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E-COMMERCE

IN INDONESIA

Bali, 3 May 2017 WORKSHOP


Indonesia ICT Reseller Channel Summit 2017
By Jeffrey Bahar, Spire Research and Consulting
A. OVERVIEW OF
INDONESIA RETAIL
INDUSTRY
Indonesia Demographic Overview

+256 MILLION Overall Expenditures Across the Three Consumer Product


POPULATION Clusters (2015 – 2016)
6%

$324 BILLION
TOTAL RETAIL SALES 6%
2%

67%* UPPER MIDDLE TO HIGH


CLASS POPULATION
5%
14%
12%
12
% 11
%
27 3%
Percentage Change in Disposable 22 %
Household Income in the Low, Middle, % 8%
9% 10
and High Income in Indonesia % 9%
5% 3%
28% 29%
25% 2015 2016 2015 2016 2015 2016

Food Welfare & Saving Housing & Utilities


8% Beverages Leisure & Holiday
7% 7% Transportation
3% 2% 2% Credit Card

2006 2011 2020


“48% of Indonesia’s total
Lower Income Middle Income High Income
spending on fast moving
* People with more than 60 million income per annum
consumer goods comes from the
middle class.”
DAY 1
Source: Deloitte, OECD, Nielsen, Others
Top 5 Countries in 2016 Global Retail Development Index

2016 Country Market Country Market Time GRDI Population GDP per National
Rank Size* Risk** Saturation Pressure Score (Million) Capita, Retail
(25%) (25%) (25%) *** PPP Sales ($
(25%) Billion)

1 China 100 61.2 36.2 92.5 72.5 1,370 14,190 3,046

2 India 53.7 54.3 75.8 100 71 1,314 6,209 1,009

3 Malaysia 81.2 83.4 23.5 50.4 59.6 31 26,141 93

4 Kazakhstan 56.4 37.3 61.9 70.2 56.5 18 24,346 48

5 Indonesia 64.3 38.9 50.2 68.9 55.6 256 11,112 324

* 0 = low attractiveness, 100 = high attractiveness


** 0 = high risk, 100 = low risk
*** 0 = no time pressure, 100 = urgency to enter

DAY 1
Source : AT Kearney
Share and Growth Rate of Modern Retail in Indonesia
Types and Number of Retail Stores in Indonesia (2016)
Traditional Modern Retail Modern Retail
Retail (Minimarket) (Supermarket)

2.3 mio 19,440 12,210


STORES STORES STORES

Growth of Modern Retail Turnover in Indonesia

20%

12.50%
10% 9.50% 10% 10%
8.00%
6.00% 5.60% 5% 4.80% 5% 5.40%
2.40%

2011 2012 2013 2014 2015 2016F 2017F

Growth Rate GDP Growth

Source : Indonesia Trade Ministry, Spire Research and Consulting


Spread of Modern Retail in Indonesia

Sumatera
8.2%

West Java
14.08% Central Java
10.2%
East Java
DKI Jakarta 12.12%
38.1%
Total Value of Traditional Retail Channel Transactions in
Indonesia

Source : IFC B2B Payment Assessment, 2015


Types of Goods for Sale in Indonesia Traditional Retail

LPG (45%) Ready to drink Instant beverages 


Others (27%) (100%) tea, coffee (96%)

Mobile phone credit


(pulsa) (18%) Mineral water
in gallon (42%)

Type of
Other Basic Needs/
Sembako not including
goods
Toiletries (99%)
rice
(95%) for sale
Beauty treatments
Rice (55%) Food  including (71%) Medicine/ drugs
Instant noodle, Household care (93%)
(87%)
canned food (100%)

Source : Spire Research and Consulting


B. E-COMMERCE
IN INDONESIA
Indonesia Digital Landscape (2016)

88.1 million internet user 2 hours 25 minutes/day,


(34% population) average of social media
usage

75 million smartphone user 74 million social media


(29.2% population) user (29% population)

308.2 million mobile phone 69 million facebook user


user
(121% population)

3 hour/day, average of
50 million twitter user
internet access via mobile
device

3 million fixed broadband user


(1.5% population)

Source : Spire Research and Consulting


E-Commerce Development in Indonesia
Number of Online Shoppers in Indonesia
The growth of online shopper at
17.27% from 2013 to 2016 gives
2013 4.6 mio significant effect on the sales
percentage of online

2014
transactions.
5.9 mio With CAGR at 25.74% for over
the four years, Indonesia is
2015 7.4 mio
becoming the potential market
in E- Commerce industry.

2016 8.7 mio

Online sales Transaction VS Retail Sales In Indonesia (2013-2016F)


Online Sales Retail Sales Online Sales As
Year Estimate Estimate a Percentage of
(Billion USD) (Billion USD) Retail Sales
2013 1,8 363,4 0,50%
2014 2,6 411,3 0,63%
2015 3,6 473,9 0,76%
2016 4,5 543,1 0,83%

DAY 1
Source : Spire Research and Consulting
Basic Diagram of E-Commerce

Image Source: Flexy (www.flexy.com.br)


Types of Product Bought via E-Commerce

Fashion Products 20.5


20.7
Gaming Products and 15
Services 20

Electronics and Gadgets 18


17.2

Beauty Products 12
15.9

Books 22
9.6

Sports and Entertainment 4


7.6

Health Supplement 4
2.7

Automotive Accessories 4
2 Q3 2015

5 Q1 2016
Others
4

DAY 1
Source : Spire Research and Consulting
Usage of On-Demand Service in Indonesia

Grocery Purchase via Mobile App Where Do People Order Their


Grocery Online?

