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Indonesia’s 259 million Mobile-first Market

Out of Indonesia’s 259 million-strong population, only 34 per cent are active Internet users, according to the latest Digital Yearbook

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By ASEAN standards, Indonesia has been a slow developer in terms of Internet penetration. Out of the country’s 259 million-strong population, only 34 per cent are active Internet users, according to the latest Digital Yearbook, an annual publication produced by We Are Social, a London-headquartered specialist digital agency.

While this compares poorly to the 47.3 per cent reported for Vietnam and the Philippines’ 47.1 per cent, the figure translates to 88 million users in Indonesia.

This makes Indonesia – after China – the largest national online market in the region in absolute terms, as well as one that is fast catching up on its neighbours in terms of penetration percentage.

The country’s number of online users this year grew 15 per cent, making it second only to Thailand within the ASEAN bloc in terms of rate of digital uptake.

Active Users

While a penetration of just 34 per cent may seem low, Indonesian Internet users are very active. On average, they spend about 3.5 hours per day online and, significantly, mobile is their primary access route.

With 70 per cent of web pages being viewed via smartphones or tablets, the country is way ahead of other major countries in the region in this regard.

In Thailand, for instance, mobile access accounts for only 45 per cent of page views, followed by China (40%), Philippines (29%) and Vietnam (24%). Given that Indonesia is the region’s undisputed leader in this sector, this gives online retailers a vast amount of detailed user information, allowing them to tailor and implement highly-focused e-commerce marketing strategies. Even more appealing is the fact that Indonesian mobile users are keen shoppers.

According to the Indonesian Information and Communications Technology Ministry, the country’s 2015 online sales volume was valued at US$18 billion.

It predicts that the market value will double every year over the near team, reaching a staggering US$130 billion by 2020.

Peer Recommendation

This is good news not only for smaller companies looking to build and hold market share against competition from global brands. Unlike other countries in the region, Indonesia’s social media landscape is relatively uncluttered and not fragmented. Overall, Indonesia has the world’s highest mobile Facebook usage level – some 63 million users in 2015. According to Techcrunch, up to 99 per cent of the country’s population could be Facebook users by the end of 2018.

For the typical Indonesian consumer, peer recommendations via social media have huge influence, a factor that helps smaller brands compete effectively with global giants. The country has a large and fast-growing population outside the major urban centres, areas in which there is often little brand awareness.

In line with this, domestic e-commerce platform BliBl reports that more than 33 per cent of its 2.5 million customers live in rural areas, with smartphones their sole means of Internet access for many users.

In addition to Facebook, many Indonesians are also keen users of Twitter. According to the UK-based metrics company, Global Web Index, Indonesia ties with Mexico in terms of Twitter usage, with 74 per cent of both countries’ Internet users signed up to the service. Jakarta, in 2012, was the world’s most active city in terms of posted tweets, outstripping New York, London and Tokyo. This, though, may have marked a high point for the service.

Digital Hurdles

According to a Reuters report in February, the overuse of Twitter for marketing purposes has dented its allure for many Indonesians, particularly younger users.

Most notably, heavy usage by political parties during the last presidential election and “buzzing” – the practice of paying people to send out a high volume of tweets in praise of a particular product – has seriously undermined its credibility.

Apart from the challenges facing Twitter, the country’s e-commerce sector also faces several problems. At present, there is still limited access to efficient mobile technology and the country’s ICT infrastructure remains weak.

While online access is affordable, the average Internet bandwidth and connection speed are still notably poor compared to other ASEAN countries. As a result, far less video content is accessed in Indonesia compared to more basic forms of content, such as text or low-resolution images, hampering marketing activities in Indonesia for many brands that now favour using videos.

There also remain several payment problems. Comparatively few Indonesians who shop online have credit cards, while cybersecurity remains a common – and highly valid – concern among many digital shoppers.

As a result, the development of alternative online payment options – such as bank transfers and cash-on-delivery – has been essential for the health of the sector. Several sites have even started offering payment installment plans for more expensive items.

For more market opportunities, please visit: http://research.hktdc.com/.

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