Indonesia - Country Commercial Guide
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General Overview

Electronic trading transactions or e-commerce including through the lokapasar platform still can grow after the lifting of social restriction. In Indonesia, the ecommerce market is driven by local market it will continue to grow. The trend occurs in many developing countries because the portion of online shopping to total retail sales is still relatively small and there is still a lot of potential for increasing digital adoption in most people in developing countries, including Indonesia. The growth of e-commerce transactions, including those from the Lokapasar platform, will continue to occur through penetration in ties two and tier three cities that still have great potential for e-commerce.

The Indonesia E-Commerce market size is expected to grow from USD 52.93 billion in 2023 to USD 86.81 billion by 2028, at a CAGR of 10.4% during the forecast period (2023-2028).  Indonesia stood the largest among other ASEAN countries with USD 51.9 billion, or around IDR 778.8 trillion, in E-Commerce business revenue in 2022. In total, e-commerce revenue in ASEAN in 2022 reached USD 99.5 billion and it means Indonesia’s e-commerce businesses make up 52% of the total.

Top Products or services

Indonesia’s E-commerce market is segmented by B2C e-Commerce (beauty and personal care, consumer electronics, fashion and apparel, food and beverage, furniture, and home, and other (toys, DIY, media, and others)) and B2B e-Commerce. Several top B2B eCommerce players are: Ralali, AXIQoe, Monotaro, Bizzy, Kawan Lama, Mbiz, Blibli, and Electronic City.

Legal & Regulatory environment towards e-commerce

In late November 2019, Indonesia’s government introduced its long-awaited law on e-commerce through Government Regulation 80 of 2019 (GR 80, 2019). The regulation was issued to improve the governance of internet-based and electronic trading activities in addition to ensuring tax compliance among e-commerce businesses.

The Government of Indonesia recently passed an implementing regulation imposing a blanket ban on e-commerce platforms from selling certain foreign goods with a value under USD 100. The regulation was under the revision of Minister Trade Regulation No. 50/2020 (MR 50/2020) on Provisions for Business Licensing. Advertising, Development and Supervision of Business Actors in Trading through Electronic Systems. The products that are traded must adhere to Indonesian standards, such as the Indonesian National Standard (SNI) and the Food and Drug Supervisory Agency (BPOM). Standards like these are the same as the standards for goods circulating in the offline market.

On September 26th, 2023, Indonesian Minister Zulkilfi Hassan released the latest regulation on e-commerce, which is a revision of Minister Trade Regulation No. 50/2020 (MR 50/2020), called the “Minister Trade Regulation No 31/2023.” Under this new regulation, the government banned sales of goods on social media platforms.  The government seeks to prevent direct sales on major platforms that they believe takes away business with small business. Social commerce platforms have been given one week to comply with this new regulation. Social media platforms are allowed advertise, like on TV, but the ad cannot be for a sales transaction. Companies that do not comply will first receive a warning and then risk the revocation of their Indonesian business license.

Consumer Behavior

The largest number and value of e-commerce transactions are among people who are married and don’t have children. The transactions of this group are greater than the group of single residents or those who already have children. The reason is that when married, income can be greater as it comes from two people and there are already allowances. However, when the couple has children, there are financial burdens that must be borne so that income is no longer fully spent. Based on “Report Consumer Behavior E-Commerce Indonesia 2023: Post-pandemic Economic Recovery and Shopping Trends”, released by Kredivo in collaboration with Katadata Insight Center, of all the number of e-commerce transactions in 2022, consumers with the highest number of transactions will come from consumers who are married with a portion of 58.2%. The percentage of e-commerce transactions from single consumers is 38.7% and the remaining 3.1% is from other groups.

Consumer-Preference for platforms, payment methods

In 2022, there were 6 marketplaces lead the pack among other contributors to Indonesia’s Gross Merchandise Value (GMV). There were: Shopee, Tokopedia, Lazada, Bukalapak, TikTok Shop, and Blibli.

The following are the details and estimated contribution of each marketplace to the total GMV:

  • Shopee – 36% or around USD 18.7 billion (IDR 277.6 trillion)
  • Tokopedia – 35% or around USD 18.2 billion (IDR 269.7 trillion)
  • Lazada – 10% or around USD 5.2 billion (IDR 77.1 trillion)
  • Bukalapak – 10% or around USD 5.2 billion (IDR 77.1 trillion)
  • TikTok Shop – 5% or around USD 2.6 billion (IDR 38.5 trillion)
  • Blibli – 4% or around USD 2.1 billion (IDR 30.8 trillion)

Digital wallet is the most popular payment method that used by 72% shoppers while buying things on e-commerce. The use of paylater is more common for older segments (Millenials and GenX).

Payment Method Used for Transaction on E-Commerce:

  • Digital wallet - 72%
  • COD (Cash on Delivery) - 57%
  • Mobile Banking/Internet Banking – 39%
  • Paylater/P2P lending – 19%
  • Bank Transfer via ATM – 17%
  • Credit Card/Debit Card – 10%
  • Instant Payment – 10%
  • Counter/Minimarket – 7%
  • Instant Debit – 5%
  • Digital Marketing & social media

After massive growth in the e-commerce sector during COVID-19 pandemic, social commerce became the next commercial phenomenon to take the Indonesian market by storm. From finding inspiration to purchasing the desired products directly on social media platforms, social commerce offers a convenient, seamless, and one-stop shopping experience to Indonesian consumers. This emerging way of shopping, although still relatively small in Indonesia, is posed to grow rapidly in the next few years and reach GMV of around USD 22 billion by 2028. Most used social media platforms for purchases in Indonesia are: TikTok, Instagram, Facebook, YouTube, WhatsApp, Line and X (ex-Twitter).

Digital Events

There are some e-commerce shows will take place in Indonesia: