Indonesia is the richest country in Southeast Asia and the eCommerce market is predicted to grow the most in the coming years. While now might not be the right time for companies to enter the market, it’s worthwhile to learn more about the fundamentals and get your feet wet timely.
So why is Indonesia’s eCommerce market so promising? First, its middle-class affluent consumers (MAC) will grow from around 115 million in 2017 to 222 million in 2030.
At the same time, the number of smartphone and mobile internet users grows at a steady pace, which will allow for further digital penetration in the future.
Even if Indonesia seems promising on paper, it’s not the easiest market to enter due to language and cultural differences, import regulations, and different customer preferences.
To give you a helping hand, we have written this article where we discuss the following topics:
- Which products are in demand in Indonesia?
- Top eCommerce Platforms
- Trade Fairs for Exporters
- Shipping & Logistics
Which products are in demand in Indonesia?
The same as it goes in many other Southeast Asian countries, we see a particularly high demand for the following products in Indonesia:
- Consumer electronics
- Mom & baby
- Health and beauty
We’ve seen strong growth in the sales of fashion products in Indonesia. In 2019, fashion products accounted for around USD 4.7 billion of eCommerce revenues, a number that is predicted to increase to USD 10.4 billion by 20222.
Even if there are many non-branded goods available on Lazada Indonesia, for example, you can still find international brands such as Nike, Puma, and Adidas that have official stores on the website.
Scarves, bags, shoes, and sunglasses are just examples of products that are in high demand in Indonesia and will continue to drive the market.
The consumer electronics market is predicted to more than double from 2019 to 2022, going from a value of USD 3.8 billion to USD 7.9 billion. A pattern we see is that high-income earners primarily buy Western brands. Korea and Japanese brands, on the other hand, are popular among both mid to high-income earners.
The same as it goes in Asia as well as in Europe and the US, Chinese brands such as Oppo and Xiaomi are also well accepted.
Indonesia is the fourth-top market when it comes to sales potential for this product category. The market value will reach around USD 154 million by 2024, which might not be substantial to American or Chinese standards, but still significant in Southeast Asia.
Mobile Phones and Smart PhonesThe number of smartphone users will grow to almost 90 million by 2022 and this is the most widely purchased consumer electronic product online. Popular brands in Indonesia include Oppo, Xiaomi, Samsung, and Apple.
Mom & Baby
The mom and baby product industry is extraordinarily big in many Asian countries, including Vietnam, Indonesia, and China. According to research, 66% of all Indonesians buy these kinds of products online and 57% do so every month.
The same as it goes with many other items, one of the primary reasons why Indonesians buy the products online is thanks to the convenience. This is easier to understand for mom and baby products that either tend to be large/bulky and mothers are prone to get tired more easily.
Popular products include everything from baby food, baby gear, baby clothing, and more.
Top eCommerce Platforms
Over the years, different large-sized eCommerce platforms have entered the Indonesian market. Below I have listed the biggest ones available to local shoppers.
Tokopedia is a local and Indonesia-only eCommerce website that was founded in 2009. It’s currently the second-biggest website, just after Lazada, that recently surpassed Tokopedia in terms of monthly visits.
Tokopedia is not suitable for all foreign companies as it does not allows cross-border sales. Thus, you have to work with a reliable partner and register and import the products before these can be sold on the website.
Worth mentioning is also that Tokopedia is used primarily for C2C (customer-to-customer sales) and might not be suitable for more “sophisticated” cross-border eCommerce sellers.
Below you can find the most popular products sold on Tokopedia in 2018:
- Mobile & Electronics: 22%
- Fashion: 12%
- Groceries: 11%
- Lifestyle & Hobby: 10%
- Home and Living: 9%
- Toys: 9%
- Beauty: 5%
- Health & Wellness: 5%
- Sports: 4%
- Mum & Baby: 4%
Lazada is the biggest eCommerce website in Southeast Asia and is owned by Alibaba Group. The website was launched in 2012 and available in multiple countries, including:
- Vietnam (Lazada.vn)
- Singapore (Lazada.sg)
- Malaysia (Lazada.com.my)
- Thailand (Lazada.co.th)
- Philippines (Lazada.com.ph)
- Indonesia (Lazada.co.id)
A website is a suitable option for cross-border sellers, although the platform will need more time to develop and accept more product categories. At the moment, foods, beverages, and supplements are all restricted to be sold on the website.
