Report: Ecommerce penetration in Indonesia higher than in the US, France

Amid lockdowns and social distancing measures aimed at managing Covid-19, ecommerce has thrived across the world as the pandemic forced most people to stay and work from home. However, this boom has also accelerated the growth of online transactions.

Indonesia is no exception, with ecommerce hitting an all-time high in 2020, according to the latest report from research firm Momentum Works. The sector accounted for 20% of total retail sales in 2020, a significant rise from only 2% in 2016. It’s also higher than in countries such as the US, France, Denmark, Norway, Sweden, and Spain, another report said.

Momentum Works’ CEO Jianggan Li said that the firm derived the ecommerce sales figures after deploying an on-ground research team that conducted interviews and calculations to get an estimate of the total ecommerce transactions in the country. However, for other retail channels, it relied on third-party tabulated data.

The ecommerce sales data is aligned with findings from other recent reports such as the E-conomy SEA 2020 from Google, Temasek, and Bain & Company. It stated that the total ecommerce gross merchandize value (GMV) in Indonesia had reached US$32 billion last year.

On the other hand, Momentum Works’ report found that the total ecommerce GMV in the country is higher at US$40.1 billion during the same year. However, after the researchers excluded canceled orders, returned goods, and out-of-stock items, the total net sales of ecommerce stood at US$32.2 billion.

Pegging the ecommerce penetration rate at 20% is significant when it’s compared to latest report from eMarketer. This would place Indonesia in fourth place ahead of the US and France and after China, South Korea, and UK.

According to Momentum Works, ecommerce will continue to grow in Indonesia as new business models involving fresh groceries, consumer brands, and digital finance keep popping up around the ecosystem.

Homegrown marketplace Tokopedia and Sea Group’s Shopee are still at the forefront of the race to corner the country’s ecommerce sector. The companies have widened their lead over other contenders such as Lazada, Bukalapak, Blibli, and JD.com Indonesia, reported Momentum Works.

Li cited how each player has a unique advantage. For example, Shopee has a closed loop ecosystem with its own payment and logistics services, while Tokopedia’s merger with super app Gojek will boost its resources. On the other hand, Bukalapak’s Mitra program focuses on mom and pop shops across Indonesia.

However, the Momentum Works CEO also pointed out that all players tend to become similar in many aspects, such as their free delivery service, marketing content, and promotional efforts.