Indonesia E-Commerce Market

Indonesia E-Commerce Market Size:

Indonesia e-commerce market size is projected to exhibit a growth rate (CAGR) of 9.45% during 2024-2032. The rapid internet penetration, increasing population of young and tech-savvy individuals, rising number of e-commerce transactions through mobile phones, significant logistics and payment innovations, marketplace diversity, integration of social media platforms with e-commerce platforms, and growing popularity of cross-border-e-commerce represent some of the key factors driving the market.

Indonesia E-Commerce Market Analysis:

• Major Market Drivers: Rapid smartphone penetration and widespread internet access enable more consumers to shop online which represents the major drivers in the market. The increasing middle class, along with increased disposable income fuels the demand for a variety of products and services. Government support, through initiatives like the “Making Indonesia 4.0” program, enhances digital infrastructure and encourages online businesses.
• Key Market Trends: The rise of mobile commerce, as consumers increasingly use smartphones for online shopping represents the key trends in the market. Social commerce is also gaining traction, with platforms such as TikTok and Instagram direct sales. There is a growing emphasis on local brands and products, driven by consumer preference for homegrown goods.
• Competitive Landscape: The report has also provided a comprehensive analysis of the competitive landscape in the market. Competitive analysis such as market structure, key player positioning, top winning strategies, competitive dashboard, and company evaluation quadrant has been covered in the report. Also, detailed profiles of all major companies have been provided.
• Challenges and Opportunities: The market faces various challenges including logistical issues, such as inadequate infrastructure and delivery inefficiencies in rural areas, along with payment security and fraud concerns. However, the market also faces several opportunities such as the expansion of digital payment systems which can enhance consumer trust and convenience.

Indonesia E-Commerce Market Trends:

Increasing Penetration of the Internet and Smartphones

The widespread availability of affordable smartphones and improved internet connectivity are making online shopping accessible to a larger section of the population which is driving significant growth in the e-commerce sector. According to the data from the World Health Organization (WHO), in Indonesia, the current population is 277,534,117 as of 2023 with a projected increase of 14% to 317,225,208 by 2050. For instance, in January 2024, the Indonesian Internet Service Providers Association (APJII) reported that the Internet penetration in India has risen from 78.1% in 2023 to 79.5% in 2024 based on its latest survey. This is expected to boost the Indonesia e-commerce market forecast over the coming years.

Rising Disposable Income and Middle Class

The expanding middle class population base of Indonesia, with their increasing disposable income, is increasingly turning to e-commerce for its convenience, variety, and competitive pricing which is boosting the demand for online goods and services. For instance, the World Bank report titled “Aspiring Indonesian Expanding the Middle Class” stated that 1 in 5 Indonesians is a part of the middle class. This middle class is growing faster compared to the other groups. Based on the report, there are 28 million (10.7%) Indonesian people who fall into the poor group. A total of 61.6 million (23.3%) people fall into the vulnerable group. There are also 53.6 (20.5%) million Indonesian people who belong to the middle class and there are 3.1 million (1.2%) who are classified as upper class. This is fueling the Indonesia e-commerce market statistics significantly.

Growing Digital Initiatives and Government Support

Government initiatives including the “Making Indonesia 4.0” program, aim to enhance digital infrastructure and promote the adoption of e-commerce, providing a conducive environment for market expansion and innovation. For instance, the Government of Indonesia (GOI) is pushing its digital government strategy one step further after President Joko Widodo issued Presidential Regulation Number 82 of 2023, the Acceleration of Digital Transformation and Integration of National Digital Services on 18 December. This rule will be a key reference for government agencies in creating public service applications. The Presidential Decree also appointed the Security Printing and Minting Corporation of Indonesia (Peruri) to act as the government's technology agency (GoveTech). According to the Presidential Decree, the government has determined 9 priority superapps that aim to support nine public services. These super apps will cover integrated public services as well as essential digital public infrastructure services.

Indonesia E-Commerce Market Segmentation:

IMARC Group provides an analysis of the key trends in each segment of the market, along with forecasts at the regional and country levels for 2024-2032. Our report has categorized the market based on type.

Breakup by Type:

• B2C E-Commerce
  • Beauty and Personal Care
  • Consumer Electronics
  • Fashion and Apparel
  • Food and Beverage
  • Furniture and Home
  • Others
• B2B E-Commerce
   

The report has provided a detailed breakup and analysis of the market based on the type. This includes B2C E-commerce (beauty and personal care, consumer electronics, fashion and apparel, food and beverage, furniture and home, and others) and B2B E-commerce.

In the market, the demand for B2C e-commerce is influenced by the increasing Internet and platform usage, allowing easier access to online shopping. The rising disposable income enhances purchasing power across beauty and personal care, consumer electronics, fashion and apparel, food and beverage, and furniture and home sectors. Social media influence and digital marketing strategies boost consumer engagement and sales in these categories.

