January 17, 2023
JAKARTA – Indonesia’s e-commerce sector is poised to remain strong this year with online shopping expected to stay relevant, even though an end to the public activity restrictions (PPKM) offer consumers the option to return to conventional shopping at brick-and-mortar stores.
Rusdy Sumantri, director at consumer intelligence company NielsenIQ, said that the industry still had room to grow, as the number of e-commerce users remained below the number of all internet users in Indonesia last year.
This meant that at least 10 million users were untapped.
“With PPKM restrictions gone, shoppers now have the option to shop offline. Yet with e-commerce platforms, the numbers continue to grow, implying that we can still tap into a market where some users are not shopping [online],” Rusdy told a press conference on Thursday in Jakarta.
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Indonesia’s e-commerce industry is projected to grow to US$95 billion in gross merchandise value (GMV) in 2025, up 17 percent compared to $59 billion in 2022, according to Google, Temasek and Bain & Company’s e-Conomy SEA 2022 report published on November last year.
The COVID-19 pandemic caused a shift in consumer behavior: With many people spending most of their time at home due to restrictive policies, the way they shopped changed to relying more on e-commerce platforms.
Arshi Andini, executive director at the Indonesian E-Commerce Association (idEA), said that online shopping was never meant to replace shopping at physical stores, and that the two would complement each other.
Speaking at the same event, Arshi said that using digital platforms had “become [part of our] lifestyle in the last few years. We are now headed to a new normal, and shoppers can choose between the two”.
NielsenIQ data showed that sales growth during last year’s national online shopping day (Harbolnas) was the lowest in the past five years at only 26 percent, partly due to a worsening economy amid high fuel prices.
Rusdy noted, however, that although the weakened condition had prompted many e-commerce users to shop for fewer and cheaper products, he was certain this did not mean the industry would perform worse in 2023.
E-commerce during tech winter
While the technology sector had a difficult overall year in 2022, partly due to less available funding from investors and the need for efficiency policies like layoffs, e-commerce players remained optimistic about this year.
“The opportunity for e-commerce remains high, despite the tech winter. In the beginning, e-commerce players may have hired a lot people, whereas the trend is [now] downsizing, but this is because the priorities are shifting,” said idEA’s Arshi.
“All industries will shift to digital, so [laid-off workers] will be absorbed again. After winter, there will be spring. So, we have to be patient,” she added.
Editor’s note: The writer is an intern at The Jakarta Post.