Traditional brick and mortar retailers in Indonesia are facing growing pressure to strengthen their online channels in order to catch up with tech-savvy consumers amid rapid growth of pure e-commerce companies, gunning to enjoy a piece of the expanding middle class and increasing smartphone penetration in Southeast Asia’s largest economy.
Estimates and forecasts on the size of the market in Indonesia vary, but global consulting firm Bain & Company estimated that Indonesia already has approximately 51 million of digital consumers, or roughly 20 percent of the country’s 250 million population, while technology market research firm International Data Corporation expects the market size to reach USD5 billion this year from USD2 billion in 2014.
Despite the fast growth, a recent report by Bain revealed that traditional chain retailers are missing from the picture since almost all of transactions in Indonesia are still dominated by pure e-commerce players, led by the likes of online classified site OLX and marketplace site Lazada.