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Shopee pulls ahead of Tokopedia in Indonesia as e-commerce thrives

Written by Ursula Florene Published on     2 mins read

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E-commerce made up 20% of retail sales in Indonesia last year. Analysts say it could reach up to 40%.

Indonesia is now in its golden age of e-commerce. Numerous platforms have seen massive growth since last year when COVID-19 forced people to shop online. The e-commerce gross merchandise value (GMV) reached USD 40.1 billion in 2020, according to a recent study by market research firm Momentum Works. That would double the number from 2019 calculated by the International Trade Administration.

Sea Group’s Shopee took the lead with a GMV of USD 14.2 billion, marginally ahead of local player Tokopedia. Lazada, with USD 4.5 billion, and Bukalapak, with USD 3 billion, further trailed behind. Shopee already surpassed Tokopedia early last year in terms of monthly web visits. With its in-house digital wallet ShopeePay, the company’s integrated ecosystem played a significant role in the company’s growth, said Momentum Works CEO Jianggan Li. “E-wallets and digital payments make users more sticky.”

Shopee managed to achieve a year-on-year order growth of 128%. Its massive free delivery and discount promotions, a tactic borrowed from China’s e-commerce players, contributed to the brand’s popularity, according to Li. Another factor is Shopee’s International Platform. Buyers gain access to a larger selection of items from sellers in China, Malaysia, and other countries. Local sellers, meanwhile, can tap into a bigger market. Alibaba-backed Lazada offers a similar service.

Tokopedia, after its merger with Gojek, will get access to a network of ride-hailing and payment companies in Thailand, Vietnam, and Singapore. For Li, however, it’s unlikely that the company will pursue a regional expansion of its e-commerce business. “Most of the cross border e-commerce volume comes from China,” he said.

In just four years, the share of e-commerce in Indonesia increased from just 2% in 2016 to 20% of retail sales in 2020. “It will continue to grow,” Li said. “While GMV growth will eventually slow down, increased transaction volumes are opening up opportunities.” Business ideas in logistics, digital finance, fresh groceries, on-demand fulfillment, and new consumer brands will follow.

There is also a growing interest in social commerce, with TikTok, Instagram, and Facebook now running shopping businesses in the country. Social commerce platforms with group-buying features like RateS, KitaBeli, and Chilibeli could also make a greater impact. “E-commerce could make up 25% to 40% of retail sales in the coming years,” Li predicted.

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