The Jakarta Post
Management consulting company Redseer projected Indonesia’s online retail gross merchandise value (GMV), which indicates overall sales value, to surpass India’s this year, driven by a new cohort of e-commerce users amid the pandemic.
Redseer Southeast Asia partner Roshan Raj Behera said Indonesia’s 2020 e-commerce GMV will reach US$40 billion this year, the third-highest in the world and higher than India’s predicted $38 billion. Last year, India’s GMV was higher at $29.2 billion, ranking third, compared to Indonesia’s $23 billion, which followed suit.
The change is backed by Indonesia’s retail spending, which is 2.5 times higher than India’s, according to Redseer. Indonesia’s e-commerce marketing and subsidy outflow are also higher, aiding e-commerce adoption.
“Many people in Indonesia are looking to e-commerce platforms during the COVID-19 pandemic, and most of them will continue to spend money online,” he told The Jakarta Post on Monday.
Behera added that online shoppers grew to 85 million people during the pandemic, from 75 million pre-COVID-19.
Indonesia’s e-commerce gross GMV grew strongly in the second quarter this year, reaching $10 billion and driven by people switching to online platforms to buy consumable products such as health and personal care, groceries and fast-moving consumer goods (FMCG).
“The average order value in e-commerce platforms is down, but the average daily transactions are almost more than double,” Behera said, adding that people used to buy electronics online, which cost more but are bought less often than FMCG and groceries.
In the online shop payment, the company predicted that there will be more e-commerce collaborating with e-wallet platforms as payment through digital wallet has been rising since the fourth quarter last year.
A recent survey from MarkPlus revealed that ShopeePay has outperformed competitors due to its integration with Shopee as well as the company’s vigorous marketing and discounts.
Behera also said that e-commerce players would be most likely to continue advertising because the COVID-19 pandemic presented an opportunity to focus on online marketing.
“This is a year for ads investment. E-commerce players should focus on getting people on board as the acquisition cost for post-COVID-19 will be higher,” he said, adding that e-commerce would also still be giving out discounts to gain traction.
“Some players are more mindful about giving out discounts in correlation with their profitability. However, subsidizing purchases is not necessarily bad in the long run as it can lead to higher revenue in the future.”
A 2019 study by Google, Temasek and Bain & Company showed that e-commerce has overtaken online travel to become the biggest sector of the internet economy in Southeast Asia, with a trajectory to reach exceed $150 billion GMV by 2025. Of the regional value, Indonesia is predicted to gain the highest GMV share at $82 billion.