Indonesia's eCommerce Market Opportunities, and Payments

Exploring eCommerce sector of Indonesia, its market opportunities, payments, and how to expand your business in this market.

XanPay is introducing a new series that discusses market opportunities in different sectors including eCommerce, and payments in different countries. This week, we analyze the potential market opportunities in Indonesia's eCommerce sector and how we can leverage it to expand into this new market.


A Glance at Indonesia

A recent report suggests Indonesia is officially declared as an upper-middle class income country and houses the fourth largest middle-class population in the world with over 17.3 million households. The Indonesian consumer market is one of the most confident in the world. Additionally, more than half of Indonesian population is under the age of 30. This makes it a brilliant consumer market and provides opportunities for several industries including aviation, banking, finance, infrastructure, telecommunication, defence and retail industries.


A report estimates Indonesia is going to become the fourth largest consumer market by 2030, in terms of purchasing power parity. Furthermore it also suggests that Indonesia holds a lot of growth potential for the long term and should be among 2021's business investment budgets.


Indonesia's eCommerce Market Opportunities

Indonesia's eCommerce Market Opportunities, and Payments

In 2019, Indonesia recorded the highest rate of adoption for eCommerce. By 2020, the country's e-commerce market grew by 49% and contributed to the global growth rate of 26%. Development in internet infrastructure (cost, speed and bandwidth) has opened up Indonesia to fresh markets and emerging opportunities.


Over 90% of internet users between 16-64 have made an online purchase for either a product or service. There are several eCommerce platforms in Indonesia and the biggest one is Jd.id. The store's annual revenue hit $1.5 billion by the end of 2020. Orami.co.id hit $178 million while Zalora.co.id hit $125 million.


The Rising Trends of eCommerce in Indonesia

These statistics reveal how eCommerce market opportunities and infrastructure like smartphone penetration and internet availability is growing in Indonesia.

  • Population: 264 Million

  • eCommerce Market Value: $13.6 billion

  • Mobile Commerce Market Size: $7.1 billion

  • Smartphone penetration: 50%

  • Internet Penetration: 32.3%

Source


More than 50% of Indonesian population has access to smartphones and the government is ramping its efforts in establishing a regional infrastructure. Reports suggest that the eCommerce market in Indonesia may surpass $30 billion by 2023. Indonesia’s online shopping industry is forecast to expand at an impressive compound annual growth rate of 34.6 percent to 2021.


Consumer Characteristics

In 2019, cross-border sales account for 20 percent of the overall e-commerce market, suggesting consumers are seeking higher-value items. Cross-border eCommerce exploded with an 814 percent increase in imported e-commerce parcels, from 6.1 million packages to 49.7 million in 2019.


The consumer spending for different products in the eCommerce industry in Indonesia has increased over the last two years. Consumers prefer shopping on their smartphone devices with 74.8% of sales made via mobile phones.


Social media is also a favourable marketing method for consumers to shop online. Social commerce is now estimated to account for 40 percent of all e-commerce sales in Indonesia.


E-commerce Payment Trends in Indonesia

Card payments and bank transfers take a high share of payments in the Indonesian markets. However, digital wallets are growing more popular in contrast to the traditional banking methods amongst the Indonesian consumers for shopping on different eCommerce websites.


Analysis by Statista suggests that bank transfers held 29% share for eCommerce payment methods followed by digital or mobile wallets which held 25% share in 2019. A study suggests that digital wallets are set to grow to take 22 percent of e-commerce payments by 2023.


XanPay: Helping you Leverage eCommerce Market Opportunities in Indonesia

Indonesia represents one of the growing opportunities for eCommerce businesses. At XanPay, we help you expand your business to Indonesian consumers by facilitating an innovative payment solution that allows you to offer an optimum service to Indonesians along with enabling favourable payment system for your business.

First and foremost, you can integrate XanPay into your existing infrastructure. It offers different methods of integration and more importantly, supports its services on several devices including browser and smartphones. Since, Indonesian consumers are inclined to shopping on their smartphone devices, this allows you to leverage the opportunities at its maximum potential.


Secondly, after integrating, you can leverage XanPay's features to offer local payment method options to your Indonesian consumers. Currently, XanPay facilitates GoPay and Mandarini - two favourable payment options for Indonesians. Moreover, it allows you, as an eCommerce merchant, to receive payments in your preferable payment option. In contrast to other leading payment service providers, XanPay charges a very low transaction fee and incorporates a faster process for merchants to receive their funds.


Furthermore, XanPay takes care of all the payment needs of your business while you concentrate on operational needs of your eCommerce store while taking advantage of the opportunities in Indonesia.