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Indonesia e-commerce booms

News, 02 December 2015

JAKARTA: Bank Central Asia, Indonesia's largest private lender, expects to see online shopping transactions using its debit and credit cards more than double this year and increase by up to 80% next year, one of its executives has said.

According to BCA consumer card head Santoso, the bank booked Rp 4.5 trillion (US$326.3 million) in e-commerce transactions in the first nine months of the year and he was confident it would reach Rp 5 trillion by the end of the year.

That would mark a 127% increase on the previous year and he predicted continued significant growth in 2016 of anywhere between 50% and 80%, the Jakarta Post reported.

The Indonesian E-commerce Association has also highlighted the rapid growth of the sector and forecast its value will treble between 2014 and 2016, by when it estimates it will be worth Rp 283 trillion (US$ 24 billion).

But even at that rate of growth it will still only amount to 0.5% of total retail sales, according to Josephine K Chow, chief strategy advisor to head of emerging markets at ShopBack, a Singapore-based cashback reward program for online shoppers.

Writing in Marketing Magazine she also highlighted the fact that 92% of the country's internet users are not shopping online, partly because of a lack of confidence and trust, whether in supplying card information online – credit card penetration is only 6% – or in delivery logistics.

Offsetting those concerns, however, are the ease of shopping for an increasingly affluent middle class with limited access to upmarket stores in lower tier cities. Santoso also pointed to the rising costs that have hit bricks-and-mortar retailers as a factor in the growth of e-commerce as more smaller retailers follow this route.

For its part, BCA is taking an active role in further boosting e-commerce and next week will be running a three-day "e-Shopping Carnival" featuring 16 e-commerce merchants. It also plans to add up to 150 merchants next year to its existing 420 partners which include hotels, travel and electronics companies.

Data sourced from Jakarta Post, Marketing; additional content by Warc staff