mobile application.
Source : Spire research and Consulting, gathered from many sources
Landscape of Mobile Payment Aggregator in Indonesia (2)
E-M
oney
/ E
-w
alle
tPaym
ent G
ateway
Gaming / Digital Content Focused
E-Commerce Focused
Source : Spire research and Consulting, gathered from many sources
Landscape of Mobile Payment Aggregator in Indonesia (3)
offline merchant dominates because Indonesian consumers feel more comfortable in doing transaction at offline merchant
Prepaid e-money have a significant growth in terms of
usage. This is due to marketing activities or promotion held by those banks with the merchant, mainly on F&B and retail stores
Most of bank and mobile operators users prefer to use mobile payment for offline transaction, while the rest of e-
money usage is driven by some collaborative promotion offered by the
online merchants and the mobile payment provider
Share of Spending at Offline and Online merchant
Source : Spire research and Consulting, gathered from many primary sources
Bank Cards (ATM, Debit, & Credit card)
E-money instrument
Mobile payment
Small percentage on online merchant Trx.
Almost none transaction on online merchant
Smaller percentage on online merchant Trx.
Usage Behavior on Each Payment Instrument
DAY 1
D. E-COMMERCE 2.0: THE FUTURE IS NEAR
Shifting in Customer Behavior Post Digital Technology Era
Source : Ipsos OTX/Google 2012 Holiday Shopping Intentions SurveyDAY 1
E-Commerce 2.0: O2O
“The key to O2O is that it finds consumers online and brings
them into real-world stores. It is a combination of payment
model and foot traffic generator for merchants (as
well as a “discovery” mechanisms for consumers)
that creates offline purchases.”
~Alex Rampell, CEO and Founder of TrialPay, 2010
Source : GitomeDAY 1
Case Study #1 Matahari Mall
Case Study #2 Amazon
Case Study #3 BerryBenka
DAY 1
E. CONCLUSION
Conclusion #1
Modern retail is having stronger existence in urban areas, while traditional retail holds their presence in rural areas.
DAY 1
Conclusion #2
The convenience of online shopping attracts people to use it; and alongside with it, e-payment grows.
DAY 1
Conclusion #3
The e-competition is growing fiercer, with companies strive to provide a better e-shopping experience. Addressing
customers needs is the key.
DAY 1
Jeffrey Bahar, Group Deputy [email protected]
M: +62-812-1005 940Tel: (62-21) 5794 5800
Wisma 46 Kota BNI, 25th Floor, Unit 07 & 09 Jalan Sudirman Kav. 1, Jakarta 10220
www.spireresearch.com
