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E-commerce to grow moderately in 2021 onward: Report
Indonesia's e-commerce gross merchandise value grew by 65 percent to US$37 billion in 2020, driven by online shopping during the pandemic. The growth is expected to slow down this year.
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Employees sort out goods at a Lazada warehouse in Cimanggis, West Java, on Dec. 17. During Lazada’s three-day national online shopping (Garbolnas) held on Dec. 12-14, the online shop saw a 100 percent increase in sales compared with 2019. However, overall e-commerce sales were not as high as expected because PSBB relaxations returned some online sales back to brick-and-mortar stores. JP/Seto Wardhana (JP/Seto Wardhana)
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-commerce in Indonesia is predicted to continue growing in 2021, albeit at a more moderate pace compared to previous years as industry players scale back on costly promotion campaigns.
A study by management consulting firm Redseer showed that the country’s e-commerce gross merchandise value (GMV) grew nearly 65 percent last year to US$37 billion, driven by an influx of new users as large-scale social restrictions (PSBB) compelled more Indonesians to shop online.
The growth rate is expected to slow to about 40 percent this year with a 30 percent compound annual growth rate (CAGR) until 2025, according to the study.
“Essentially, a moderation in growth is expected over the next few years for sure and definitely slower growth in 2021,” Redseer Southeast Asia partner Roshan Raj Behera told The Jakarta Post on March 10.
Last year, 85 million Indonesians, or around 65 percent of the population, became online shoppers. Behera said that, with the already high e-commerce user baseline, further growth would be muted.
E-commerce players would also rely more on organic user growth in the future, especially from users outside of Java, and on the current average order values rather than on aggressively attaining new consumers or artificially boosting sales values, he added.
Online marketplaces, including Tokopedia, Bukalapak, JD.ID and Shopee, have been offering extensive discounts, subsidies and cashbacks over the years to attract and capture the biggest market share, a practice often called "money burning" marketing.
