Indonesia’s e-commerce market is booming. Already the largest in southeast Asia, the market grew almost 50% in 2020,¹ while cross-border e-commerce purchases by consumers in Indonesia increased eight-fold in 2019.²

And it still has plenty of room to grow. Indonesia is the fourth largest country in the world by population, with 275 million people. What’s more, they’re young; the average age is 31 years old and 40% of the population is under the age of 25.³ They’re digitally savvy too, spending an average of four hours per day online on their mobile devices – above the global average of three hours and 13 minutes.⁴

During the Covid-19 pandemic, the government and the Indonesian E-Commerce Association rolled out programmes for around 2,500 SMBs, providing training on how to use e-commerce platforms to increase sales.⁵

With the local e-commerce market becoming more mature and consumers growing used to making purchases online, that could mean more opportunity for overseas SMBs looking to break into the market.

the proportion of the Indonesian population that bought at least one product online in 2020¹

It’s worth understanding the options you may need to provide to make your business attractive to local customers.

Look beyond card payments

According to JP Morgan’s figures, cards are the most common way to pay for goods online in Indonesia, accounting for 33% of the total in 2019. However, many Indonesian consumers prefer alternative methods including bank transfers (29% of the market) and digital wallets, such as PayPal (16%).² It’s worth understanding the options you may need to provide to make your business attractive to local customers.

Be aware of regulation changes

The recent boom in e-commerce sales has left authorities in Indonesia playing catch-up. In 2020, the government lowered the threshold for import taxes on cross-border e-commerce purchases, from $75 to $3, in a bid to help local businesses stay competitive.⁸ Experts have also called for improved regulations to strengthen consumer protection and serve different business models in the sector.⁹ With a fast-moving regulatory environment, it’s crucial to ensure you have the most up-to-date information on the market. More information on exporting to Indonesia can be found here for UK businesses, and here for those exporting from the EU.

Learn the local social media trends

Many e-commerce shoppers in Indonesia either make or plan their purchases from their smartphone, so having a presence on the social channels they use can help your business win customers. But it’s also worth researching the specific market trends in Indonesia – for example, the growing use of social media influencers,¹⁰ and the ways businesses are using messaging apps to interact with customers.¹¹