Turning Indonesia’s e-commerce challenges into opportunities
Published on April 6, 2023
Indonesia, the fourth most populous country in the world, has seen tremendous growth in e-commerce, with a market size estimated at US$40 billion in 2020 and projected to reach US$77 billion by 2027. Growth is driven by a number of factors, including a young and digitally savvy population, the increasing penetration of smartphones, and the Covid-19 pandemic, which accelerated a mass shift toward online shopping. However, as the e-commerce industry continues to expand in Indonesia, there are also challenges that need to be addressed.
Even today, one of the main challenges for Indonesian e-commerce is a lack of important infrastructure, particularly in terms of logistics and payments. Many parts of Indonesia are still difficult to reach, addresses are not clearly marked (via Google Maps or offline), and internet access can be spotty at best in rural areas. As recently as 2020, around 30% of the nation’s geography did not have broadband access.
Insights from e-commerce veterans
These elements can make it difficult for companies to deliver goods in a timely and cost-efficient way. While vast improvements are being made on the digital payments front, simple and universal systems are still nascent, with many consumers still opting for cash-on-delivery over e-payments.
In a recent MindShare episode of Indonesia Digital Deconstructed, hosted by Leighton Cosseboom of AC Ventures, two experts spoke about where the sector is heading. Jacopo Mor is the ex-COO of Lazada Indonesia, one of the largest e-commerce operators in Southeast Asia. Vincent Tjendra is the co-founder and CEO of Astro, Indonesia’s top quick commerce startup for grocery delivery. With over US$90 million in funding from blue-chip venture capital firms like Tiger Global, Accel, and AC Ventures, Astro has outraised its competitors by around 10x.
Jacopo pointed out that in Indonesian e-commerce, priorities have changed significantly with regard to what customers want and how they shop. According to JP Morgan, Indonesia is now a mobile-first e-commerce market, with 58% of transactions completed on a mobile device. Optimizing mobile shopping services is therefore vital to accessing the Indonesian consumer.
Shifting consumer behavior and preferences were huge opportunities for Astro, a startup that delivers groceries to the customer’s doorstep within 15 minutes. The company’s mission is to make people’s lives simpler and easier by helping them save time, energy, and money. Astro’s customers range from working professionals to young parents at home who seek convenience at the click of a button.