Taking E-Commerce Global: Indonesia

In the first installment of Qordoba’s “Taking E-Commerce Global” blog series, we look at the Indonesian e-commerce market and provide key, data-backed tips for success in this rapidly expanding digital marketplace.

Next week, we’ll take a look at Mexico’s e-commerce landscape.



Indonesia is one of the fastest growing e-commerce markets in the world with retail e-commerce sales growth projected to average 37.1% between 2015 and 2020. The conclusion to draw from this is that Indonesian retail is booming and e-commerce isn’t far behind.

This means that there is a current and growing potential for companies looking for international expansion opportunities. In our analysis below, we’ll provide some insight demonstrating that companies interested in the Indonesian market should focus on localization, and emphasize enhancing their mobile experience; having a strong social media presence; and ensuring superior product and e-commerce localization for a satisfactory shopping experience.

Indonesia is the largest retail market in Southeast Asia

In 2016, the total retail market in Indonesia was 5x the size of Singapore. As we recently discussed, Indonesia is projected to grow significantly over the next 2-3 years. The sheer size of the population and retail market potential makes this a potentially lucrative target for brands and companies considering e-commerce expansion.


Indonesia’s retail sales are projected to grow 7% annually through 2020

Indonesia’s retail sector is projected to grow around 7% for the foreseeable future, indicating not only strong growth, but also a relatively stable market trajectory through 2020. 


Indonesia has the world’s 5th largest online population

In 2017, Indonesia is projected to have over 100 million individuals online for the first time in its history, which is a little under 50% of its population. Indonesia now has more internet users than Japan (6th in the world), and is just behind Brazil (4th in the world), according to the website Internet World Stats.  While the Internet user growth rates are leveling off, Indonesia’s online population will have more than doubled over the course of the decade, with lots of room to continue growing.


Smartphone users are catching up to the general online population in Indonesia

Due to the difficulty of expanding landline internet across islands in Indonesia, mobile internet and smartphone adoption will outstrip landline internet. Existing predictions already suggest that smartphone users and internet users are projected to track closely over the next 2-3 years. In fact, Bain and Co. published research suggesting that 80% of the total commerce in rural Indonesia takes place on a mobile phone. In urban areas, this statistic is expected to be over 30% by next year.


For brands and companies wishing to sell to Indonesians, it is critical to have a website that is optimized for mobile browsing and mobile commerce experiences, in addition to thoroughly localized mobile apps.

Facebook is popular with over 80 million people in Indonesia, with as many as 30% of online buyers shopping socially

Data from eMarketer (October 2016) indicates that Indonesians’ preferred social media site is Facebook, with more than 83.2 million users. In Indonesia, this is an important phenomenon. According to a 2016 research report by Bain and Co., two-thirds of Southeast Asians shop online, with upwards of 30% of that activity happening on social platforms like Facebook and Instagram.

While Facebook is certainly not the only option for targeting new customers, in Indonesia, it’s a significant opportunity for cross-border companies.


Indonesia’s business landscape is blooming with companies and service providers for almost every aspect of e-Commerce


Indonesia is an archipelago nation that consists of approximately 17,000 islands. While the country’s population is spread across these islands, there are significant concentrations on the four main islands. Java, the main island, is home to nearly 140 million people—roughly 60% of the total population. Add in the other most populous islands—Sumatra (47 million,) Borneo (15 million,) and Sulawesi/Celebes (17 million)—you’re looking at nearly 219 million potential customers.

17,000 islands might conjure images of nightmare shipping scenarios. Fortunately, there are numerous shipping options. Partnering with a reputable service provider to tackle logistics will be key.

Consider looking into the following logistics providers:

See the link to the Indonesian service providers and the ecosystem graphic here. There is a lot of useful information regarding logistics from the World Bank here: Indonesia’s Connectivity and Logistics Challenges: Findings from World Bank advisory work for IPC.

Indonesian shoppers overwhelmingly prefer a localized shopping experience


Know that Indonesians overwhelmingly prefer to shop locally for three reasons: variety, price sensitivity, and convenience. Moreover, when Bain and Co. analyzed the Net Promoter scores of local, regional, and global e-commerce players, they found that local and regional players generally performed better.

That doesn’t mean there isn’t a market in Indonesia for foreign products. Rather, it suggests that global e-tailers looking to compete with local companies will need to better localize products; price them for the market (or fill a niche); and ensure their presence is accessible to Indonesian consumers in a convenient and familiar manner. As such, it is important to localize in terms of language, as well as website look, feel, and layout.


The market growth in Indonesia is being driven through the robust retail sector and consumer demands, increasing mobile and internet penetration, as well as through social commerce.

There is a higher (and growing) payoff for efforts applied toward mobile optimization, social integration, and localization, as well as choosing the right local service providers for things such as fulfillment. There is huge potential for current and future success in the rapidly growing Indonesian marketplace for non-local firms.

Citations/ links:

  1. https://www.qordoba.com/blog/2017/03/2017-e-commerce-growth-forecast-3-takeaways/
  2. https://www.emstatic.com/images/chart_png460/204001-205000/204302.png
  3. http://travel.nationalgeographic.com/travel/countries/indonesia-facts/
  4. https://ecommerceiq.asia/indonesia-ecommerce-landscape-ecommerceiq
  5. http://na2.totalaccess.emarketer.com/Chart.aspx?R=189232&dsNav=Ntk:relevance%7cbarriers+to+purchasing+from+foreign+ecommerce+sites+%7c1%7c,Ro:0,Nr:NOT(Type%3aComparative+Estimate)
  6. http://www.bain.com/Images/BAIN_BRIEF_Can_Southeast_Asia_Live_Up_to_Ecommerce_potential.pdf
  7. http://isd-indonesia.org/wp-content/uploads/2015/12/Indonesia-Services-Dialogue-IPC-The-World-Bank.pdf
  8. http://www.internetworldstats.com/top20.htm


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