Market Trends of Indonesia eCommerce Logistics Industry
Live Commerce Contributing in Market Expansion
Live commerce is the act of selling products online through live video while shoppers interact with the brand in real time. Live commerce has transformed into a lucrative industry in the Indonesian and overall Southeast Asian digital ecosystems, especially after seeing how China managed to scale up the system into one of its strongest sales campaigns. Several industries have adopted live shopping to market their products. According to a survey on live shopping in Indonesia conducted in October 2022, 69% of the respondents in Indonesia have purchased products using Livestream commerce. 57% of Indonesian respondents used an e-commerce platform to watch live shopping. E-commerce platforms in Indonesia adopt live shopping to improve customer engagement and push sales. Shopee was the leading e-commerce platform for live shopping. 69% of Indonesian respondents used TikTok to watch live shopping. The attractive discount was the main reason why Indonesians shopped from live shopping promotions, as stated by 66% of respondents. Fashion products were the most popular products Indonesians bought from live shopping promotions. 50% of Indonesian respondents stated that they were interested in buying items from a live shopping promotion.
While bigger brands tend to use live shopping to push new products or sales, the benefits of the approach manifest differently for small-scale sellers. For these merchants, videos are a front-end funnel to entice new potential buyers and serve as an invitation for customers to get to know their brands and products more. For new merchants, the average Livestream can increase product viewership and shop visits by 40% and 20%, respectively, while driving 29% of their orders for the day. Overall, live streaming can also lead to an increase of up to 625x more product detail page views, a 262x increase in shop visits, and up to 100% of the shop's daily orders. In some cases, small brands have been able to attract more than 80,000 viewers from a piece of content generated as part of their live shopping efforts. For Indonesia's nearly 65 million small and medium-sized businesses (SMBs)-nearly 98% of which are micro-enterprises with less than IDR 300 million (USD 19,500) in annual sales-the trend could open doors to new customers amid a government push towards digitalization. Considering this, live commerce will see tremendous growth in Indonesia in the coming years. With this growth of live commerce, the Indonesian eCommerce logistics market will see continued expansion.
Government Regulations can Negatively Impact the Market
The growth of e-commerce in Indonesia has made a big difference in the economy of the whole country.However, data also shows that foreign products dominate the e-commerce market in Indonesia, which is dangerous for the domestic economy. The Indonesian Institute of Sciences (LIPI) conducted a survey related to online commerce (e-commerce) in Indonesia, which is flooded by 90% of foreign products. This has an impact; imports of goods through e-commerce have increased sharply. The implication is that the competitiveness of domestic products is weakening. The trend of importing goods through e-commerce needs special attention from the government. Data from Customs said that throughout 2018, the average amount of goods imported through e-commerce increased by 10.5% per month, while in terms of transaction value, it jumped 22% from the previous year. There are several reasons why imported goods sell well in the Indonesian e-commerce market. First, consumers shop for goods from abroad because the product is rare in the market. Secondly, the price of goods is rated relatively low by buyers. In fact, some e-commerce platforms in Indonesia provide facilities for foreign sellers to open online stores in the country. According to some industry experts, if this is not followed up immediately, it will further threaten the business continuity of online producers and sellers in Indonesia.
The Indonesian government is taking steps in this direction. Indonesia plans to restrict online retailers, especially e-commerce, from entering the country, according to Indonesia's Minister of Cooperatives and SMEs. The ministry has suggested changes to Trade Minister Regulation No. 50/2020 on business permits, marketing, and overseeing trade across electronic systems, or PMSE. The minister underlined that this plan is needed to better maintain the products that are marketed domestically. There are currently many foreign e-commerce players that can directly conduct sales in the Southeast Asian nation, but the products fail to meet the Indonesian National Standard (SNI) or marketing authorization from the Food and Drug Monitoring Agency (BPOM). According to the minister, any international eCommerce should basically be allowed to enter the Indonesian market but must be required to establish a company in Indonesia. The ministry hopes that as the restriction policy is implemented in the future, micro, small, and medium-sized enterprises will not be left out or unable to compete with imported products sold on foreign e-commerce platforms, which are mostly cheaper compared to domestic goods. The government hopes that as the restriction policy is implemented in the future, micro, small, and medium-sized enterprises will not be left out or unable to compete with imported products sold on foreign e-commerce platforms. However, this could lead to reduced eCommerce demand and negatively impact the market.
