It is no secret that ecommerce across the world grew rapidly under the covid-19 pandemic, as it provided a safer alternative to buying offline. 

In Indonesia, the biggest ecommerce market in Southeast Asia, the total GMV by the large marketplaces in 2020 reached US$40.1 billion, or a 91% growth from the previous year. 

This is according to estimates in the Momentum Works Blooming Ecommerce in Indonesia report, a three part series. The first part, Marketplaces, is being released this week. 

The top players are Shopee and Tokopedia, each with about US$14 billion in GMV. In fact, Shopee has slightly overtaken Tokopedia, becoming the number 1 player in Indonesia in GMV terms. 

However, we think GMV, while important, is not the most important factor to judge a platform’s success. We will share our thoughts on this during an online briefing which will take place on Friday 4 June, 2-3pm Jakarta time / 3-4pm Singapore

At the briefing, we will also share our thoughts on why Shopee is winning – the reality is probably far simpler than many of the analyses you have ever read. 

Blooming Ecommerce in Indonesia will examine ecommerce and its ecosystem in Indonesia in a very systematic way.

In Part 1: Marketplaces, we focus on the overview, and zoom into the marketplaces. Here more attention is dedicated to the top four players: Shopee, Tokopedia, Lazada and Bukalapak. Collectively they occupy 91% of the marketplace GMVs in Indonesia. 

The other two parts: Part 2: Rise of ecosystem and Part 3: Emerging models and future, to be released in a few weeks’ time, will examine areas including payment, logistics, enablers, cross border as well as social commerce. 

 

Below are some key insights from Blooming ecommerce in Indonesia, Part 1: Marketplaces:

  1. In 2020, Indonesia’s marketplace records US$ 40.1B GMV, 91% yoy growth

Shopee is leading  with US$14.2 billion GMV in 2020. It is also very mobile focused, with 37.9 million downloads in Indonesia in the same year. It is securing its moat by building a full ecosystem, spanning across food delivery, fresh groceries, payment / digital finances, and a bank.

Homegrown Tokopedia (who recently announced its merger with Gojek) comes second.

SME-empowerment-focused local player Bukalapak and Alibaba’s Lazada formed the 2nd tier, while Blibli and JD.id formed the 3rd.

Gaps between tiers are widening.

 

2. Investment has accelerated across the ecosystem

Investment into ecommerce, payment and logistic companies saw a large uptick last year, even excluding Shopee’s allocation of its funds raised from the public market. 

A lot of activities also happened since the beginning of 2020, making it the most active year in ecommerce development to date (though 2021 might overtake it soon).

 

3. Shopee and Tokopedia, and especially Shopee, leads in all marketing metrics

While the above is more obvious, the following is probably more telling of a trend. Five years ago, Lazada and other players still enjoyed some lead in consumer search interest in a few provinces, in 2020 it is all overwhelmingly Shopee:

4. The players are becoming very similar from outside

This might lead you to believe that the competition is intensified. For us, we think it is a clear sign that Shopee is winning. We will explain the reasons in our briefing.

 

5. Shopee’s mass segment marketing strategy

One of the keys to Shopee’s success is its brilliant marketing campaigns.  They leverage on the power of virality by  localising the ads to make them relatable for each customer, adding positivity and humor touch, riding the bandwagon of trendy songs, and including (fun) controversy.

The customers appreciate Shopee’s attempts and genuinely enjoy the advertising.

However, clever marketing is just the optics, the execution part of a strategy that is far ahead of other players.

The report highlights a few other factors, in addition to marketing, that contributed to this success.

 

6. Is Shopee’s winning streak sustainable?

In our opinion, pundits who focus on Shopee being loss making demonstrate a complete lack of understanding of Shopee’s strategy, or ecommerce in general. 

We think Shopee is in a good shape, and as long as it continues the execution based on its strategy, which it has been doing for 5 years, it will see very good results.

 

Get the report

Ecommerce and its ecosystems have good prospects to continue their growth. While GMV growth is expected to eventually slow down, we observe further opportunities for new business models to emerge. 

Blooming Ecommerce in Indonesia report is complimentary for industry players, ecosystem stakeholders as well as investors and people who work in the ecommerce industry in general. Click here to download the report.

We look forward to seeing you at the briefing this coming Friday (4 June).

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.

 

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