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Indonesia tops global list of e-commerce growth: Study
Indonesia’s e-commerce market still has ample room to grow thanks to its high internet penetration, according to the latest report on payments and e-commerce by United Kingdom-based financial services firm PPRO
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span>Indonesia’s e-commerce market still has ample room to grow thanks to its high internet penetration, according to the latest report on payments and e-commerce by United Kingdom-based financial services firm PPRO.
Titled High-Growth Markets 2018, the report puts Indonesia at the top of a list of 10 countries with the highest e-commerce market growth this year. According to PPRO, the domestic e-commerce sector sees a 78 percent growth annually, with a total value of US$7.2 billion a year — higher than its Southeast Asian neighbors.
In comparison, the Philippines experiences a 51 percent growth with a market value worth $1.6 billion and Vietnam sees a 32 percent growth with a market value of $2.6 billion.
However, the study also suggests that Indonesia’s high growth might be because its market is still relatively small compared to its peers’, despite having a huge number of people that have access to the internet — 103 million out of a total population of 257 million.
“Online sales [in Indonesia] only account for 2.4 percent of all retail sales, despite an internet penetration rate of 40 percent. This suggests ample room for growth,” the study said.
Compared to Mexico, which ranked second in the report, Indonesia’s average online spending is still low. Mexico, which recorded a 59 percent growth in e-commerce, had the higher annual online spending of $819 per person on average, compared to Indonesia at only $228 per person a year.
With 72 million connected to the internet, the country recorded a higher e-commerce market value of $16.22 billion a year.
Indonesia’s average online spending per person is also lower compared to countries like Argentina, Singapore, Colombia, the United Emirates Arab and Saudi Arabia, all of which have a smaller online population compared to the archipelago.
Experts said that online purchases in Indonesia were projected to grow further, in line with the exponential increase of smartphone penetration and internet access.
“Internet penetration with smartphones in Indonesia is increasing, e-commerce advertising is booming and many manufacturers and retailers are migrating online. So, the trend is going there; Indonesian people are rapidly consuming things online,” said Ade Setiawan Elimin, head of consumer and retail at PricewaterhouseCoopers (PwC) Indonesia.
A 2018 report on global consumer insight by consulting firm PwC states that “the frequency of online purchasing daily and weekly in Indonesia is higher compared to those in Southeast Asia”.
According to PwC, 35 percent of Indonesians make purchases through their smartphones or tablets daily or weekly, an increase of 10 percent from last year. Meanwhile, 27 percent of respondents make online purchases via their computers or laptops, up 5 percent from last year.
According to PwC Indonesia’s outlook, smartphone penetration will reach more than 60 percent of the population in 2019, up from 50 percent in 2017. It also found that 51 percent of respondent are likely and extremely likely to purchase groceries online over the next 12 month.
According to Sharly Rungkat from PwC Indonesia, Indonesia’s archipelagic geography will also drive people outside Java to shop online, as the availability of specific goods at offline stores was low.
“Another thing that is quite different in Indonesia is the rise of various digital services coming from e-commerce players,” she said. “For example, they also provide ways to top up mobile phone credits and pay for electricity bills, which leads to higher online purchases.”
