Indonesian eCommerce boom

Indonesians are embracing online shopping at an astonishing rate.

The Indonesian eCommerce Association expects the total online market to treble between 2014 and 2016, worth Rp 283 trillion (US$24 billion) in 2016.

According to Bank Central Asia, Indonesia’s largest private lender, an Indonesian eCommerce boom will see spending rise an estimated 127 per cent this calendar year. And next year, growth will be as high as a further 80 per cent.

The head of BCA’s consumer card division, Santoso, says the bank recorded Rp 4.5

trillion (US$326.3 million) in eCommerce transactions in the first nine months of the year and he is confident it will reach Rp 5 trillion by the end of the year. Shoppers are using both credit and debit cards online.

Despite such figures, the Indonesian eCommerce market remains in relative infancy. Online shopping still accounts for just 0.5 per cent of sales. Consumers are wary of supplying card details online and a mere six per cent of Indonesians actually possess a credit card. Unreliable logistics infrastructure is a further barrier to growth, although this week’s agreement between Zalora and Pos Indonesia to have nearly 3000 of its post offices double as delivery and return points are a step towards addressing that issue.

Driving the current growth is the small percentage of Indonesia’s affluent consumers – especially those living in second tier cities who lack physical access to branded retail stores or range of products.

Next week, BCA will hold a three day long e-Shopping Carnival featuring 16 online merchants. It currently works with 420 eCommerce businesses and plans to add a further 150 to those ranks next year, including hotels, travel businesses and electronics vendors.

Meanwhile, Indonesia’s National Online Shopping Day (Harbolnas) will take place on December 12 with 140 eCommerce sites offering discounts of up to 90 per cent for one day. The online retail event is likened in magnitude to the Jakarta Great Sale.