It is no brainer that COVID-19 has changed everyone’s life. Nonetheless, the world keeps on moving forward and we do what we do best: adapt. We changed our lifestyle and call it the new normal. Pre-pandemic, Indonesians much prefer to visit shopping malls and physical stores to browse and shop for our needs. During this pandemic and not to mention the digital age, we have learned to be content with doing so while staying safe at home. E-commerce has been taking Indonesians by storm in the past years, and COVID-19 has only further accelerated the growth of this industry.
Ravenry, an on-demand research platform, has collaborated with Kaliber in highlighting some key insights about the industry as it continues to transform through the pandemic.
According to Ravenry, the transaction growth of Indonesia’s e-commerce industry is expected to accelerate 47% this year compared to 35% as previously projected, driven by the COVID-19 pandemic. An already strong adoption of e-commerce platforms by the middle-affluent segment provides the industry with a strong launchpad to further capture digital transactions that are substituting offline transactions.
Additionally, Redseer estimated 12 million new e-commerce users are expected to onboard during the pandemic. Under normal circumstances, this massive growth would have taken 1.5 to 2 years. With strict social distancing measures enforced and also personal safety fears, people have opted to shop online to limit crowd exposure, facilitate goods and services delivery, and minimise health exposure through in-person physical payments and exchanges.
Social commerce has been on the rise too. Products sold through Facebook shops and Instagram shops are more personal, provide better product details, and have strong communities that bolster credibility. This e-commerce channel will make up around 40% of the total e-commerce market by 2022.
Before the pandemic, the projection for Indonesia’s e-commerce market size in 2020 was estimated to grow by 54%. What’s interesting is the pandemic is expected to boost this growth up to 91% instead.
What to do with the fast-growing Indonesian e-commerce market?
As competition in the industry rises, the cost of acquiring customers is inevitably going to increase. It’s essential for businesses to take advantage of the low customer acquisition cost in 2020, before the increase of competition inevitably drives these costs up.
Table 2. Projected e-commerce market size before and after COVID-19 hit Indonesia
While customer acquisition remains a strong focus of many players in the industry, many platforms are also pressured to prove customer stickiness especially as customers face more options. Many players are now placing intense scrutiny over retention of their customers by ensuring great buying experiences on their platforms. The following are the key drivers to improve customer stickiness in the industry:
- Speed: Focus on delivering a fast seamless solution for customers as Indonesians have been accustomed to same-day delivery services by many large players.
- Mobile: The majority of customers are on the move and on mobile devices, and having a mobile-first strategy ensures a large captive market.
- Personalisation: Invest in customer journey personalisation to build a better rapport with your customers. By aiming for personalisation, you can tailor the experience based on their respective stages on the customer journey.
The pandemic has forced a lot of businesses to accelerate their digital transformation and it is more important than ever for them to understand the future of the e-commerce landscape. The online selling landscape will expand beyond a singular channel and customers expect increasing high-touch services through personalisation and association with relevant interest groups. The opportunities to differentiate in the market are huge and the time to take advantage of the e-commerce industry in Indonesia is now.
The Indonesia e-commerce market will continue to rise and Kaliber has the vast global expertise, carried over from saturated e-commerce markets such as the US and Australia, to position a headstart for our Indonesian clients in the local e-commerce market.
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