Indonesia: Becoming the World’s Most Active Digital Ecosystem

15 Nov 2021   |  Indonesia

Indonesians are among the world's most active social media users, with a rapidly growing digital ecosystem that includes online commerce, ride-sharing services, and financial technology services. The unique consumer behavior has created exponential business opportunities in the digital realm, eventually providing new jobs, easing accessibility, and enabling more excellent connectivity with the global digital ecosystem. The country is already home to the most Unicorns in Southeast Asia. The top e-commerce in Indonesia include the renowned Bukalapak, Tokopedia, Traveloka, and Gojek.

The mobile-first market is critical in the e-commerce market in Indonesia, positioning it to grab an eight-fold growth at the end of 2022 to reach USD 65 billion spendings. With 83 percent internet users adoption and USD 620 average individual annual spending at the end of the projection. The e-commerce development in Indonesia has so far impacted the country's macroeconomic conditions in four critical benefits.

Financial Benefits

Indonesia: Becoming the World’s Most Active Digital Ecosystem

As the largest e-commerce market in Southeast Asia, e-commerce transactions covered over 30 percent of all goods transacted in the country. A significant boost after the COVID-19 pandemic forced people to opt for home deliveries and online shopping. Although over half of the country's e-commerce spending came from its capital city, Jakarta, e-commerce expects to spread its coverage outside of the Java island with double-digit growth annually. Indonesia currently expects the rate of consumption to grow beyond 30 percent annually in the post-pandemic era.

Job Creation

By the end of 2022, the Indonesian e-commerce sector will facilitate over 30 million jobs with expansive IT engineers and programmers fields. Additionally, indirect fields such as supporting roles in the e-commerce companies would also contribute to the country's job creation alongside the growing numbers of Micro, Small, and Medium Enterprises (MSMEs) encouraged by the presence of the platforms.

Buyer Benefits

The e-commerce presence has helped Indonesian consumers by providing accessibility across the archipelago, with 11 to 25 percent saving compared to if the consumers buy from conventional retail. The reason being conventional stores operate on a multilayered supply chain process that requires many players to jump in the journey of the goods to stores outside of the Java island. Similarly, consumers within the Java region would also benefit from saving around 4 to 14 percent supported by the highly developed distribution networks.

With the potentials brought forth by the Indonesian e-commerce platform, the industry's success and growth rely on a few critical success factors and its ability to resolve fundamental challenges. Indonesia needs to ensure reliable logistics and infrastructure, as consumers demand seamless deliveries for their e-commerce orders.

The robust development of e-commerce platforms also puts the urgency of secure and scalable payment methods, emphasizing fintech adoption and collaboration with significant e-commerce players. Today, Indonesian financial services merely cover 49 percent of the country's residents, lagging back compared to Malaysia and Thailand with 85 and 82 percent, respectively.

E-commerce in Indonesia has already shown its significant effect on the country's economic conditions, with many to come in the future given the supportive interrelated sectors and active consumer behavior. However, the country's journey towards becoming one of the world's most dynamic digital ecosystems relies on its ability to resolve fundamental infrastructure challenges that are long overdue.

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