Lazada 61.30%
34.47%
Tokopedia 49.15%

65.53% AlfaCart 42.09%

Bukalapak 38.70%

Yes No Klikindomaret 27.12%

HappyFresh 10.73%

Other Supermarket
10.73%
Apps

DAY 1
Source : Livingsocial
Shoppers Likes and Dislikes in Online Shopping

Trust issue on
Free shipping product quality

No hands on
Exclusive items or experience before
deals buying

High shipping cost


Product warranty and slow delivery
time

Safe and simple Unreliable payment


payment methods method

DAY 1
C. INDONESIA
E-PAY LANDSCAPE
Used Electronic Payment Method in Indonesia

Online Payment Methods Used by Payment Methods Used to Pay for


Indonesia User as of 2015 On-Demand Services (2016)

SMS Banking 67.40% Cash 69%

Internet Banking 33% In-apps e-money


(Go-Pay, 28%
GrabPay, etc)
Credit Card 24%

Credit Card 12.46%


Debit Card 7%

Other e-money
PayPal 2.70% services (Android
10.42%
Pay, PayPal,
KasPay, etc)
Rekber 2.30%
I have never paid
for an on-demand 17%
service
Mobile Money 1%

DAY 1
Source: Asosiasi Penyelenggara Jasa Internet Indonesia, LivingSocial
Landscape of Mobile Payment Aggregator in Indonesia (1)
Mobile Money / Mobile Payment

3rd Party Payment


Bank Institution Telco Provider
Service Provider

1 5 1 1
Bank DKI Jak Card Binus Easy Transaction
Bank BNI
Bank DKI
t-cash Skye Sab
Tap Cash

Indomaret Card Skye Mobile Money


2 2
6 UniqKu
2
Gaz Card Indosat Finnet Indonesia FinChannel
Dompetku
Bank Mandiri Bank BRI Brizzi
3 3
E-Toll Card
7
Bank Permata BBM Money Artajasa Mynt e-money
XL Axiata XL Tunai
3 E-Cash 4
8
4
BTPN BTPN WOW Flexi Cash Doku Wallet
Bank BCA (Dismissed in 2015) Nusa Satu Inti Artha
BCA Sakuku
Telkom
9 5
Flazz Card 5
CIMB Niaga Rekening Ponsel I-Vas Witami Tunai Mandiri Witami Tunai
4
10 6
Mega Cash
Smartfren Uangku
Bank Mega mVcommerce Ponsel & Instan Pay
Nobu Bank Nobu E-Money
Mega Virtual

DAY 1
Source : Spire research and Consulting, gathered from many sources
Landscape of Mobile Payment Aggregator in Indonesia (2)

Some card based e-money players have launched the web based and mobile application to
support the behavior of banking people who is getting mobile, as well as support the growing
number of smartphone penetration and the increasing trend of online transaction

Card Web Based, USSD, SMS

Most of the transaction of


All transaction of mobile Mobile Apps e-money happened on the
operators’ service is merchant will usually be
delivered through its handled only by the same
dedicated network, and acquirer (on-us), since the
could be accessed either e-money (card base)
through UMB or mobile instrument have not
application. implemented
interoperability

Source : Spire research and Consulting, gathered from many sources


Landscape of Mobile Payment Aggregator in Indonesia (3)
Gaming / Digital
Content Focused
E-Money / E-

Gateway
Payment
wallet

E-Commerce Focused

Source : Spire research and Consulting, gathered from many sources


Usage Behavior on Each Payment Instrument
Share of Spending at Offline and Online merchant

offline merchant dominates


Bank Cards because Indonesian consumers
(ATM, Debit, &
Credit card) feel more comfortable in doing
transaction at offline merchant
Small percentage
on online merchant
Trx.
Most of bank and mobile operators
users prefer to use mobile payment for
offline transaction, while the rest of e-
Mobile money usage is driven by some
payment collaborative promotion offered by the
online merchants and the mobile
Smaller percentage payment provider
on online merchant
Trx.
Prepaid e-money have a
significant growth in terms of
E-money usage. This is due to marketing
instrument
activities or promotion held by
those banks with the merchant,
Almost none
transaction on online
mainly on F&B and retail stores
merchant

DAY 1
Source : Spire research and Consulting, gathered from many primary sources
D. E-COMMERCE 2.0:
THE FUTURE IS NEAR
Shifting in Customer Behavior Post Digital Technology Era

DAY 1
Source : Ipsos OTX/Google 2012 Holiday Shopping Intentions Survey
E-Commerce 2.0: O2O

“The key to O2O is that it finds


consumers online and brings
them into real-world stores. It is
a combination of payment
model and foot traffic
generator for merchants (as
well as a “discovery”
mechanisms for consumers)
that creates offline purchases.”

~Alex Rampell, CEO and Founder of TrialPay,


2010

DAY 1
Source : Gitome
Case Study #1 Matahari Mall
Case Study #2 Amazon
Case Study #3 BerryBenka

DAY 1
E. CONCLUSION
Conclusion #1

Modern retail is having stronger existence in urban areas,


while traditional retail holds their presence in rural areas.

DAY 1
Conclusion #2

The convenience of online shopping attracts people to use


it; and alongside with it, e-payment grows.

DAY 1
Conclusion #3

The e-competition is growing fiercer, with companies strive


to provide a better e-shopping experience. Addressing
customers needs is the key.

DAY 1
Jeffrey Bahar, Group Deputy CEO
jeffrey.bahar@spireresearch.com
M: +62-812-1005 940
Tel: (62-21) 5794 5800
Wisma 46 Kota BNI, 25th Floor, Unit 07 & 09
Jalan Sudirman Kav. 1, Jakarta 10220
INDONESIA
indonesia.info@spireresearch.com
www.spireresearch.com