Indonesia’s e-commerce market tipped to exceed $46 billion

E-commerce transaction values are growing steadily in Indonesia, with the market size up from $18.2 billion in 2020 to $40.8 billion last year.

According to data and analytics company GlobalData, this represents a compound annual growth rate (CAGR) of 22.3 per cent.

With such a growth pace, GlobalData forecasts the Indonesian e-commerce market to reach $46.6 billion in value this year.

Government initiatives to improve digital infrastructure and online transaction security have contributed to this market growth, the research house reports.

To protect traditional businesses and online marketplaces, and to reduce online fraud, the Indonesian Ministry of Trade issued a ban on social media e-commerce transactions in 2023, improving consumer confidence.

GlobalData’s 2024 Financial Services Consumer Survey found that alternate payment methods held a market share of 49.3 per cent in the e-commerce payment landscape due to their convenience, speed, and security.

Mobile wallets such as GoPay and Dana have gained popularity among consumers, with GoPay seeing 30 million downloads last July.

The survey found that bank transfers held a 30.2 percent market share, particularly for high-value transactions, attributed to perceived security and the direct nature of the process.

The use of cards for e-commerce transactions was just 7.5 percent, according to the survey.

A preference for credit cards was seen due to the benefits offered, such as reward programs, cashback, interest-free installment payment options, and discounts.

“Looking ahead, Indonesia’s e-commerce market value is projected to grow at CAGR of 12 per cent from 2025 to 2029. The growth will be driven by several key trends, including the continued expansion of digital payment solutions, the increasing penetration of smartphones and internet connectivity, and the rising demand for convenient and secure online shopping experiences,” said GlobalData banking and payments analyst Siddharth Das.