Many Indonesian Citizens Don't Use E-Commerce; Offline Sales Remain Important

Technology & Telecommunications

Adi Ahdiat 06/10/2023 11:33 WIB

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Estimated Proportion of E-commerce Users and Non-Users in Indonesia (2022)

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According to the Katadata Insight Center (KIC), the majority of Indonesia's population are not active users of online shopping services or e-commerce.

"E-commerce has had a significant impact and attracted attention over the past decade. However, e-commerce remains a relatively small part of the Indonesian economy," said the KIC team in *Beyond the Digital Frontier*, a research report resulting from their collaboration with Evermos.

Based on data analysis from the Indonesian Digital Literacy Survey, an annual project of KIC and the Ministry of Communication and Information Technology, and data from the Indonesian Internet Service Providers Association (APJII), KIC estimates that in 2022, 49.6% of the Indonesian population were non-e-commerce users.

This non-user group comprises Indonesians without internet access, plus those with internet access but who are unaware of, haven't installed applications for, or don't use e-commerce.

KIC also estimates that 17% of the Indonesian population belong to the occasional user group, meaning they use e-commerce but infrequently, only once every few months.

Meanwhile, in 2022, the proportion of the Indonesian population actively using e-commerce was estimated at only 33.4%.

"If occasional users are included (along with the non-user group), then 66.6% of the Indonesian population are actually inactive e-commerce users," said the KIC team.

"For every one active e-commerce user, there are two people who haven't actively used e-commerce," they continued.

From this analysis, KIC concludes that online sales channels cannot be the sole reliance for doing business in Indonesia.

Businesses still need to build face-to-face or offline sales channels to reach consumers from the group that does not actively use e-commerce.

Based on interviews with several national market leaders, KIC also found that brands achieving sales exceeding Rp500 billion per year generally have stronger offline performance than online.

"Focusing only on online channels means ignoring more than half of Indonesian consumers," said the KIC team.

"Although online channels are important for growth in this digital era, market leaders are those with strong roots in offline channels," they continued.

Editor : Adi Ahdiat

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."