These startups could unlock ecommerce’s true potential in Indonesia

Many ecommerce platforms have hit a wall in Indonesia. Despite billions in US dollars in investments, traditional ecommerce players like Tokopedia and Shopee have a long way to go to win over the rural population. While people in Greater Jakarta are spending a third of their household expenditure online, those who live far from the country’s capital are still reluctant to do that, according to data from the Indonesian government and Google’s eConomy report.

	Greater Jakarta	Other cities
Total yearly consumption per capita	US$1,618	US$773
Online yearly consumption per capita	US$555	US$103
Offline yearly consumption per capita	US$1063	US$670
Online – offline consumption ratio	1 : 1.9	1 : 6.5
Total yearly consumption	US$56.6B	US$181.7B (3x Greater Jakarta)

Why do people in the countryside still prefer offline transactions? Rusli Abdullah, a researcher at the Institute for Development of Economics and Finance cites two reasons: lack of internet access and limited payment options. Only 22% of rural residents in Indonesia have internet access, including Facebook, Twitter, and WhatsApp, he says. And of those with access, only 42% of them have a bank account.

“Meanwhile, ecommerce transactions usually require people to deposit money in a bank account or mobile payment first,” adds Abdullah.

Even if rural people have bank accounts or can do mobile payments, their funds might be low because most of them sell agriculture products and have irregular daily or weekly income.

“That’s why they still prefer offline transactions and payment in cash – they only have to pay when the goods are there. It’s really different [from] private or public employees who have a monthly income and are less reluctant to deposit money,” Abdullah explains.

Despite these challenges and logistics-related issues, a prominent venture capitalist in Indonesia thinks that it’s only a matter of time before traditional ecommerce reaches the countryside and people’s behavior “will shift.”

See: Indonesia’s stunning growth doesn’t tell the full story

Marketing through agents

Offering cheaper prices

Efficient logistics

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