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Update 14th Jan 2020: Indonesia will be revising its de minimis value down to US$3 from an earlier US$ 75 on the 30th January 2020 as confirmed by Indonesia’s Directorate General of Customs and Excise, Ministry of Finance. You can find more details about how this could affect your shipments, at our latest announcement.
We discussed Indonesia’s eCommerce market drivers earlier, but what are the key Indonesian online shopper profiles as well as their behaviours you need to know about? Read on to find out the following:
Meet Indonesia’s online shoppers
Their motivations for shopping online
What influences their online shopping decisions? (Updated for COVID-19)
Where do Indonesians shop online?
What are the payment methods Indonesian consumers have for online purchases?
Meet Arief, our City Convenience Seeker. He lives in Jakarta and earns roughly IDR 120 million (US$8,200) per year working as a software engineer.
In his free time, he likes to watch videos of YouTubers unboxing and reviewing gadgets. He reads extensively about mobile phones before choosing which one to buy. But because he lives in Jakarta, going to the mall to purchase a new phone means driving through hours of traffic. So he buys it online instead, comparing deals between Lazada and Tokopedia.
Putri is a professional in her mid-20s who lives in up-and-coming cities like Bandung and make around IDR 80 million per year. She’s one of Indonesia’s Trendsetters.1
She likes finding trendy clothes at a bargain and follows Indonesian fashion icons on Instagram. While the city she lives in is experiencing rapid growth, it doesn’t have a wide enough range of apparel stores, including niche boutiques like those that sell K-pop-inspired clothing. She turns to online retail stores like Shopee3 to get her affordable fashion fix, as well as to social sellers on Instagram and Facebook.
Liana is a young professional who uses fashion to express her conservative values while still having fun. She favours modest fashion, fashion forward outfits which don’t reveal one’s skin. These outfits are coupled with hijabs and other coverings to assert their connection to Islam and its teaching to be modest.
Liana prefers high-quality brands which is why she sometimes shops for overseas brands online. This modern Muslim trend seems to be going strong as it is being driven by designers like Diajeng Lestari and brands like Uniqlo who are partnered with designers like Hana Tajima to cater to modern Muslims needs. You can read more about this group in our post about Indonesia’s Muslim Millennials.
In another part of the city is a full-time mom of an infant and a toddler.2
She relies on a WhatsApp group of acquaintances who share motherhood tips and recommend baby products and kids’ toys. As she needs to care for her children, she has no time to hop from mall to mall looking for these products, and isn’t sure she’ll find them anyway. She purchases the items online. Her friends recommend Orami and Bukalapak.
In Surabaya, a young married couple that owns a café is looking for heating lamps. They are our busy small business owners.3
With few staff and no time to head out to buy equipment, they find a specialised B2B online marketplace like Ralali. At the same time, they realise they’ve run out of a few ingredients, and engage a personal shopper via the HappyFresh app.
These five types of shoppers represent the larger eCommerce trends in Indonesia—what people are buying, why they’re buying, and where they shop.
As covered in our drivers of Indonesian eCommerce post, most of them are within Indonesia’s middle class. More Indonesians than ever are shopping online. In 2020, 138.1 million people in the country made online purchases with more than 3 of 10 of these shoppers being first time users.4
Janio specialises in helping you ship your international B2C eCommerce products to your shoppers in countries like Indonesia!
Indonesia’s online shoppers visit eCommerce sites for different reasons. Below shows the percentage of Indonesian’s top drivers for online shopping from Deloitte:5
A survey by Deloitte revealed that 31 per cent of Indonesian online shoppers chose to shop online for the convenience and practicality it provides as their main reason. These practical reasons include avoiding traffic or the ability to compare products and prices among different sellers without leaving one’s seat for example.6
Price was mentioned by 26 per cent of Indonesians as their main reason for buying online, given their ability to compare deals among various sellers. Another 17 per cent cited product range, as eCommerce stores can aggregate the products of different sellers to offer more choices, and even offer items that are not found in the country.7
Meanwhile, 14 per cent cited reliable reviews while 12 per cent pointed to promotions as their primary reason for shopping online, such as zero interest rates and free shipping as their main reason for buying online.8
The reasons further vary by city, according to Austrade.9 For instance, those in larger cities like Jakarta shop online mainly for convenience, given the heavy road traffic. McKinsey also found that consumers outside of Java tended to save up to 25 per cent on the price of goods when buying them online instead of in brick-and-mortar stores.
