Market Trends of Indonesia E-commerce Industry
Penetration of Internet and Smartphone Usage Drives the Market
- Over the years, Indonesia has experienced a surge in internet penetration, with a large portion of the population accessing the internet. As per the report by The Indonesian Internet Service Providers Association, internet penetration in Indonesia has risen from 78.1 percent in 2023 to 79.5 percent in 2024. With the increase in internet penetration, the growing sales of new and updated smartphones with 5G features are also increasing in the country.
- Further, Looking at the growing demand for smartphones in the company, many smartphone providers are launching new products. For instance, in January 2024, Oppo announced that the company was launching the OPPO Reno 11F smartphone in Indonesia. The company has already tested the smartphone in the country and plans to launch it in 2024.
- Such investment by the companies is increasing the sales of smartphones in the country, and with the widespread availability of smartphones, Indonesians can shop online anytime and anywhere, providing them with unparalleled convenience. E-commerce platforms offer a wide range of products and services, allowing consumers to find what they need with just a few taps on their smartphones. According to GSMA, smartphone adoption in 2022 is 83 percent and is expected to grow 94 percent by 2028.
- In addition to this, as the internet continues to grow in the country, the use of the internet has grown among students; as per the report by the Central Bureau of Statistics, 77.5% of students aged between 5 and 24 years use the internet in the country. This student spends much time on social media platforms such as Instagram, Facebook, and WhatsApp, which are widely used in Indonesia and have become essential channels for e-commerce transactions. Many businesses leverage social media to promote their products and interact with customers, leading to the rise of social commerce in the country.
- Moreover, the Indonesian government has supported the digital economy and implemented initiatives to boost e-commerce growth. This includes improving internet infrastructure, promoting digital literacy, and incentivizing e-commerce businesses.
- Overall, the penetration of the internet and smartphone usage has created a favorable environment for the growth of e-commerce in Indonesia. As technology continues to evolve and connectivity improves further, the e-commerce market is expected to expand even more in the coming years.
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Fashion and Apparel Segment is Expected to Hold Significant Market Share
- Economic growth and urbanization in Indonesia have led to a burgeoning middle class with higher disposable incomes. As consumers become more affluent, they increasingly shop online for fashion and apparel products, seeking convenience and a wider selection of the products that are available online. E-commerce companies also provide an option for customers to browse several trending apparel and fashionable accessories. This increases customers' inclination toward the country's online shopping platforms.
- Furthermore, Indonesian consumers are becoming more fashion-conscious, influenced by global fashion trends and the proliferation of social media platforms. Many internet users in Indonesia spend their time on Instagram and Facebook and follow many social media fashion influencers who make people aware of the latest trends in fashion.
- Further, according to the Indonesian Internet Service Providers Association (APJII), internet penetration in Indonesia rose from 78.1% in 2023 to 79.5% in 2024. This growing awareness of fashion and style has fueled demand for diverse clothing and accessories available through e-commerce channels, which drives the overall demand for the product.
- Moreover, in Indonesia, there has been a growing sales of smartphones. With the increasing use of smartphones and mobile devices, mobile commerce (m-commerce) has emerged as a significant driver of online retail growth in Indonesia. According to the Information and Communications Technology Ministry, Indonesia is billed as the next big market in m-commerce after China and India, with an annual growth of 50%.
- Hence, Fashion and apparel retailers are optimizing their websites and apps for mobile shopping to cater to the preferences of mobile-savvy consumers. In addition, these companies have integrated their website into social media sites where customers can directly access the website through their social media accounts, helping the market's growth.
- Overall, the fashion and apparel segment in the Indonesian e-commerce market is poised for continued growth. As e-commerce continues to mature in Indonesia, fashion retailers are expected to innovate and adapt to meet consumers' evolving needs and expectations during the forecast period.
