E-Commerce Tips to Succeed in the Indonesian Market

An overview of Indonesia’s e-commerce landscape

Indonesia’s e-commerce landscape is rapidly evolving and has gained global recognition.

Within the time period of 2023-2027, revenue is projected to reach from 52.93 billion USD to 78.68 billion USD. The market has overshadowed the growth by 10. 42% in the upcoming years, which would help Indonesian merchants to reach greater heights. 

Even though the maximum Indonesian revenue is generated from foreign buyers of China, Indonesia has still projected formidable growth in the past few years. Within a few years, the Indonesian e-commerce market has substantially flourished, causing more and more buyers to migrate from physical stores to online retail. 

The pandemic has significantly contributed to the success of e-commerce, particularly in Indonesia. With rising pandemic concerns and lockdown measures, the South Asian markets, including Indonesia, have experienced a significant boost in e-commerce. Indonesia’s e-commerce sector witnessed a robust growth of 23.8% in 2022 and is expected to continue growing in the coming years.

Other than that, e-commerce players also illustrated that digital transformation had made a huge contribution to the e-commerce market of Indonesia. Therefore, apart from building a potent logistics infrastructure, Indonesia is now supporting the influx of online orders easily with the growth of digital transformation. 

Indonesia’s e-commerce landscape is experiencing rapid growth and is expected to continue expanding. The country’s innovative merchants and strong business acumen are driving their business growth to new heights.

Indonesia’s Local E-commerce Sales Rules & Regulations 

To conduct a business, one has to follow certain rules and regulations to sustain in their business environment. The Indonesian government is no different. According to the International Trade Administration, they have set up some rules and regulations adhering to the tips for creating successful e-commerce that would boost their growth and also incur maximum revenue. They are: 

• As per the GR 80, 2019, only business practitioners, non-business individuals, consumers, and government agencies can engage in e-commerce in Indonesia. 

• For setting up an e-commerce entity in Indonesia, one has to have a business license, a tax identification number, and a business identification number alongside a technical license. These documents must specifically mention the type of business conducted alongside the details of the merchant. 

• Businesses should prioritize trade of domestic goods or services on e-commerce. 

The other laws and regulations set forward in the Indonesian market are: 

• Government regulation No. 80/2019 for online trade and e-commerce 

• Law No 19/2016 on ITE law

• Law No 11/2020 on Job Creation- Omnibus Law 

• Bank of Indonesia Regulation No. 20/6/PBI, 2018 of E-money

• Minister of Communications and Information Technology Circular Letter No. 5 of 2016 on the limitations and responsibilities of platform providers and merchants in e-commerce that use user-generated content and platforms. The circular letter is known for establishing safe harbor and protections against e-commerce platforms for product offerings and user-generated content. 

• Minister of Communications and Information Regulations No 23 of 2013 regarding Domain Name management. 

• Minister of Trade Regulation No 50/200 on Provisions of Business License, Advertisement, Development and Supervision of Business Actors in Trading through Electronic Systems. 

Assessment of Current Buyer Behavior in the Indonesian Market 

Currently, 53% of Indonesian consumers report being financially stable, with a global increase of 26% and an APAC increase of 36%.  

However, despite this substantial growth, consumers now have a very cautious mindset and spend minimal amounts on different products and services. Additionally, 18% of Indonesians feel financially constrained despite having sufficient resources. This cautious mindset is driven by rising food prices and the fear of an economic downturn experienced during the pandemic.

The top three spending priorities of Indonesian consumers are as follows: 

• Physical wellness (70%) 
• Future planning (64%) 
• Mental wellness (60%) 

Consumer behavior has been significantly influenced by the uncertainties brought about by the pandemic situation. This shift occurred notably in the 4th quarter of 2022, when the economic downturn emerged as a primary concern for consumers.

Local E-commerce Business Service Provider Ecosystem

The Indonesian market is now thriving, leaving more room for further growth. E-commerce sales increased rapidly during the pandemic by 20%, which is 4% more than that in 2019. Even though logistics and infrastructure management are inadequate and not addressed properly, the country is thriving in its field of e-commerce. 

Since 2020, e-commerce has become a very popular ground for trade in Indonesia. With COVID-19 restrictions, e-commerce was the only sought way by consumers to access their day-to-day products and services. 

Consumers trust e-payments, with popular payment gateways like GoPay, OVO, and ShopeePay. Bank transfer is the second most used method, followed by credit card payment. It has been reported by the Indonesian Credit Card Association that the circulation of credit cards increased exponentially by January 2021 to 18.83 million. 

To make payments easier, the Indonesian government also implemented a National Payment Gateway system where the bank limits switching to more than four domestic girls through foreign companies. The Indonesian government and the Central Bank hope that this will help in improving the financial situation of Indonesia and promote electronic payments. Even though cross-border transactions are still done via credit cards and conventional bank transfers, the Bank hopes that this will boost e-commerce significantly. 

With the current e-commerce situation, it can be further summarized that the payment systems adopted in the Indonesian business ecosystem bestow greatly upon online payments. Offline payments have been substantially reduced, resulting in seamless transaction procedures. 

Current E-commerce Trends in Indonesia 

Indonesia now has a booming e-commerce market that makes a huge contribution to the overall economy. Moreover, with digital transformation in the picture, the e-commerce market has been growing substantially. Here are some current e-commerce trends in Indonesia or tips for creating successful e-commerce that would boom development substantially. 

• The Indonesian government has developed the Indonesia Digital Roadmap for 2021-2024, focusing on improving and accelerating the country’s digital infrastructure. Digital transformation is a key priority, and the government has plans in place to foster its development.

