Google: Indonesia will dominate Southeast Asian ecommerce

Photo credit: Leeta Luminate.

Opportunities in Indonesia’s digital economy continue to look rosy – if not better than expected – according to a study by Google and Temasek.

The US search giant and Singapore’s tech investment vehicle Temasek released a report covering all of Southeast Asia in May.

Yesterday they presented new, Indonesia-specific material.

Internet usage

People in Southeast Asia, including Indonesia, are coming online at a fast pace – that’s no news. In a few years, we’ll hit a saturation point – when pretty much the entire population can access the internet (hence the graph doesn’t project further than 2020.)

The question relevant to digital entrepreneurs is: how many people are spending money online – for example on travel sites, or ride-hailing apps?

Google’s and Temasek’s study found that in Indonesia last year, 18 million people fell into the category of online buyers.

That’s about 7 percent of the population. It paints a more optimistic picture than a 2014 study by SingPost, which estimated the number of online shoppers to be at 8 million by 2016.

With online buying, there’s ample room to grow before hitting a saturation point, but it’s a process that will last more than a decade, according to Google, even at the 21 percent growth rate it foresees.

Ecommerce is Indonesia’s biggest opportunity

The study specifically looks at four digital economy sectors: ecommerce, online travel, ride-hailing, and digital ads.Ecommerce is by far the largest opportunity with the highest anticipated growth rate: 39 percent annually.

What’s more, Google says by 2025, Indonesia will dominate 52 percent of all ecommerce activity in Southeast Asia. The main reason for this, of course, is Indonesia’s massive population, which makes up almost half of Southeast Asia. But another factor is Indonesia’s island geography. It will make ecommerce an inevitable factor in the future distribution of goods.