Lazada is superior in the sense that it offers sophisticated and developed fulfillment options to local and cross-border sellers through Fulfillment-By-Lazada (FBL) and Lazada Global Shipping (LGS).
Besides, they offer multiple payment solutions including cash-on-delivery, which is proven to improve online sales by 1.5 to 3.5 times (!).
Shopee is one of the biggest eCommerce marketplaces in Southeast Asia and was founded in 2015. Tencent, the owner of Jingdong (JD), has a large stake in Shopee which means that it has moved outside of the Chinese borders to fight head-to-head with Alibaba.
What makes Shopee popular among eCommerce shoppers in Southeast Asia is thanks to the removed shipping fees and a large variety of products. Yet, Shopee caters to more C2C sellers and has a less developed fulfillment system for cross-border eCommerce sellers, compared to Lazada.
Most likely, Lazada will be your first option when you start out selling in Southeast Asia. After, you’ll add other websites like Shopee to your portfolio.
Trade Fairs for Exporters
Indonesia hosts several large-sized exhibitions each year that focus on different product categories. Below, we have listed one option for food products and also one for X products, due to the popularity of these product categories.
InterFOOD is held by SIAL Group, one of the biggest event organizers that have been around for around 50 years. The venue of the event is the Jakarta International Expo, Kemayoran, and first started in 2015.
Since then, the event has attracted thousands of visitors and exhibitors that want to enter the Indonesian market. Examples of products being displayed at the fair are:
- Food & Beverage
- Bakery & Confectionery
- Food & Hospitality Indonesia
- Food Ingredients
- Herbal & Health Food
Below you can find some key figures released after the event in 2018:
- Exhibitors: 1,458 (Foreign: 302, National: 1,156)
- Visitors 63,977 (Foreign: 3,979, National: 59,998)
The event is organized by COMEXPOSIUM from France and attracted visitors from 72 countries. For more information, I recommend you check their website.
Food & Hotel Indonesia (FHI)
FHI is one of the biggest F&B events in Indonesia and is predicted to attract 1,000 exhibitors and 30,000 potential buyers in 2021. With a floor area of 35,000 square meters, it’s undoubtedly one of the biggest exhibitions being held in Indonesia.
Products and services on display include:
- Food & Beverage
- Foodservice & Hospitality
- Tea & Coffee
- Bakery & Confectionary
- Wine & Spirits
The event is held at JIExpo, Jakarta, and should definitely be at the top of your list if want to learn more about the F&B market and make new connections.
Shipping & Logistics
You can either sell products cross-border or import the products for local sales. This will determine how you will store your products and manage last-mile deliveries.
In short, by selling cross-border, it’s comparably easy to import the products into Indonesia and you will most likely store them in a bonded warehouse close to the market. Janio has written an in-depth guide that explains this in greater detail.
If you sell cross-border with Lazada, for example, your first option will be to store the products in Hong Kong where Lazada’s fulfillment center is located. Lazada will then manage the pick & pack, shipping to Indonesia, and also last-mile deliveries.
It’s preferable if you use a website with developed fulfillment and shipping capabilities as this will strongly determine your customer satisfaction and sales success.
To get a better overview of how much it costs to ship from Hong Kong to Indonesia with Lazada, I’ve included a list below:
- 0.1 kg: IDR 35,382.80
- 0.2 kg: IDR 50,275.37
- 0.3 kg: IDR 65,185.21
- 0.4 kg: IDR 80,077.77
- 0.5 kg: IDR 94,987.61
- 0.6 kg: IDR 108,843.57
- 0.7 kg: IDR 123,753.42
- 0.8 kg: IDR 138,645.98
- 0.9 kg: IDR 153,555.82
- 1 kg: IDR 168,448.39