• The World Economic Forum has surveyed that Indonesia falls under the 139 nations that have incorporated digital transformation in their day-to-day e-commerce trends. Although the rank is only 105 out of 139, Indonesia is quickly catching up. The Indonesian government is investing in an internet-boosting initiative like the Palapa Ring broadband network that has been using more than 1.5 billion USD. This project aims to provide 4G internet to more than 149,000 places for booming e-commerce activities. 

• E-commerce platforms are incorporating social initiatives that not only drive sales but also raise awareness about societal issues in the country.

• The e-commerce market trend is now leaning toward the fashion industry. Since fashion trends are changing dynamically, it becomes imperative for merchants to keep up with these trends. Hence, the e-commerce market is also expanding with these trends that are keeping them on track. 

Current Indonesian E-commerce Payments Trends

Payment trends in Indonesia are widely dependent on the e-commerce website. Not all e-commerce websites support versatile payment gateways. Hence, the use of credit cards and bank transfer is also very prevalent here. 

Payment trends in Indonesia have substantially changed in the last few years. After the commencement of the pandemic, consumers are much more inclined to do online transactions than leaning towards an offline mode. Hence the entire landscape of using digital payments and digital wallets has revolutionized the payment trends in Indonesian e-commerce. 

Statista’s survey reveals that Indonesian consumers show a higher inclination, with 39%, towards using digital wallets for payment compared to other payment methods. Bank transfers, cash on delivery, and credit card transactions rank at 27%, 11%, and 9%, respectively. Hence, the payment trends in Indonesia are much inclined toward digital transactions that have been affected due to the growing digital transformation. 

6 Ways to Use Social Media for E-commerce in Indonesia

Social media is now an important vehicle to promote e-commerce. Social media comes in handy when your e-commerce is new, and you want to create awareness about your brand and increase your sales margin. Here are some effective methods to use social media as a viable way to succeeding in e-commerce: commerce, insider advice, and practical tips.

Brand awareness: To upscale your e-commerce in Indonesia, creating brand awareness and generating buzz on social media is a popular method. It provides the perfect platform to promote your new online store and engage with your target audience in meaningful conversations about your products or services. Here are some tips to help you build brand awareness:

• Showcasing your business values and personality
• Maintaining consistent interactions with customers 
• Targeting the right audience for your business
• Always respond to feedback 
• Demonstrating the purpose and value of your business

Advertisement: This is another fine example of e-commerce tips and tricks to succeed in social media marketing in Indonesia. Building a strong presence on social media can significantly boost your e-commerce sales in the Indonesian market. Leveraging social media platforms can be a valuable source of revenue and expanded reach. Here are some tips for successful social media advertising:

• Understand your target audience and market
• Target the parameters from zero to your target audience
• Always have a compelling content strategy for speaking to them
• Define your KPIs and goals clearly for every channel
• Align your goals for a feasible advertisement
• Understand and specify your conversion metrics

Selling directly: Selling directly on social media is another way you can utilize social media in the Indonesian market. It has made your lives easier and has in-built social selling capabilities. The most popular sites for e-commerce are: 

• Facebook
• Instagram 
• TikTok 
• Pinterest 

Over these platforms, you can easily promote your e-commerce and incur profit. 

E-commerce chatbots: E-commerce chatbots in Indonesia help to connect with your customers easily. You can even establish your brand footprint easily with your sales capacity on social media, which would massively help you to retain customers. 

Customer support: Without taking customer support into account, no social media e-commerce strategy comes to its full circle in Indonesia. Social media platforms are integral in nurturing existing customers. They help in improving your e-commerce and provide you with the opportunity to do better. 

Social listening: This is a process of scanning social media in Indonesia and mentioning your brands in relevant conversation threads. It is a useful way to track and understand the needs of the customers and also offers various valuable insights. It understands which issues to address, how to seize opportunities, and also meet market demands. 

What is Social Media E-commerce Marketing? 

To put it into simple words, social media e-commerce marketing is the practice of merchants promoting their products on social media. This helps in creating immense brand awareness alongside creating interest in the merchant’s products and services. Here are some ways you can use social media for your e-commerce. They are: 

• Drive and promote traffic for creating a branded e-commerce website
• Sell all the products directly on social media
• Engage with the customers directly over social channels
• Provide pre as well as post-sale support to the customers 
• Find insightful information about the industry as well as their market
• Build a potent online community to create brand awareness 

Critical Factors in Indonesia’s E-commerce Collaboration 

Indonesia is now a booming market with immense growth in e-commerce. The market has been immensely booming with its e-commerce trends. However, some critical factors must be considered for a successful e-commerce collaboration. Here are some viable e-commerce successful tips you might use for future collaborations. They are: 

• The aspects of networks and cooperation for flourishing e-commerce
• The management’s commitment to keeping up with the business
• Having viable knowledge and expertise in e-commerce
• Knowing ways to promote and benefit the organization
• Gaining partners’ and customers’ trust
• Being technologically sound before taking up any new measures for your e-commerce website
• Gaining customer satisfaction from the first day of sales
• Having a sound distribution channel
• Knowing to scale the business timely
• Being well aware of entry strategies and data security systems

Conclusion 

E-commerce tips and tricks are a viable way to succeed in the Indonesian market. With booming e-commerce and government support on this particular stream of business, more and more merchants are now inclined to open up their own e-commerce platforms. 

There are no specific tips for creating successful e-commerce. If you know your market and customers, you can easily drive your e-commerce toward massive success. Utilize social media and other free sources to upscale your business and give it a new height. 

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