Asia's Next Giant
Recent estimates by Macquarie Bank suggest the Indonesian market has grown 60%–70% annually since 2014 and will expand from US$8 billion in 2016 to US$60 billion in 2020. This is expected to generate new opportunities for e-commerce sites and their businesses. Several factors have ushered in the rise of Indonesia’s e-commerce industry. Increasing smartphone and internet penetration, intensive foreign investment in leading platforms, the growing Indonesian middle class, and the more recent overhaul of online payments have all contributed to market growth and the sophistication of local players. Positive regulatory tweaks by the Indonesian Government also auger well, especially for Australian businesses looking to access online consumers. The rapid evolution of the market presents a real opportunity for Australian businesses who have typically faced a difficult process to gain access to Indonesian consumers. Complex local operating conditions, combined with a difficult customs and regulatory environment, have created obstacles for businesses looking to sell their wares in the archipelago.
Like China 10 years ago, E-commerce offers the possibility of much easier access by lowering or eliminating many of these hurdles, making it possible to access Indonesia from afar through cross-broder strategy.
Australian businesses should already be looking at the possibilities afforded by the growth in Indonesian e-commerce. Accessing Indonesian e-commerce still has its challenges, but Australian businesses existing relationships and operations in the archipelago should have an e-commerce strategy in place. Australian businesses without existing relationships or connections to Indonesia should still look seriously at entering its e-commerce market. However, the viability of doing so will depend on how well they can navigate ongoing regulatory barriers and their ability to furnish products that suit the tastes of Indonesian consumers. These products should also take cultural and religious differences into consideration. For example, some e-commerce markets may only accept Halal-certified products. Businesses without connections to Indonesia have some options open to them, and this report discusses fundamental changes that may occur in the next 12 months that could give them unprecedented access to Indonesia’s 100 million-plus internet users.
It is vital for any serious long-term businesses to start planning and testing the market in Indonesia through e-commerce strategy, digital marketing and cross-border shipment of products, as Indonesia is set to become the 3rd largest middle-income population among emerging markets after China.
Source and adapted from: Austrade: E-commerce in Indonesia - A Guide For Australian Business 2019