9 eCommerce Facts - Amazon Web Services

1

ECONOMIC OVERVIEW AND GROWTH OF ECOMMERCE

Indonesia's GDP is forecasted to grow at an average of 5.8% over 2013 ? 2020. Its market is largely represented by small and medium businesses (SMBs) representing 99% of all companies in Indonesia. Online spending is predicted to increase by 40% in 2014 and 53% in 2015. While developed markets like the US see online sales around 5% of total retail revenue, Indonesia sees just 0.6% of the estimated USD 411.29 billion total retail spend for 2014, illustrating its growth potential.

2013 - 2020

5.8% GDP

2

GROWTH IN INTERNET PENETRATION

58.4 39.8%

%

29.8%

102.8 Million

between 12 to 34 years old

74.6 Million

2013

2016

2012

In 2013, 74.6 million Indonesians were online, representing a 29.8% internet penetration rate. This is expected to increase to 102.8 million in 2016. In 2012, 58.4% of internet users were between 12 to 34 years.

3

INDONESIA'S ONLINE RETAIL SPACE

Marketplaces

Direct Selling

Indonesia's ecommerce space is a mix of marketplaces and direct selling websites. While big players like Amazon and Lazada remain popular, local sites such as Bhinneka and Tokopedia are also driving online retail sales with their focus on localized content.

Growth in Online Retail Sales

2013

$1.8 Billion

2014

$2.6 Billion

2015

$3.56 Billion

2016

$4.49 Billion

4

GETTING TO KNOW THE AVERAGE INDONESIAN SHOPPER

Most Popular Products in Indonesia

Clothing and Apparel 67.1%

Shoes 20.2%

Bags 20%

In 2012, online shoppers spent an average of USD $256. The most popular products being clothing and apparel (67.1%), shoes (20.2%) and bags (20%). Understanding local customers is the key to success as a localized strategy increases approachability and trust. Lazada Indonesia made the jump to top online retail site in 2014 after rebranding with native language marketing campaigns.

5

THE POTENTIAL OF MOBILE COMMERCE

Smartphone Ownership in Indonesia

March 2012

12%

March 2013

24%

DID

Indonesians spent USD $8.5 million in mobile commerce in

YOU 2013. They also spend an

KNOW?

average of 181 minutes on their smartphones every day.

Smartphone ownership doubled from 12% in March 2012 to 24% in March 2013, due to affordable devices and cheap mobile internet. With a mobile user base estimated to grow to 71 million by 2015, this represents a huge opportunity for mobile commerce.

9 eCommerce Facts

Indonesia is on track to become the third largest consumer base in the world (after China and India) and the 7th largest economy worldwide. Affordable mobile internet, cheap smartphones and increased spending power of the middle class are driving the development of the eCommerce sector. However, consumers have yet to establish trust in online payment and businesses are also facing challenges associated with emerging markets.

6 SOCIAL COMMERCE TRENDS

Social Sites

26.4% 20%

Traditional eCommerce

Sites

8 CROSS-BORDER ECOMMERCE

.com.sg .com.my

.com.us .com.uk

Online Forums

26.6% 27%

BBM Groups

Facebook, Twitter and Google+ are the most frequently used platforms. The purchasing pattern on eCommerce websites are: Traditional eCommerce sites (20%), BBM groups (27%), online forums (26.6%) and social sites (26.4%). Therefore, a strong social commerce strategy is key for businesses entering the Indonesian market.

7

INCREASED INVESTMENTS IN INFRASTRUCTURE

Infrastructure is a key challenge for businesses in Indonesia. While both the private and public sector have been making investments in the country's infrastructure, businesses need to be prepared for potential roadblocks, as is expected in developing markets.

In 2013, international marketplace Amazon was the most popular site despite having no local presence, pricing or logistics support. This, in addition to Indonesians' preference for UK and US based sites, illustrates local online shoppers' willingness to shop cross-border.

9 ONLINE PAYMENTS CHALLENGES AND PREFERENCES

34.6% Of Customers

Different Payment Modes in Indonesia

"Afraid of Fraud". Other Payment Mode

Manual Bank Transfer

34.6%

Credit Cards

8% 7%

57%

28%

CoD

According to a 2013 survey by the Indonesia Internet Service Provider Association, 34.6% of Indonesia's online consumers are "afraid of fraud". Manual bank transfers (57%) are the most popular payment method, followed by Cash on Delivery (CoD) (28%), credit cards (7%) and other payment modes (8%). Only 4.5% of Indonesia's population have a credit card. To overcome this, businesses are getting innovative with payment methods. Some of the popular payment methods used are: Doku, Veritrans, iPayMu and indomog.

SOURCES:

Asosiasi Penyelenggara Jasa Internet Indonesia, CNBC, Crawford & Company, ee, eMarketer, e27, Payvision, REDWING, Reuters,Tech in Asia, Vela Asia

Indonesia 9 eCommerce Facts ? 2014 Singapore Post Limited. All Rights Reserved. For more information, visit knowledge-centre

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