Indonesia’s e-commerce ranks first in Southeast Asia

Photo by Tom Fisk

Bank DBS Indonesia’s research team recently conducted a survey involving more than 500 respondents in Java, including Jakarta and several small regions outside Java, entitled “Indonesia Consumption Basket”.

The survey found that the number of e-commerce customers in Indonesia rose to 66% after the COVID-19 pandemic hit the country as a direct impact of the Large-scale Social Restrictions (PSBB).

On top of that, since 2019, 90% of internet users in Indonesia have made purchases via e-commerce platforms, making Indonesia the country with the highest rate of e-commerce use in Southeast Asia.

The survey also revealed that online shopping increased by about 14% while conventional shopping fell significantly by 24% since the pandemic. Before the pandemic, 72% of respondents chose conventional shopping over online shopping.

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According to a report by Redseer, Indonesia’s e-commerce Gross Marketing Value (GMV) increased to US$10 billion in the second quarter of 2020 as people switched to online platforms to buy daily needs such as health and beauty products, groceries and fast-moving consumer goods (FMCG). This has also caused activities in traditional markets to plunge to 30% from 52%.

The number of respondents who shopped on company websites and social media has increased slightly during the pandemic by 6% and 3%, respectively. This means companies should not ignore competition from online platforms.

Bank DBS Indonesia’s survey suggested that companies accelerate omni-channel strategy or start collaborating with established e-commerce platforms.

The high interest in online shopping has not only benefited large companies that sell their products via e-commerce platforms but has also supported the growth of micro, small, and medium enterprises (MSMEs). By purchasing MSME products online, people meet their daily needs while maintaining economic sustainability as well as social distancing in the midst of the pandemic.

“Businesses and MSMEs that sell their products online could survive and even grow their business in the midst of the pandemic,” said Minister of Cooperatives and MSEs Teten Masduki at the #BANGUNRESOLUSI Talks entitled “Digitalisation of Finance to Boost the Economy” held online in early December.

Although the number of e-commerce shoppers rose sharply during the pandemic, Indonesia’s e-commerce has evolved and stood out in Southeast Asia even before the COVID-19 pandemic and served as one of the most prominent driving forces of national economic growth.

The Gross Market Value (GMV) of Indonesia’s e-commerce stood at US$21 billion in 2019 and is expected to hit the US$40 billion mark by 2022. Looking at the number, Bank DBS Indonesia sees the important role of e-commerce during the pandemic and expects its contribution to grow after COVID-19. 

To support the growth of e-commerce in Indonesia, the government has strengthened internet networks in all regions across the country. Minister of National Planning and Development Bambang Brodjenegoro said in the annual Organisation for Economic Co-Operation and Development (OECD) Ministerial Meeting 2019 that the Indonesia government continued to improve communication and information technology services for internet users in Indonesia to increase economic productivity and open new job opportunities.