Indonesia has been one of the fastest-growing countries in the Southeast Asia region over the last decade. Since 2010, the country's population has increased by 13% to 273 million people and, over the same period, households with annual incomes greater than US$10,000 has doubled to more than 30 million. Yet while the population is growing and its citizens are becoming richer, ecommerce remains at only 4% of the total retail market. So, is Indonesia is a 'digital laggard'? Or are its next generation of online shoppers poised to take the country to ecommerce leadership in the region?
To find out, ClickInsights, in partnership with Adobe, recently surveyed consumers across Southeast Asia to learn about the current state of online shopping in the region. Responses were divided into two groups: those aged 16 to 22, also known as Generation Z or 'GenZ', and those aged 23 to 37, the 'Millennials'. Below are summary results from Indonesian respondents from both generations, but to see results from each of the Southeast Asian countries, please download the full report here: Southeast Asia Online Shopping in 2020: GenZs vs. Millennials.
1) Millennials in Indonesia are much more likely to shop online frequently than GenZs in the country
Respondents were first asked to estimate how often they shop online. Do they use ecommerce on a weekly basis, a couple of times a month - or only a few times a year? Millennials in Indonesia indicate that they shop online regularly. Nearly half (46%) said they buy over the internet every week and three out of four (76%) use ecommerce at least a couple of times a month. Fewer than 1 in 4 (24%) of GenZs buy online every week and half (50%) said that they shop online only a few times a year.
This generational difference could be seen that online shopping is becoming less popular in Indonesia which would be a surprisingly different conclusion than most other regional surveys. But this is unlikely to be the case as, instead, it is much more likely that GenZs simply do not have the income to shop frequently, online or offline. So, in addition to purchasing tendencies, shopping habits, too, need to be considered before making conclusions about the health of a country's online economy.
2) When GenZs in Indonesia buy online, they are most likely to buy electronics
Respondents were also asked to provide details about their online purchases. Specifically, whether they had spent at least the local currency equivalent of US$100 last year on items from several consumer goods categories. More than 2 in 5 Millennials, though spent significant amounts on travel and electronics (40%, 41%) and 21% bought more than US$100 in clothing online. The most popular category for GenZs was electronics, with 1 in 3 (33%) indicating that they made a major purchase online last year.
So, while GenZ Indonesian consumers may not buy online frequently, they do make significant purchases online.
3) Indonesian Millennials find influencers more helpful across nearly all categories
Over the past few years, influencers have become a popular way for brands to reach a young audience. Social media posts in which influencers are seen using or recommending a product are considered by marketers to be more authentic than paid display advertising. But what do consumers think about them? Our survey revealed that, in Indonesia, both Millennials and GenZs have positive feelings toward influencers across a wide variety of categories. Nearly 2 in 3 GenZs and Millennials (61% Z, 63% M) find influencers helpful when shopping for clothes. This makes sense as seeing the latest fashion trends being worn by 'real' people can help consumers discover and make decisions about clothes.
Overall, though, Millennials are more likely to find influencers helpful across most other categories than GenZs. Approximately half of Indonesian Millennials look to influencers for inspiration on categories as diverse as travel destinations, beauty products, electronics and shoes. GenZs in Indonesia are slightly less impressed with influencers than Millennials. Fewer than half seek find them useful for the other categories though, interestingly, more GenZs find influencers helpful when shopping for games than Millennials (Z 36%, M 30%). This differential, though, may reflect more the difference in shopping habits than a difference in attitude and may change as GenZs get older.
4) Indonesian GenZs are more likely to make their next beauty purchase online than Millennials
When asked whether their next purchase will be online or offline for a variety of consumer categories, more than 2 in 3 (69%) GenZs responded that their next beauty purchase will be online. This is notably greater than Millennials who said the same (53%).
As Millennials are, as per point 1 above, more likely to shop online in general, that GenZs indicate that they are significantly more likely to buy beauty products online may represent a true generational change in consumer behaviour. Also, interesting to note is that nearly all respondents (91% Z, 95% M) say that their next travel purchase will be online.
5) GenZs are more concerned than Millennials in Indonesia about fake goods online
Another generational difference emerged when respondents were asked about their online shopping concerns. More than half (57%) of GenZ respondents said that they are worried about fake products whereas only 44% of Millennials feel the same.
There are many reasons why this may be the case. It's possible that GenZs are more brand conscious than the older generation and, therefore, more concerned about the authenticity of their purchase. Or, perhaps, GenZs are more likely to buy lower-priced items and, as a result, are more exposed to unscrupulous merchants who cut costs by substituting fakes for branded products. Irrespective of the reasons, that GenZs are more worried about fakes presents an opportunity for marketers to advertise their own-brand websites to the younger generation with the guarantee that buyers can rest assured that they will always be buying the genuine article.
6) Indonesian Millennials are more optimistic about ecommerce prospects in 2020 than GenZs
Finally, respondents were asked to estimate their online spending in 2020 and compare it with what they spent through ecommerce in 2019. Both generations are overwhelmingly positive that they will spend more, though Millennials were more optimistic than the younger generation. More than 3 in 4 (76%) Millennials said that they would spend more online in 2020 whereas 69% of GenZs felt the same.
While it is possible that this difference is a sign that ecommerce growth may be slowing in Indonesia, it is more likely to be a reflection that the younger generation simply shops online less than the older, as per point 1 above, and so GenZ respondents are less certain about their future shopping habits than Millennials.
Regardless, the overwhelmingly positive response to this question is a clear indication that ecommerce is set to grow in Indonesia in 2020. And, with a growing population and rising incomes, Indonesia will remain an attractive market for ecommerce merchants for many years to come.
To learn much more about the generational differences in online shopping behaviour across Southeast Asia, please download the full report here: Southeast Asia Online Shopping in 2020: GenZs vs. Millennials.