Social commerce is gaining momentum in Indonesia

Despite a slowdown in fundraising across Asia, venture capital firms are betting on Indonesia’s emerging social commerce platforms.

For the past four months, the industry has become one of the top-funded verticals in the country, after transportation, education, fintech, and ecommerce, according to Tech in Asia data.

An offshoot of ecommerce, social commerce startups build a network of offline agents that promote and sell products to people in their communities. The business model was started in China by platforms like Pinduoduo and is just beginning to take off in Indonesia.

The sector is also seeing strong demand amid the Covid-19 pandemic as most stay at home and buy their daily necessities online.

According to Erika Dianasari, a partner at Alpha JWC Ventures, social commerce startups are addressing a need that traditional ecommerce sites like Tokopedia, Shopee, and Lazada have yet to fulfill. 

“Ecommerce penetration in Indonesia is still low,” says Dianasari. “That’s why the opportunity for social commerce is very big.” A recent Goldman Sachs report supports this statement, revealing that ecommerce penetration for physical goods is only 7% of the total retail market in the country.

Focus on specific products

A hybrid model