Indonesia Investments often reports about Indonesia's blossoming e-commerce industry (a lucrative sector for investors). Online retail is growing rapidly in Southeast Asia's largest economy because both Internet and smartphone penetration are rising sharply in Indonesia, while expanding per capita GDP boosts people's purchasing power. But what do Indonesia's consumers actually buy online? A new survey from Google Indonesia gives some more information.
One of the characteristics of Indonesia - in terms of Internet behavior - is that a mobile device is generally used by the Indonesian audience to access the Internet. And as smartphone penetration has been rising significantly in Indonesia, e-commerce applications on smartphones have become the most popular option for Indonesia's online shoppers. Online marketplaces such as Lazada, Tokopedia, Bukalapak, Elevenia and Blibli are thé places to browse and purchase consumer products. These aforementioned marketplaces are all big and constitute established names and can therefore rely on a high degree of trust among online shoppers.
The Google Indonesia survey shows that beauty and baby products are the most popular items that are sold online in Indonesia. Therefore it is also no surprise that most online shoppers in Indonesia consist of women and mothers. CEOs of Tokopedia and Blibli.com confirmed this matter. Other products that are popular (browsed and bought by consumers) are gadgets, accessories, and apparel.
Meanwhile, Google data also show that mobile application platforms are key for business expansion because about 71 percent of Indonesian smartphone users use these applications to browse and for online shopping. About 92 percent of survey respondents indicated they would purchase products if the mobile application helps them find products easily.
Factors that explain Indonesia's rapidly expanding e-commerce industry are (1) demographic composition, (2) rapidly rising mobile phone as well as smartphone penetration, (3) rising Internet penetration, and (4) expanding per capita GDP.
Indonesia contains a young population with about half of the total population below the age of 30. For these younger generations of Indonesians it is easier to absorb an online lifestyle compared to the older generations. Moreover, with nearly 100 million smartphones in use in Indonesia while Internet penetration is reaching the level of 50 percent of the population, the younger generations obtain the tools to become online customers.