Personal Reflections on the Indonesian Ecommerce Market

indonesia-e-commerce-thumbI recently went to Indonesia to visit some relatives and poked around in the ecommerce space a little while I was there. It was very interesting to see the visible progress in ecommerce within the country since my last trip, although there is also clearly a lot of progress still to be made.

This post is based on some real data, some discussions with locals, and a fair dose of personal conjecture. Opinions here are my own, and not necessarily those of my employer.

Indonesian Demographics

Many may not realize that the countries with the highest populations in order are China, India, USA, and then at number four comes Indonesia, with around 250 million people. So it comes in behind USA (310 million), but with only one tenth the land mass. Indonesia is made up of more than 17 thousand islands, although most of the population is on a few big islands, like Java (which holds 57% of population). Jakarta is the capital city and the center of commerce with a population of around 10 million people (but will traffic that feels much worse). I stayed in Surabaya, which is the second largest city in Java with a population approaching 3 million. Indonesia is a predominantly Muslim country (87% according to Wikipedia), with around 10% Christian population. Roughly half the population lives in rural versus urban areas.

Indonesia-mapWhile Indonesia has a large population, I had a question of the size of the “middle class”. This article from a few years back indicates the middle class is growing. Talking with locals, 70% was the figure they were now using. The annual income is still very low compared to the US, but definitely growing in a healthy way. In one strip of very low end accommodation I have driven past multiple times over the years, almost every “house” this last trip now has a TV. Indonesia seems to be growing, and with such a large population, feels like could really explode for ecommerce in the coming years.

Market Drivers

One of the drivers of ecommerce is that a lot of the country does not have the same access to products as available in the bigger cities. A significant number of purchases involved shipping from major cities to regional areas. This seemed to be especially true for electronics (such as TVs). Greater selection at lower prices is helping ecommerce adoption.

Personally I suspect ecommerce will pick up within cities as well as the reliability of delivery improves. There are two interesting tensions – many of the bigger shopping centers are nice, gleaming, multi-story complexes.  Tunjungan Plaza and Galaxy Mall are examples. So for some, going shopping is entertainment. Nice environment, air conditioned, places to eat and shop.


On the other hand, parking is limited and getting anywhere in the bigger cities takes a long time due to almost constant traffic congestion. As people get more time starved I believe ecommerce will increase.

Bargain hunters were also quite savvy about checking out online prices. Several younger people I talked to were quick to respond with which online sites were best for different areas (e.g. electronics versus fashion). No single person came up with a complete list of sites – there are quite a few around and being actively advertised on TV. The market feels somewhat fragmented still. (It reminds me a bit of the California land rush.) Maybe it was just the people I was talking to, but the idea of getting a “special offer” had real appeal to many people. This seemed unrelated to income level – it felt more cultural. Getting a better deal to some felt more important than the product itself!

Another driver was pure online businesses. These were typically small, but it felt like there were a lot more small businesses in Indonesia. Sure, there are larger companies like banks, but small(ish) businesses felt like the norm. (This might be less true in Jakarta, or it may simply be my lack of local knowledge and the circle of people I interacted with.) One example small business was someone trying out selling home-baked products online (cakes, pies, etc). They wanted a quick and simple site they could get up with low cost to list a handful of products. (As a faithful Magento employee, I of course mentioned Pixafy, but did mutter something about sites like Shopify and BigCommerce.)

Internet Quality

The quality of Internet connections seems to be improving rapidly. Mobile devices felt much more common than desktops or laptops, which is consistent with other reports I had heard for the Asian market. So responsive mobile sites are critical for countries such as Indonesia.

One thing that was particularly interesting to me was the performance of local sites (inside Indonesia) versus international sites. Currently sites hosted inside Indonesia felt a lot more responsive than international sites. This implies there is a bottleneck getting outside the country. This could change as the country improves its connectivity, but right now if you want a responsive site for the Indonesian market, hosting locally seems the way to go. This actually surprised me a bit as typically for me the network like from the consumer to the network provider has been the greatest bottleneck. In Indonesia it is still an issue, but it is not the only network bottleneck. The local wisdom seemed to be “if selling in Indonesia only, host in Indonesia. If selling into the whole region, host in Singapore.”


