Indonesia is now the world’s fastest-growing mobile-commerce market in the world, a new study shows.
The increased spending power of the middle class and rapid adoption of new technology is fueling a boom in online shopping on handsets in Indonesia, with experts predicting the country fizzing to become Asia’s next m-commerce power player.
The study, conducted by the Better Than Cash Alliance, said the nation’s m-commerce market exploded by 155% last year.
Indonesia – the largest economy in Southeast Asia with more than 260 million people – is billed as the next frontier in m-commerce after China and India. Its market is expected to swell to US$130 billion in 2020, with an annual growth of 50%, according to the Information and Communications Technology Ministry. The new numbers suggest those estimates may be lowballing the country’s true potential.
Some of this growth may be due to the release of an e-wallet service by BlackBerry, called BBM Pay’s Instant Mobile Payments, in 2015. The popular BBM chat app has more than 55 million users in Indonesia and allows users to pay for goods and services with participating merchants. It was directly inspired by the ecosystem of WeChat, the leading chat app and second biggest e-wallet solution in China.
Indonesia is one of Asia’s foremost mobile-first nations, with a more than 70% of Indonesia’s internet traffic originated from mobile devices.
On-demand transport, food and shopping service Go-Jek recently became the country’s first “unicorn,” a startup company valued at over US$1 billion. New ventures such as UangTeman, which provides short-term micro loans online, and HaloDiana, a private virtual assistant, are also springing up.
The country is also attracting attention from abroad. Both e-commerce giants Alibaba and Amazon are reportedly planning to launch there. Chinese e-commerce giant JD is in talks to make a major investment in Tokopedia, one of Indonesia’s largest online marketplaces.
China’s giant AliPay, the finance affiliate of Alibaba Group, is also extending its mobile payments empire to Indonesia.
Silicon Valley-based VC firm 500 Startups is targeting to invest in up to 100 Indonesian seed-stage companies from its US$50 million Durian Fund II, its managing partners announced in May.
The Better Than Cash Alliance is a partnership of governments, companies, and international organizations that accelerates the transition from cash to digital payments in order to reduce poverty and drive inclusive growth.