11 Jan 2021
Posted in Banking
Indonesia’s e-commerce market continues to surge amid COVID-19 pandemic, says GlobalData
Indonesia is a promising e-commerce market in Asia-Pacific, with several local and global players competing in the market. Rising Internet penetration, increasing digitalization and the proliferation of websites have been driving e-commerce growth. The COVID-19 pandemic has further accelerated e-commerce sales in Indonesia, according to GlobalData, a leading data and analytics company.
An analysis of GlobalData’s E-Commerce Analytics reveals that e-commerce sales is estimated to grow by 37.4% to reach IDR351.1 trillion (US$25.3bn) in 2020, compared to the pre-COVID-19 estimate of 22.2% for the same year. The figure is expected to rise at a compound annual growth rate (CAGR) of 19.2% between 2020 and 2024, to reach IDR707.6 trillion (US$51.0bn) in 2024.
Kartik Challa, Banking and Payments Senior Analyst at GlobalData, comments: “Online shopping is gradually becoming mainstream in Indonesia with more consumers preferring due to the convenience it offers. This shift became even more prevalent during the COVID-19 pandemic with strict lockdown and social distancing rules being in place.”
To push consumer spending during pandemic, the government collaborated with the Indonesian E-Commerce Association and rolled out programs for around 2,500 SMEs, providing training on utilizing e-commerce platforms for increasing sales.
While traditional payment methods such as bank transfers and cash are still widely used for e-commerce purchases, the use of alternative payments is on the rise.
As per GlobalData’s 2020 Banking and Payments Survey* for online purchases, ‘bank transfers’ is the most popular payment tool with 30.7% share in 2020. The COVID-19 outbreak is driving customers towards alternative payment tools such as OVO, GoPay, PayPal, Dana, DOKU, and LinkAja. As a result, cash share is expected to decline from 98.0% in 2020 to 96.9% in 2024.
Mr Challa concludes: “As Indonesia continues its digital transformation, the use of electronic payments, including cards and alternative payment solutions for e-commerce purchases, will rise as consumers are moving away from cash due to fear of getting infected.”
*GlobalData’s 2020 Banking & Payments Survey was carried out during Q1 2020. Over 43,000 respondents aged 18+ were surveyed across 44 countries.