The Indonesia e-commerce market is growing at a fast pace and is expected to surge by 15.5% in 2024, driven by the ongoing shift of consumer preferences from offline to online shopping, finds GlobalData, a leading data and analytics company.

GlobalData’s E-Commerce Analytics reveals that Indonesia e-commerce market registered 18.3% growth in 2023 to reach IDR573 trillion ($37.6 billion). The market is set to increase at 15.5% to reach IDR661.9 trillion ($43.4 billion) in 2024.

Poornima Chinta, Senior Banking and Payments Analyst at GlobalData, comments: “Indonesia’s e-commerce market, one of the fastest growing in South East Asia, experienced sustained growth over the past few years supported by rising internet and smartphone penetration, increasing household disposable income, and the availability of secure online payment solutions. Online shopping festivals such as Black Friday, Cyber Monday, and Single’s Day have also contributed to the overall growth of e-commerce in Indonesia.”

Increased e-commerce activity in tier 2 and tier 3 cities, supported by advancements in digital infrastructure and logistics, is also driving this expansion.

To boost e-commerce sales, the Ministry of Trade in association with the Indonesian E-Commerce Association (idEA) organizes National Online Shopping Day (Harbolnas) every year in December. It has proved to be instrumental in boosting the e-commerce sales in the country. In 2023, sales from the Harbolnas event increased by 13% year-on-year to reach IDR25.7 trillion ($1.7 billion).

In terms of payment methods, alternative payment solutions lead e-commerce space with a combined market share of 42.4% in 2023, according to the GlobalData’s 2023 Financial Services Consumer Survey*. OVO, Go Pay and Dana are some of the popular alternative payment tools among the online shoppers, which have gained prominence due to their simplicity, speed, and convenience.

Bank transfers are the second most preferred payment method, accounting for 30.2% of total e-commerce payments value in 2023. This can be mainly attributed to the convenient and secured payment experience this payment method offers.

Cards account for a 17.4% share of e-commerce transaction value in 2023. Credit cards are more preferred than debit cards due to the value-added benefits they offer including interest free instalment payment options, reward programs, cashback, and discounts.

Despite the rise in electronic payments, over 10% of e-commerce purchases in the Indonesia are still made using cash. This highlights the traditional preference for cash among consumers especially among the unbanked, rural, and elderly population.

Chinta concludes: “Indonesia’s e-commerce market is expected to continue its upswing in near future. The market is anticipated to increase at a compound annual growth rate (CAGR) of 12.4% between 2024 and 2028 to reach IDR1,056.3 trillion ($69.33 billion) in 2028. Alternative payment solutions are expected to continue their lead driven by growing preference for fast and convenient payments solutions among the younger demographics.”

*GlobalData’s 2023 Financial Services Consumer Survey was carried out in Q2 2023. Approximately 50,000 respondents aged 18+ were surveyed across 40 countries.