Monday, September 19, 2011

Indonesians Starting to Fill Their Online Shopping Bags

Faisal Maliki Baskoro | July 15, 2010
Source: Jakarta Globe 
Online shopping is becoming an increasingly regular part of Indonesian commerce, with Internet users devoting 10 percent of their disposable income to online purchases.  (JG Photo/Afriadi Hikmal) Online shopping is becoming an increasingly regular part of Indonesian commerce, with Internet users devoting 10 percent of their disposable income to online purchases. (JG Photo/Afriadi Hikmal) 

Once wary of online transactions, Indonesian consumers are quickly embracing the Internet for their shopping needs, and are beginning to catch up with their Asian neighbors, according to a survey released on Wednesday.

Nielsen Indonesia’s survey, conducted in March, found that 68 percent of Indonesia’s online population had shopped on the Internet at least once, an increase from 63 percent in the fourth quarter of last year and up from a mere 3 percent in 2008.

“The trend of online shopping is increasing over time, mainly caused by the improvement in the level of comfort when buying online and an increasing sense of security,” said Catherine Eddy, Nielsen’s director of consumer research.

About 24 percent of the country’s online population now spends more than 10 percent of their monthly shopping budget online, compared with an Asia-Pacific average of 35 percent who say they spend more than 10 percent of their monthly budget online.

That compares to 13 percent in Malaysia, 17 percent in Thailand and the Philippines and 32 percent in Vietnam.

“Indonesian consumers are similar to the other Southeast Asia nations of Malaysia, Phillipines, Thailand and Vietnam, where one third claim to never shop online, and those who do, tend to allocate less than 10 percent of their monthly shopping expenditure,” Eddy said.

Books are the most popular online purchase among Indonesians, with 38 percent saying they would buy a book online at some time during the next six months.

An additional 33 percent said they intended to buy clothing, while 29 percent said airline tickets and 27 percent electronics.

“ boosts online book spending in Indonesia because the Web site provides security and trust. Also, it’s easier to look for books in English [at] rather than the translated version,” Eddy said.

Online retailers have been eagerly eyeing the nation’s massive, untapped market, as low broadband penetration and a lack of trust in the security of payment systems held back online shopping in a country whose wired population is expected to explode from an estimated 30 million now to 150 million.

Japanese Internet company Rakuten and PT Global Mediacom in May announced they were planning to launch a joint-venture online shopping mall in Indonesia this year.

Meanwhile, PT Telekomunikasi has invested $2 million to develop — an e-commerce portal that aims to attract 1,000 merchants and have a million products for sale by the end of the year.

Andi S Boediman, chief innovation officer at, said he expected the number of merchants and items on the Web site to rapidly multiply by the end of this year.

“We have around 1,600 merchants selling 16,000 items since our opening on April. We’re expecting that the number [merchants and items] could grow up to fivefold,” Andi said.

Contrary to Nielsen’s survey, Andi said that the most preferred method of payment on was by credit cards and bank transfer.

“Security is the biggest concern. To ensure security, we check every transactions manually by telephone,” he said.

He said that online shopping had not yet reached a mass market level in Indonesia, but that it was growing in terms of peer-to-peer sales.

Eddy said that the Nielsen survey found that security remained the top concern of consumers, with recommendations from family and friends being the most trusted sources when making a purchase.

Paypal was the most preferred method of payment, followed by debit card, bank transfers, and credit cards.

“Unfortunately, there are cases when international portals often don’t accept Indonesian banks’ credit cards.

“Banks have to be more creative so that international portals will accept Indonesian credit cards,” she said.

1 comment:

  1. Personally, I don't believe the data captured in this article. Based on our internal ecommerce ecommerce in 2009, only 3 - 5% of online users has ever been to buy products online.

    I can only assume that the online transaction in this article is not only on products, but entire digital transaction, including games and event tickets.