This may be because eCommerce operations don’t usually come with the high distributor inventory costs often incurred by offline retail networks.
COVID-19 necessitated Indonesians to adapt to life at home and adopt activities and habits to keep themselves safe from the pandemic. This year, eCommerce grew by more than half from USD 21 billion in 2019 to USD 32 billion in 2020.10
37 per cent of Indonesian digital service users are first time users as many had to turn to online shopping for necessities for the first time. Naturally, one of the product categories that saw huge eCommerce growth were groceries food deliveries.
McKinsey’s survey on Indonesian consumer sentiment during the coronavirus crisis found the following reasons for Indonesians shopping at a new retailer, store, or website during 2020’s third quarter:11
The same McKinsey report details how Indonesians are accelerating their shift online, how they’re adapting to life at home and how their purchase decisions are increasingly value driven.12
While the survey results above don’t place ‘keeping safe’ on the same level as price considerations, many Indonesians still expressed concerns about going to crowded spaces. The report found that the top 4 activities Indonesians were most worried about were attending a large event, using a clothing rental service, using public transportation and travelling by airplane.13
Indonesians have also found many at-home alternatives to activities that they could previously do out-of-home. As of the time of writing, Indonesia had instituted a lockdown between 3rd July 2021 and 20th July 2021. With the pandemic likely to continue on this trajectory for the coming months, these at-home alternatives – and hence continuing to spend most of their time at home – is likely to continue for some time.14
These at-home alternatives include:15
During this period, McKinsey found a 165 per cent increase in consumers who do all their shopping online. Both Google’s 2020 e-Conomy report and this McKinsey survey agree that at least 9 in 10 Indonesian consumers intend to continue using at least one of the digital services they’ve started using during the pandemic even after the crisis ends.16
During the McKinsey survey period, they found that more than 60 per cent of Indonesians have seen reduced incomes and savings, but 50 per cent have seen increased spending. That being said, Indonesians are also becoming increasingly mindful of how they spend their money and are now actively looking for ways to increase their savings. 87 per cent of them are also looking to reduce their holiday spending, likely also driven by the lack of travel options as well.17
This increased need to save money ties in with the finding that ‘value’ is the biggest factor when it comes to their purchase choices. Indonesians are now more likely to trade down to less expensive brands, with 78 per cent of them citing value as the main driver for brand switching.18
This could spell a very different landscape for eCommerce merchants. While there are now more Indonesians shopping online, many of them are looking for the best value-for-money options. On the other hand, this makes them more willing to try new brands and stores as well, which can spell a good opportunity for merchants who can meet this change in shopping behaviour.19
Indonesia had changed its customs rules to increase the customs taxes on imports of certain item types, which could lead to higher costs for cross-border merchants but there are other methods of shipping into Indonesia to adapt to this. Janio also offers bulk international freight into Indonesia as well as warehousing for those who want to cater to Indonesian online shoppers.
Before making a purchase, at least 49.7 per cent of Indonesian buyers conduct Google searches and read customer reviews, and 93 per cent of mobile users look up products online.20
Social media presence is a must if you want to increase your reach in Indonesia, with ads and recommendations via social media being relied upon by nearly 4 out of 10 Indonesians. Ads on television are still a viable marketing alternative, with 35.5 per cent of Indonesians using this to discover new products and services.21
You should also bear in mind the influence of social groups on WhatsApp and Line. These aps are among the country’s top social platforms with the highest number of monthly active users.22
The most used social media platforms, from most popular to least popular (by percentage of Indonesian internet users reached) are:23
Thinking about expanding your online store to Indonesia? Get the latest tips and tricks in our latest Indonesian e-book, now updated with Ramadan-related info!
In Indonesia, as elsewhere, there are several types of online platforms for shopping.
One example of a B2C platform is where businesses sell directly to consumers from their own websites. This is especially useful for luxury brands that aim to maintain exclusivity. For example, one can either shop at the website of jewellery designer John Hardy or visit his shops in Bali.
People may also buy from marketplaces, another B2C channel, where different e-tailers sell products. This is the space occupied by the likes of Shopee, Lazada, Tokopedia, Bukalapak, among others. Depending on the platform, sellers may include both SMEs and individuals, and even the eCommerce company that hosts the marketplace.