Talking with Neil Cresswell of Indonesian Cloud, it sounds like there are a handful of “serious” hosting providers, and a large number of lower quality partners. Looking at their offering it certainly sounded like a serious operation – more advanced than I was expecting. So there are certainly some good hosting companies within Indonesia if you want a more responsive store.

Popular Online Sites

The following list of sites I got by asking various locals for sites they knew of. If someone knew of any sites they typically could name three. But no-one had heard of all the sites on my informal list below.

Most are marketplaces (like, where lots of sellers can list their items), but talking with some local ecommerce developers it sounded like there were also individual Merchants working on improving their online presence as well. There was one large Merchant actively building their site on Magento, but I am not sure if it is commercial in confidence so I won’t name them here. It was nice to hear however.

I also come across this article of 18 popular online shopping sites in Indonesia (April 2014)  which includes Alexa rank information for the sites. This data is more objective and reliable than my informal interviews.

Magento Partners and Extensions

Magento-Indon-PartnersWorking for Magento, I had to of course do a search for Indonesian partners on the Magento portal. Two came up:

There are also a number of extensions on Magento Connect specific to Indonesia. (Oh, and of course Karen from WebShopApps said they have supported shipping for Indonesia for a long time now, which I is probably equally true of many other extensions available.)

There are also other local web site and ecommerce experts around. I caught up with Heru Setiawan from Smart-It for lunch one day. Hopefully I convinced him to have a look at Magento 2 for future projects!😉 They are doing a mix of projects from web sites to exploring mobile apps with geo-fencing to send deal alerts if someone was in proximity of a store. An important goal seemed to be keeping the cost down per site. Small Merchants combined with an emerging ecommerce market means generally small project budgets for now I suspect.

I did also come across, but it’s in Indonesian which was not so useful for myself!

From my investigation, Magento certainly is used in Indonesia, but it feels like the market is still maturing. The few Merchants I talked with were more concerned about choosing between which marketplace to use and the challenge of multi-channel inventory control. Having their own branded web site seemed less important to them, but I suspect because most did not think it cost effective.


Historically, shipping to Indonesia has felt rather like playing roulette. I certainly know that sending Christmas cards over the years has been a bit hit or miss. Talking to a number of locals, three shipping providers came up multiple times as now being reliable and trustworthy: JNE, Tiki, and POS Indonesia. None of the locals I talked to on this recent trip seemed concerned about the reliability of these three shipping providers. Shipping reliability feels like it might now be a solved problem.

Online Payments Maturity

Trust of online purchase was another area that interested me. This was a combination between shipping reliability and the reliability of collecting payments. With ecommerce still being new, how many are willing to hand over money before receiving goods? How many are willing to use credit cards online? How have payments worked traditionally in Indonesia?

What I heard from locals included:

  • COD has been the main way of paying. The consumer would only pay when they saw the goods arrive in good condition. Talking with some locals however, trust does seem to be increasing with respect to a willingness to pay in advance.
  • Bank transfers are common, more popular than using credit cards.
  • Online payments is emerging, as promoted by the ecommerce sites. Education and awareness seemed the biggest issue.

I later found this online discussion that seemed to exactly mirror what I heard from locals. In addition, the following I found interesting:

I did ask about PayPal awareness. Some knew of it, but many did not seem to understand its benefits. PayPal is present in Indonesia, but it does not feel like it has a significant presence at this stage. I personally predict a bigger presence as the maturity of the market increases, but there is certainly competition in the local market.


I wrote this post up to sharing a little insight into an emerging international market. Indonesia feels like a market set to grow significantly in the coming years. Just sitting around watching TV, multiple ads came up for several of the online marketplaces. The war for market share is on. Currently, the market still feels fragmented, with multiple players trying to stake their claim. I don’t have any data to say who is winning.

For Magento, it does feel like there is an opportunity that will grow as people think about the importance of their own store identity. A key capability feels like the ability to do cross marketplace inventory control, at least until “winning marketplaces” more clearly emerge. Problems like shipping are being solved, and local demand is increasing. There are interesting days ahead there for sure.

So would I move to Indonesia? Ask me again in a few years’ time. For now the heat and humidity is still a bit much for me. (And my kids hated the mosquitos!)

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