Metamorphosis in a post Covid world: Indonesia’s eCommerce ecosystem is fast evolving to meet the challenges and opportunities from Covid-19. We estimate another strong year with 50%+ y-o-y growth in GMV in 2020.
Indonesia's eCommerce is likely to see some near-term pains due to the disruption unleashed by COVID-19. However, the sector is likely to see meaningful long-term gains as the ecosystem steps up to a newer set of demand and supply requirements.
The emerging challenges and opportunities could necessitate some players to double down on their existing strategy, while others might have to diversify and/or pivot. We expect the eCommerce sector to emerge as a net-beneficiary of the current crisis as it offers a strong tailwind for buyers and sellers to go online.
Some of the key highlights from this report are:
1. Big GMV set to get bigger
Indonesia's $23 bn formal eCommerce GMV in 2019is likely shrug off the challenges of Covid and grow 50+% y-o-y to reach USD 35Bn in 2020 and ride the digital adoption wave to reach $ 101 bn in 2025, as perour estimates. In 2019, Electronics (69% contribution), Fashion (16% contribution), and Beauty (9%contribution) had emerged as the top-three categories in terms of their absolute size and share of market.
However, from a growth perspective, grocery, household appliances, personal care (part of Beauty), are expected to be the leading growth categories over the short to medium term driven by the impact of Covid.
2. Covid-19 to have a positive impact on sector in longer run
Our supply side research indicates that online FMCG/Grocery sector is currently seeing a massive adoption boom due to Covid-19- with many of these first time eGrocery shoppers likely to stick around. However, post some short-term discretionary spending uncertainties are smoothened out, even non-grocery categories like electronics, fashion, beauty are likely to see a catalytic positive impact due to covid-19 and long-term growth acceleration.
As 80% of our surveyed consumers and expecting a spending rebound in next 6 months and prefer the comfort of their home for shopping needs rather than going in the crowded offline outlets. However, e-tailers still need to solve for the short term, lockdown driven challenges of insufficient delivery and supply chain constraints.
From a readiness perspective, the large horizontals seem better positioned to cater to the short and long end of the demand curve. Vertical players could be better suited to swiftly consider online and offline partnerships and especially take advantage of their initial lead in the 'fresh' subcategory within overall eGrocery.
Get a copy of the report here
By Roshan Raj Behera, Mrigank Gutgutia, Akshay Jayaprakasan, Divyanshu Shrivastava and Mohit Khanna