Based on iPrice’s map of eCommerce, the top eCommerce sites in Indonesia during Q1 2021 were:24
One emerging C2C trend is social commerce which allows buyers to connect with individual sellers through online social networks. McKinsey reports that 40 per cent of online sales are done via social commerce while the remaining 60 per cent is done through standard online commerce.25 Apart from Facebook and Instagram, there are dedicated social commerce platforms like Kaskus, which started out as an online forum and evolved to leverage its engaged online community by connecting buyers and sellers. Tokopedia also recently raised more funds17 for its own social commerce platform, Tokotalk.26
Other creative C2C models include that of AirFrov, an app that matches travellers with people willing to pay to get them to bring back products from overseas. A majority of the requests are for beauty products, but people may also request food and drinks, household items, clothing, gadgets, accessories, and more. AirFrov operates in Singapore and Indonesia.
Customers might purchase directly from businesses for their availability of supply or because they trust the seller or brand. On the other hand, online shoppers may turn to other consumers to find unique products or affordable second-hand items, such as on OLX.
Our Indonesia eCommerce guide also includes insights on what’s driving Indonesia’s eCommerce growth and the top product categories sold online there. Consider heading over to our Indonesia guide to for your free download.
Depending on the source and timing, the reported payment preferences of Indonesians could vary. When looking at JP Morgan’s report based on 2019 data, Indonesia’s online shopping payment preferences are:27
Cash is still used by more than 1 in 10 users in Indonesia,28 with their unbanked population remaining high at 42 per cent in 2019.29 Without access to regular banking services, many Indonesians cannot access credit cards or bank transfers and have to rely on cash on delivery payment options. If you’re looking to serve a wider audience, particularly in non-urban areas in Indonesia you should consider having a logistics partner who can help you facilitate cash on delivery collection and remittance.
On the other hand, the Indonesian government is trying to shift more Indonesians online, and have rolled out new policies and regulations to facilitate this. Euromonitor noted that these policies included allowing consumers to top up their digital wallets with cash without the need for a bank account or financial card. Another initiative includes the launch of a standard single-code QR system (QRIS) as part of their Indonesia Payment Systems Blueprint 2025.30
On the private sector end, various tech giants such as eCommerce players and fintech companies have also been introducing digital payment options too. Go-Jek has rolled out payment options such as GoPay, PayLater; Shopee has Shopee Pay, while OVO is another popular eWallet option in Indonesia.
Speaking of PayLater, it’s one of the players in an upcoming ‘buy now pay later’ payment trend. These services are good for unbanked citizens as well as those who do not hold steady salaried income such as freelancers. With the ability to pay their transactions over a series of installments, it also helps some of them manage their finances between paychecks. Go-jek’s PayLater is also less strict compared to credit card applications, allowing it to reach a much broader audience. In 2019, PayLater was the third most popular fintech product in Indonesia, with 56.7 percent of respondents aware of the feature.31
However, with all the different modes of payment and Indonesia’s fragmented online payments space, a setup like Tokopedia’s helps eCommerce players cater to a wider audience.
For eCommerce players around Southeast Asia, Indonesia’s large population, online activity, and growing consumer class are certainly enticing.
But just because the pie is big, it doesn’t mean you should immediately dive straight in. There are some things you need to consider before entering the Indonesian market.
Customs clearance may be slow. To avoid delays and reduce the chances of mistakes, make sure you have complete documents and requirements for customs clearance. It also helps to have a partner who has customs clearance experience in Indonesia.
Make available a wide variety of payment options. There are plenty of fin-tech startups who are offering different payment options—but keep in mind that 80 per cent23 of new businesses fail. Spread your options by accepting payments from different online platforms, as well as from mobile wallets, credit cards, bank transfers, and of course, cash on delivery. This will also help you avoid diminishing the user experience by forcing shoppers to create an account with your preferred payments platform instead of allowing them to use the one they like.
Indonesia is an archipelago. Some areas will be more difficult and expensive to reach than others. Consider this when estimating delivery times, as well as when choosing your eCommerce logistics model, be it cross-border shipping or local distribution.
User experience plays a big role in winning and keeping customers. You not only have to beat the competition—you also have to make your online store visually appealing on smartphones’ small screens, and make sure it works smoothly despite the country’s average mobile Internet connection speed of 9.82mbps.
Lastly, given Southeast Asia’s diversity, it’s wise to observe and learn.
Analyse what makes some eCommerce businesses succeed and what makes others fail. Understand their culture, work with local partners, and steadily win your slice of ASEAN’s biggest eCommerce pie.
If you’d like to find out more about how we can solve your SEA eCommerce delivery needs, come and have a conversation with us.
Interested in eCommerce in Indonesia? Find out more about Indonesian eCommerce scene here:
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