18 Feb, 2022 Indonesian e-commerce market to grow by 23.8% in 2022, forecasts GlobalDataPosted in Banking
Indonesia e-commerce market is expected to register a robust 23.8% growth in 2022 and reach IDR420.8 trillion ($30bn) in 2022, forecasts GlobalData, a leading data and analytics company.
According to GlobalData’s E-Commerce Analytics, e-commerce payments in Indonesia are forecasted to rise further at a compound annual growth rate (CAGR) of 22.0% between 2021 and 2025, to reach IDR753.8 trillion ($53.8bn) in 2025.
E-commerce sales in Indonesia registered sustained growth over the last few years supported by rising Internet and smartphone penetration, growing middle class population, and proliferation of online merchants and payment tools. Furthermore, the COVID-19 pandemic made online shopping more appealing among consumers due to social distancing and lockdown restrictions.
Nikhil Reddy, Payments Senior Analyst at GlobalData, comments: “Online shopping is popular in Indonesia, a trend that has become more prevalent amid the COVID-19 pandemic. The recent outbreak of Omicron variant has further led to the resurgence of new cases, the highest in last six months, which is likely to drive online shopping.”
To drive consumer spending and push e-commerce sales, the Indonesian government in collaboration with 72 e-commerce companies launched a shopping event named ‘2021 Indonesia Made Shopping Day (BBI) Program’, which was held between 5 May 5 and 13 May 2021. Various discounts and cashbacks as well as free delivery were offered to encourage consumers to shop online.
The growth in e-commerce led to surge in the use of electronic payments, with alternative payments being the major beneficiaries. According to GlobalData’s 2021 Financial Services Consumer Survey*, alternative payment tools collectively accounted for 46.7% share in the total e-commerce value in Indonesia, up from 30.9% in 2020, with OVO alone accounting for 18.5% share.
The rise in e-commerce is also supporting the emergence of new payment models such as buy now pay later. The Indonesian buy now pay later market is crowded with several players including banks and payment service providers offering this service, some of them being Kredivo, Atome, SPayLater, and GoPayLater.
Digital-only bank TMRW is among the latest to join the list with the launch of its pay later solution TMRW Pay in December 2021, allowing users to pay for online purchases in instalments up to nine months at partner e-commerce platforms.
Reddy concludes: “The COVID-19 outbreak has accelerated consumers’ shift from in-store to online payments. The uptrend in e-commerce sales is likely to continue over the next few years, supported by government initiatives, growing consumer preference and improvements in payment infrastructure.”
*GlobalData’s 2021 Financial Services Consumer Survey was conducted online during Q1-Q2 2021 with 52,742 consumers across 42 markets globally