The rising digital transformation of businesses seeking efficiency and cost savings is further driving the demand for B2B e-commerce in the market across Indonesia. Improved Internet infrastructure and increasing adoption of digital tools facilitate seamless transactions. The rise of small and medium enterprises (SMEs) expands the market, as they increasingly prefer online procurement for convenience and wider reach.

Breakup by Region:

• Java
• Sumatra
• Kalimantan
• Sulawesi
• Others
   

The report has also provided a comprehensive analysis of all the major markets in the region, which include Java, Sumatra, Kalimantan, Sulawesi, and Others.

The demand for e-commerce in Java is driven by Internet connection and smartphone penetration which is facilitating online shopping. The high population density and urbanization of Java are providing a large customer base. The growing middle class with increased disposable income is boosting the demand for diverse products. Efficient logistics and delivery networks enhanced physicality and community. According to the Green Data Centre Indonesia, Java has the highest number of Internet users at almost 40% in Indonesia.

In Sumatra, the demand for e-commerce is influenced by improving Internet infrastructure and increasing smartphone penetration, making online shopping more accessible. According to the Green Data Centre Indonesia, after Java, Sumatra is next with about 30% of Internet users in Indonesia. The expanding logistics network enhances delivery efficiency across the island. The rising middle class and growing disposable income boost consumer spending on e-commerce platforms.

The expanding Internet and smartphone penetration, improving access to online shopping which is driving the demand for e-commerce in Kalimantan. The development of logistics and transportation infrastructure improves delivery efficiency, catering to dispersed populations. Government initiatives promoting digital economy adoption and the rising influence of social media and digital marketing also contribute to e-commerce growth.

In Sulawesi, the demand for e-commerce is fueled by growing smartphone usage and improving Internet connectivity, facilitating online shopping. Government initiatives supporting digitalization and the increasing influence of social media and digital marketing further stimulate e-commerce growth. The convenience and variety offered by online shopping appealed to the diverse consumer base in Sulawesi. Economic development and rising disposable income boost consumer spending on e-commerce platforms.

Competitive Landscape:

• The report has also provided a comprehensive analysis of the competitive landscape in the market. Competitive analysis such as market structure, key player positioning, top winning strategies, competitive dashboard, and company evaluation quadrant has been covered in the report. Also, detailed profiles of all major companies have been provided.
• The competitive landscape of Indonesia e-commerce market is highly competitive, and dominated by key players such as Shopee, Lazada, and Tokopedia, which offer exclusive product ranges and robust logistics. Local giants including Blibli and Bukalapak also hold significant market shares. The competition is intensified by global entrants like Amazon and Alibaba, pushing innovation and customer service improvements. For instance, in April 2024, Igloo announced a collaboration with Tokopedia to make purchase protection products more accessible and convenient for consumers across Indonesia. This collaboration aims to reach 99% of districts and more than 14 million micro, small, and medium enterprises (MSMEs).

Indonesia E-Commerce Market News:

• In February 2024, a tie between TikTok Shop and Tokopedia is set to reshape Indonesia's online shopping space and could set a new global benchmark, with observers posting an acceleration of the trend toward continuous commerce.
• In March 2022, Modalku, as a digital funding platform in Indonesia, officially collaborated with Lazada Indonesia (Lazada) to reach a total of 10s of thousands of permanent employees and Courier partners (frontliners) who are at the forefront of logistics at Lazada. This collaboration is expected to be able to increase business productivity through Employee Capital facilities for all permanent employees, as well as Lazada courier partners as logistics vanguard to support daily operations.
• In April 2024, Southeast Asia e-commerce platform Lazada established a strategic partnership with Indonesian e-commerce comprehensive service provider Aha Commerce. This collaboration aims to encourage local brands to transform to digital and make Lazada a suitable platform for local brands and sellers to develop their e-commerce businesses.

Indonesia E-Commerce Market Report Scope:

Key Questions Answered in This Report:

• How has the Indonesia e-commerce market performed so far, and how will it perform in the coming years?
• What has been the impact of COVID-19 on the Indonesia e-commerce market?
• What is the breakup of the Indonesia e-commerce market on the basis of type?
• What are the various stages in the value chain of the Indonesia e-commerce market?
• What are the key driving factors and challenges in the Indonesia e-commerce market?
• What is the structure of the Indonesia e-commerce market, and who are the key players?
• What is the degree of competition in the Indonesia e-commerce market?

Key Benefits for Stakeholders:

• IMARC’s industry report offers a comprehensive quantitative analysis of various market segments, historical and current market trends, market forecasts, and dynamics of the Indonesia e-commerce market from 2018-2032.
• The research report provides the latest information on the market drivers, challenges, and opportunities in the Indonesia e-commerce market.
• Porter's five forces analysis assists stakeholders in assessing the impact of new entrants, competitive rivalry, supplier power, buyer power, and the threat of substitution. It helps stakeholders to analyze the level of competition within the Indonesia e-commerce industry and its attractiveness.
• The competitive landscape allows stakeholders to understand their competitive environment and provides an insight into the current positions of key players in the market.