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Mar, 2021     

Indonesia e-Commerce: In A Sweet Spot

Massive onboarding of new users has happened in 2020 – next 1-2 years could be spent on consolidating & maximizing potential of existing users


1. ID eCommerce netted 60%+ growth in 2020 to become a USD 37 Bn market

E-commerce markets across the globe saw strong growth during 2020 owing to the digitization impetus provided by the pandemic.

Indonesia saw another stellar year of growth reaching USD 37 Bn in 2020 growing at 61% yoy.

Online Retail GMV, CY19-20, $Bn

2. Grocery was the growth engine through the year – but has moderated in Q3-Q4 as other categories have started picking up steam

eGrocery was the major gainer in the space, becoming the 2nd largest contributor to overall GMV (after electronics), overtaking other categories like Fashion and BPC, which are normally more suited to the online channel.

Within eGrocery, the Fresh segment also started figuring prominently in the mix this year compared to last year (when the segment was dominated by dry FMCG).

However in Q3-Q4 while growth in eGrocery moderated post a period of exponential adoption, we saw a rebound in segments like Fashion and Beauty as the markets have started opening up and people are moving out more often.

GMV evolution across categories (Q1’19 figures indexed)`, Q1’19-Q4’20, $B

3. Massive onboarding of new users has happened in 2020 – next 1-2 years could be spent on consolidating & maximizing potential of existing users

2020 has been a year of strong customer acquisition as new users flocked online. This has resulted in a step change in the onboarded user base for eCommerce companies and we believe that the focus in the short term would be to maximise the value from onboarded customers and try to drive more stickiness.

This also aligns with the increased focus on profitability and sustainable business models which is playing out among (most) eCommerce platforms. They can leverage the strong supply chain and Seller network that they have built to drive a strong product and service experience among consumers, driving up wallet share and thus profitability.

Online has also become a key channel for marketing, and revenue from brand marketing/promotions has already started to figure prominently within the monetization levers for most eCommerce platforms – we feel there is significant upside to tap into here as well in the short to medium term.