E-Commerce in Indonesia: Outlook & Retail Trends in 2023

Last Updated: October 30, 2023


How's The Development of E-Commerce in Indonesia?

E-commerce in Indonesia has experienced significant growth over the past decade. From 2012 to 2022, total e-commerce sales in Indonesia increased from $140 million to $15.6 billion, representing approximately 3.4% of total retail sales.

This 10-year growth of 11,143% has dramatically changed the landscape of Indonesia. While being a poorer infrastructure-ready economy, comparing with its neighboring countries, we can still see e-commerce continue to grow dramatically over the coming years.

Over the past decade, the growth has been driven primarily by three factors: the expansion of the middle class, increased access to the internet and mobile devices, and the rapid development of fintech and alternative financing options. These factors have increased the availability of goods and services and facilitated the meeting of rising demand.

The Covid-19 pandemic has played a major role in the recent surge of e-commerce growth in Indonesia. Since 2020, the penetration of e-commerce has doubled in just three years. The government’s restrictions on physical retail and the public’s fears of the virus have led many consumers to turn to e-commerce as their primary means of shopping.

It is interesting to note that during the multiple waves of the Covid-19 pandemic from 2020 to 2022, small electronic devices such as phones, tablets, and other consumer electronics experienced the most growth. Groceries such as food and drinks also saw increased purchasing, and this behavior seems to have persisted among many Indonesian consumers even after the pandemic.

The majority of e-commerce penetration in Indonesia is concentrated in the Java region, which accounts for about 76% of buyers, followed by Sumatra (14%) and Sulawesi (4%). Digital shoppers in Indonesia are predominantly millennials between the ages of 20 and 37, comprising about 88% of the total. Men make up the majority of online shoppers in the country, accounting for around 53% of digital buyers. Almost all customers in Indonesia access e-commerce through smartphones, while a small minority use personal computers. Despite Indonesia’s weaker infrastructure compared to its neighbors, the increasing penetration of smartphones, rising GDP, growth of the middle income population, and increasing tech-awareness are contributing to the rapid growth of e-commerce in the country. The pandemic has also led consumers of all income levels to turn to online shopping, further driving the growth of e-commerce in Indonesia.

Online & Offline Retail in Indonesia
Unit: Billion USD
Online & Offline Retail Growth in Indonesia
Unit: %
Retail Value Added (% of GDP) in Indonesia
Unit: %
E-Commerce Sales a a % of Retail in Indonesia
Unit: %

Competition Among E-Commerce Platforms in Indonesia

In 2021-2022, major e-commerce platforms in Indonesia have intensified their competition by expanding their capabilities in areas such as transportation (for example, Gojek and Tokopedia) and payment methods. These collaborations and partnerships allow the platforms to offer lower prices to consumers, which has attracted more customers to e-commerce, particularly given the negative impact of Covid-19 on purchasing power. In addition, reduced shipping costs from logistics partnerships are likely to encourage more frequent purchases throughout the year, reducing retailers’ reliance on seasonal sales periods or large basket purchases.

In Indonesia, Tokopedia and Shopee are the most dominant players in the e-commerce market, holding a combined market share of 65%. It is worth noting that a few years ago, Alibaba, along with their consumer-facing brand Lazada were the leading players in the Indonesian market, but their failure to cultivate the local market has ultimately cost them their dominant position.

Retail & E-Commerce Trends in Indonesia

  • Outside of Java: It is expected that several regions in Indonesia, particularly those outside of Java, will contribute to a significant increase in the number of e-commerce transactions in the future. The increasing number of smartphone users and the continued introduction of innovative digital transaction methods will be key drivers of this increase in the forecast period.
  • Social Commerce: The same way that China surpassed every other countries in digital payment because of its less-developed infrastructure in terms of ATM and credit/debit cards payment. Now in Indonesia, more and more customers are switching to social commerce during the Covid-19 pandemic, as many people who have lost their jobs have turned to selling products online through platforms like WhatsApp and Instagram to generate income. This has led to a growing number of small businesses selling products online. Additionally, brands have increasingly used these platforms to reach consumers who were unable to visit physical stores due to closures and social distancing measures. One popular method has been conducting sales through messaging apps like WhatsApp.
  • The Korean Factors: With rise of the k-pop culture in Indonesia in the past few years, more and more retailers are tapping into the popularity of South Korean (Korean) trends, also known as hallyu in Indonesia. Tokopedia’s ambassadors, for example, included the globally famous South Korean music groups BTS and Blackpink, and the brand hosted the Tokopedia WIB (Waktu Indonesia Belanja, or “time for Indonesians to spend”) K-Pop Awards concert featuring performances from several South Korean music groups. This demonstrates the extent to which the brand leveraged the popularity of these artists to build loyalty among consumers. In addition, Lazada employed South Korean actor Hyun Bin as an ambassador, further highlighting the strong influence of Korean culture in Indonesia.

Financial Environment

Source: World Bank, Payment Providers, eMarketer

In Indonesia, There are about 2.4% of people use credit cards, and 30.8% of people use debit cards. While there are 9.9% of people purchase on the internet, there is only 7.7% of people with online banking accounts.

% of People With Financial Accounts
Unit: %
% of People with Credit Cards
Unit: %
% of People with Debit Cards
Unit: %
% of People Exchange Through Digital Channels
Unit: %
% of People Buy Through Online Channels
Unit: %
% of People with Internet Banking Accounts
Unit: %
% of People Pay Utility Bill Online
Unit: %
E-Commerce Sales as a % of Total Retail
Unit: %

Weekly Use of E-Commerce

Source: Statista Digital Market Outlook

E-Commerce Driving Factors

Source: GWI.com (Q3, 2021)

For E-Commerce Customers in IndonesiaWhat are the major driving factors to purchasing online?

% of respondents think is their main drivers
Source: Multi-select survey

Consumer Goods E-Commerce in Indonesia

Source: GWI.com (Q3, 2021)

There is 158.6 million consumer goods e-commerce users in Indonesia, and they spend total of around 53.81 billion USD dollars in 2021. That makes a per capita spending on consumer goods e-commerce of around  339 USD. Also, in those e-commerce users, about 63.8% of them purchase through their mobile phone.

Market Size of Consumer Goods E-Commerce
Unit: Million USD

Digital Media E-Commerce in Indonesia

Source: Digital Market Outlook 2021
Market Size of Digital Media E-Commerce
Unit: Million USD
  • Retail Sales & E-Commerce Penetration: eMarketer, Edge By Ascential, Euromonitor Retail Passport
  • Currency: Based on IMF Data 2022/12
  • Consumer Behavior: Statista Digital Market Outlook
  • Retail Channels: Euromonitor, Local Association, Financial Reports (Of Relevant Retailers)
  • Data Compilation: OOSGA.org
  • Analysis: OOSGA CR Team Analytics
Author: CR Team

Our consumer research practice tracks what customers spend and how they make decisions across major economies in the world.

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