What Makes Indonesia’s Online Travel And Payments Space So Exciting

Traveloka – Flying high in USD 21 bn Indonesian online travel opportunity

Published on: Jul 2019

• Online travel in Indonesia to grow at 25% CAGR over the next few years, with both incumbents (traveloka) and insurgents (tiket.com) spending heavily to grow the market
• All major e-tailers including Tokopedia, Bukalapak and others have also entered the market but will find it challenging to acquire market share from travel specialists given limited selection and service offerings vs specialists
• Traveloka well-positioned to succeed given its large base of premium and loyal users

Meaningful opportunity opening up in non-flight online travel categories

• Out of the USD 18 Bn overall travel market in Indonesia, USD 7 bn is already online
• However, 55% of online travel is domestic flights, with other categories being relatively underpenetrated online
• We expect online travel players to drive growth across both flight and non-flight categories using a combination of aggressive marketing/discounts and better selection/user experience

Online bills and recharges- Charging up for 8x growth with e-tailers in driving seat

• In contrast to travel, e-tailers are well positioned in the online recharges and bill payments space vs competition
• E-tailer’s market leadership is driven a large captive user base, aggressive cashback (at least till 2018) wide product selection and improving UI/UX
• E-tailers are well-positioned to benefit from the massive 8x growth expected in this market in the next five years as users migrate rapidly from offline payment modes like minimarts

Next wave of online bills and recharges- More use cases (current users) and higher penetration (current non-users)

• RedSeer research on online wallet users in Indonesia makes it clear that the value prop of wallets is both convenience and cashback, which has driven their rapid adoption
• However, amongst non-users, the key bottleneck to wallet use is lack of trust and complex UI/UX- which keeps these non-users away from the digital payments economy
• We believe that these hurdles to wallet usage in non-users will fall in the next few years driven by improving wallet interfaces, omnichannel top-up modes and strong brand trust in wallets in general