Indonesia eCommerce Explorer: People and Payments

pura ulun danu bratan temple in Bali, indonesia.

The island nation of Indonesia is home to more than 200 ethnic groups¹. With the world’s fourth-largest population and a GDP of over $1 trillion², this archipelagic country boasts the biggest economy in Southeast Asia – a region brimming with stunning natural resources and business opportunities. Although more than 40% of the Indonesian labor force works in agriculture, the largely agrarian economy has experienced steadily improving living standards as cities modernize and the government expands infrastructure into rural areas³. All this makes Indonesia an attractive new market for expanding ecommerce enterprises.

Indonesia at a Glance

Population: 267,663,435²
GDP per capita: $3,893.59²
Internet adoption: 54%²
Bank account adoption: 49%²
Credit card adoption: 4%⁴

Current State of the Indonesian eCommerce Landscape

Indonesia is the least developed ecommerce market in Southeast Asia, according to Forbes⁵. As of 2019, slightly more than 50 percent of Indonesians had internet access⁶, but this percentage will increase quickly as the government continues to develop regional infrastructure.

The Indonesian economy is projected to grow from around USD 7.8 billion in 2015 to USD 78.8 billion in 2025, with the strongest growth in ecommerce⁷. Travel, fashion, and homewares are currently three of the hottest online categories, with Shopee, Tokopedia, and Bukalapak being the three most popular ecommerce websites⁸. With more than 6,000 inhabited islands, delivering goods is more challenging in some areas of Indonesia, especially when delivery services must traverse mountains and large bodies of water⁹. Despite the challenges, a combination of improving local infrastructure, expanding internet penetration, and new financial technology make the Emerald of the Equator an enticing opportunity for intrepid companies.

Indonesian eCommerce – Key Data Points⁹

Business to consumer ecommerce market value: $13.6 billion
Mobile commerce market size: $7.1 billion
Primary mobile sales channel: apps ($5.3 billion in sales)
Top three online merchant segments: Travel, fashion, and homewares

Preferred eCommerce Payment Methods by Value

Although most online purchases are made using a credit card, overall credit card penetration is only 0.07 per capita⁹. This creates a significant business opportunity for ecommerce retailers that can tap into this growing Southeast Asian market by offering locally preferred payment methods.

Indonesian’s Favorite Payment Methods

Snapshot: Which payment methods have you used to pay for goods or services in the last month?

Forge Ahead with the Power of Fintech

When moving into the Indonesian market, it’s crucial to offer local payment options and prepare to accommodate local preferences. The percentage of Indonesia’s population that shops online is certain to rise along with incomes and expanding internet access. According to Google and Temasek, the ecommerce market is projected to be worth $53 billion by 2025⁹ — up from 13.6 billion today⁸. There are major opportunities waiting in Indonesia for businesses equipped with the right financial technology to collect and distribute payments cross-regionally like Rapyd Collect and Rapyd Disburse. With Rapyd, you can quickly optimize disbursement and checkout experiences everywhere you do business.

Sources:

Mark Stiltner

Mark Stiltner is a finance and fintech writer. From educating independent investment advisors on retirement plan management to helping families maximize their savings to educating businesses on global payment preferences, Mark has spent over a decade researching and educating audiences on complex financial topics. Mark has been a contributing author on blog articles and educational content for the Bank of Colorado, Pinnacle Bank, TD Ameritrade, First Data and Rapyd.