Indonesia ranks among highest in B2C ecommerce growth potential

Indonesia, a market with high double-digit annual growth rates, is the second fastest growing B2C ecommerce market worldwide. However, logistics and payment infrastructure represent ecommerce development hurdles.

Indonesia ranks fourth globally in terms of population and has had a relatively low internet penetration, reaching under 30% in 2013. Internet penetration, however, is projected to top 100 million, with online shopper penetration also increasing by 2016.

A revised ecommerce legislation is expected to take effect in Indonesia in 2014 and, thus replace the current unclear regulations for the industry. Among the considerations in the proposed legislative package are provisions to strengthen consumer rights, such as the obligation of merchants to provide full information about their services and their legal status.

Mobile phones are the main device for internet access for more than half of the citizens and a quarter of all adults in the country have a smartphone. The highest potential for mobile commerce in Indonesia comes from instant messaging and social networking apps, which are among the most popular activities carried out on Indonesian smartphones.

Messaging apps, such as Line and KakaoTalk, have the ecommerce option integrated in their function. Shopping via mobile browsers and retail apps is also on the rise, with some merchants reporting as much as one third of total online sales coming from mobile users.

Social media is a salient means for online shopping, as consumers in Indonesia are among the most active worldwide in terms of social media usage. Users review products, communicate with merchants through social media and regard the social media as a convenient direct shopping channel.

The Indonesian ecommerce market has adopted models such as C2C forums and classifieds, C2C online marketplaces, B2C E-Commerce merchants and social network sellers..

Though online shopping is increasing across all product categories, apparel leads as the most purchased product category for both male and female consumers.

Check out our Cross-border Ecommerce Research section here for more info on country-specific ecommerce facts & figures, preferred payment methods, risk and fraud, as well as ecommerce legislation & regulation for mature and emerging markets.