Mapping Indonesia’s ecommerce sector as funding hits 10-year low

Indonesia has long been viewed as a promised land for ecommerce.

However, the growth of the ecommerce industry in Southeast Asia’s largest economy has slowed down recently. According to the latest e-Conomy SEA report, the sector’s gross merchandise value (GMV) rose by just 7% between 2022 and 2023, a drop from the 20% growth it experienced between 2021 and 2022.

Nevertheless, ecommerce remains the largest contributor to Indonesia’s digital economy. The report estimates that GMV for this sector will reach US$82 billion in 2025, which will account for 75% of the country’s overall digital economy that year.

The key players that dominate the sector are general ecommerce platforms such as Shopee, Tokopedia, Lazada, Bukalapak, and Blibli. These five players are either publicly listed or part of a larger group that is, with Tokopedia under GoTo, Shopee under Sea Group, and Lazada under Alibaba.

However, GoTo sold 75% of Tokopedia to TikTok for US$1.5 billion at the end of 2023.

This investment was made by TikTok to revive its social commerce platform TikTok Shop, which had been shut down for two months in Indonesia.

Following the deal, TikTok Shop resumed operations in the country in December 2023 under a new brand, Shop Tokopedia.

## Competition up, funding down

The collaboration between TikTok Shop and Tokopedia, which is estimated by Momentum Works to have a combined market share of 39% in the Indonesian ecommerce industry, will enable the two firms to mount a stronger challenge to Shopee, which has a 40% share.

However, Shopee has not been sitting on its laurels. It has been actively reinvesting to boost Shopee Live and Video since the third quarter of 2023. Last December, 15% of Shopee’s physical order volume in Southeast Asia came from livestreaming.

The company also recently announced a partnership with YouTube, where creators on the video streaming platform can promote products from Shopee. These creators will receive a commission from each product sold, similar to affiliate programs commonly found on ecommerce platforms.

The fierce competition comes amid overall funding for Indonesian ecommerce in 2024 (up to October 1) being at its lowest in the past 10 years. This is in line with the decline in investment for the startup industry in the country this year.

Struggling models

Emerging models

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