Describes how widely e-Commerce is used, the primary sectors that sell through e-commerce, and how much product/service in each sector is sold through e-commerce versus brick-and-mortar retail. Includes what a company needs to know to take advantage of e-commerce in the local market and , reputable, prominent B2B websites.
Last Published: 2/4/2019

Overview

Mobile devices are the main means with which Indonesians carry out e-commerce.  Some online shopping malls report that about 70% of the online shoppers shopped on their mobile devices like smartphones rather than desktop computers. Air travel is increasingly being arranged through websites such as Tiket.com and Traveloka while accommodations are arranged through booking.com and even Airbnb. Global hospitality marketplace Airbnb recorded 904,600 guest arrivals in Indonesia in 2017, a growth of 69 percent from the previous year[1].  Another trend is for inhabitants in major cities to use applications such as Go-Jek to arrange for food delivery, cleaning service, massage, buying movie tickets, as well as its original purpose of ordering a motorbike or taxi for transportation.  

Indonesia's youth demographic – about 50% of the population is under 30 – and the growing middle class are driving the growing of e-commerce.  In 2016 Indonesians spent about $228 per user on online shopping.

Current Market Trends

In a country of 262 million inhabitants with over143.26 million internet users in 2017

Domestic eCommerce

Indonesia online retailing is dominated by a number of local wholesalers selling products. Blibli, Bukalapak, Zalora, Bhinneka, MatahariMall, Tokopedia, Traveloka, Tiket.com, Pegipegi are some of the leading online marketplaces in the country.  The rapid growth in the online marketplace has also contributed to the development of B2B eCommerce startup companies such as ralali.com and Bizzy.com.

Social Media

The capital of Indonesia has been named the world’s number one “Tweeting City”, with one of the highest number of active twitter users in the world.   Instagram, WhatsApp, Facebook, Line and Path are some of the more popular platforms.  According to eMarketer, almost 90% of Indonesia’

eCommerce Intellectual Property Rights

E-commerce remains governed by a complex set of laws and regulations. Some laws and regulations that apply to the e-commerce sector include:

  • Law No. 11/2008 on electronic information and transactions (ITE Law).  This law, which was intended to promote open and fair electronic commerce, has been criticized as creating investor uncertainty by failing to define key terms.
  • Law No. 7 /2014 on trade.
  • Bank Indonesia Regulation No. 20/6/PBI/2018 regarding E-money.
  • Minister of Communications and Information Technology Circular Letter No. 5 of 2016 on the Limitations and Responsibilities of Platform Providers and Merchants in E-Commerce Using User-Generated Content Platforms.  This circular letter established safe harbor protections for, and obligations of, e-commerce platforms for user-generated content and product offerings.
  • Minister of Communications and Information Regulation No. 23 of 2013 regarding Domain Name Management.

Online Payment

Although the Indonesian e-commerce industry is thriving, there is room for further growth. E-commerce sales are expected to reach 4.4% of total Indonesian retail sales by 2019. To build on this growth, issues with inadequate infrastructure, poor payment systems, and logistics should be addressed. For instance, although the number of credit cards increased to around 17.4 [3]million at the start of 2017, 80% of e-commerce payments are completed with bank transfers and only 2.5% with credit cards. This illustrates the need for a strong bank infrastructure that allows for online originating bank transfers.
In keeping with this need, Bank Indonesia has begun implementation of its National Payments Gateway. Under this scheme, the Bank limits the participation of switchers to four domestic firms, though foreign companies may participate as minority shareholders. More importantly for e-commerce, the central bank hopes that NPG implementation will increase financial inclusion and promote greater use of electronic payments for in person and online transactions. . Cross border transactions are currently still conducted through conventional banks or credit cards.
Domestic transaction switchers, eager to expand their capacity to meet the fast-growing demand, are increasingly looking to tech startups to help close the technology gap in payment systems and e-wallets, hoping to steer consumers ever more in the direction of cashless transactions.

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.