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[News] E-commerce Is Flourishing In Indonesia
Posted at: 06 February 2019

E-commerce accounted for 8 percent of total retail sales in Indonesia last year, on course to reach 18 percent by 2023, fueled by changing behavior among tech-savvy customers who are willing to spend more for convenience, according to a recent study by American multinational investment bank Morgan Stanley.

The study estimates the size of Indonesia's e-commerce market at $13 billion in 2018, having grown by 50 percent annually over the past two years. It suggests that the e-commerce market in Southeast Asia's biggest economy may follow a similar growth trajectory to that of China and expand by at least 32 percent annually over the next five years to $52 billion in 2023.

"This is notably above our previous estimate of $7.3 billion, or 4.4 percent of sales, partially due to better data availability but also due to the rapid growth in the user base... Indonesia is now only five years behind China in terms of penetration," Morgan Stanley wrote.

A separate study by global tech giant Google and Singapore's Temasek, published last December, put the size of Indonesia's e-commerce market at $12.2 billion in 2018 and $53 billion in 2025.

The Morgan Stanley study, based on interviews with 1,582 respondents in eight Indonesian cities, suggests that the growth trend is still in an early stage, with many indicating that they only started shopping online in the past year.

Apart from smartphone penetration, low data costs and the growing number of people with bank accounts serve as crucial enablers for continuing e-commerce growth, Morgan Stanley said. Data costs about 50 US cents per gigabyte in Indonesia, compared with $2.1 per gigabyte in China. About 49 percent of the adult population in Indonesia now has a bank account, compared with 20 percent in 2011.

(source: The Strait Times)