Deloitte Consumer Insights - Dawn of the digital age in Indonesia January 2020
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Deloitte Consumer Insights Dawn of the digital age in Indonesia January 2020
Foreword 03 Dawn of the digital age 04 Deloitte Consumer Insights 06 1. Overall consumer sentiment 08 2. Spending patterns 11 2. Brand preferences and buying behaviours 13 4. Buying channels 22 5. Communication channels 24 6. e-Commerce 27 Looking ahead 32 Contact us 34
Foreword
Over the last five editions of the Deloitte Consumer Insights, we have observed the evolution of the Indonesian
consumer as they become more discerning about product attributes, and increasingly moved towards greater
adoption of Modern Trade and e-commerce channels.
In this sixth edition of the Deloitte Consumer Insights, we explore some of the latest consumer behaviour patterns
emerging from the results of our survey conducted during the first quarter of 2019 across 1,500 households
through face-to-face interviews in five major cities: Bandung, Jakarta, Makassar, Medan, and Surabaya.
We will begin by examining the overall consumer sentiment and plan for future expenditure, and observe how
they vary between the various cities. One interesting finding was that consumer sentiment and plan for future
expenditure may not always be correlated: according to our findings, some survey respondents who expressed
negative sentiments may in fact plan to increase their future expenditure.
Next, we explore some of the latest trends in spending patterns. What we found was a significant uptick in the
amount of expenditure allocated to Consumer Electronics categories, particularly amongst survey respondents
with average monthly household income levels. We also noted a desire to purchase more premium products, as
well as an interest in exploring alternative product options for the next purchase.
In terms of buying channels, we observed that survey respondents utilised a diverse mix of retail channels across
the entire spectrum from Modern Trade to Traditional Trade, with Warungs maintaining their dominance as
the most preferred retail channel. Although survey respondents continue to rely on traditional media as their
preferred communication channel, we are also witnessing the growing importance of online reviews, especially for
online marketplace platforms.
Finally, we examine the e-commerce landscape in Indonesia in the context of its rising digital economy. Home to
many of Southeast Asia’s unicorns, Indonesia’s vibrant and dynamic technology start-up scene has introduced
a number of new business models to the e-commerce market, which have in turn fundamentally changed the
expectations and behaviours of the Indonesian consumer.
We hope that this report will provide you with some insights into the evolution of the Indonesia consumer, and the
considerations that you will need to make at the dawn of this digital age.
Pua Wee Meng
Consumer Industry Leader
Deloitte Southeast Asia
03Deloitte Consumer Insights | Dawn of the digital age in Indonesia
Dawn of the digital age
Young and digitally savvy, Indonesian consumers are also growing
increasingly conscious about their health and wellness. As
urbanisation continues to accelerate, consumer companies will also
need to grapple with several urban-specific challenges.
Young and digitally savvy
As the fourth most populous economy in the world after China, India, and US, Indonesia has an estimated
population of 267 million, with this figure expected to reach 300 million by 20331. The majority of this population
are also young: more than 40% of Indonesia’s population are under the age of 24, and 85% are under the age of
55 (see Figure 1)2.
For consumer companies, this demographic composition – unlike the ageing populations of many other
regional economies such as China or Japan – tilts heavily towards the digitally savvy Generation X, Millennials,
and Generation Z segments, and implies the need for customisation to cater to these consumers’ unique
characteristics and lifestyle preferences, including an increased emphasis on instant gratification, digital
customer experiences, and “on-the-go” consumption.
From product selection, to check out, payment, and delivery, the market is experiencing the introduction of new
technological solutions that have been designed provide consumers with the convenience of conducting their
transactions whenever, and wherever. With Indonesia now home to five out of nine Southeast Asian unicorn
start-ups – Bukalapak, Go-Jek, Ovo, Tokopedia, and Traveloka – we are also witnessing the development of a
vibrant technology start-up scene, and accompanying higher consumer expectations for digital journeys with the
proliferation of mobile application solutions designed to enrich every step of a digital customer journey.
Figure 1: A projection of Indonesia’s age distribution (2019)
6%
9%
25%
44% 16% 0-14
15-24
25-54
55-64
65 and above
Source: Central Bureau of Statistics
1 "Inter-census Population Survey 2015”. Central Bureau of Statistics. https://www.bps.go.id
2 "Inter-census Population Survey 2015”. Central Bureau of Statistics. https://www.bps.go.id
04Deloitte Consumer Insights | Dawn of the digital age in Indonesia
Adoption of urban habits
By 2020, urban consumers will account for about 57% of Indonesia’s total population3. These consumers are likely
to be concentrated in its 12 large cities – including Jakarta, Medan, and Surabaya – that currently have populations
of more than 1 million (see Figure 2) 4.
Figure 2: Cities in Indonesia with populations of more than 1 million
2.5 million
Medan
1.1 million
Batam
1.6 million
Palembang
10.8 million
Jakarta 1.7 million
Semarang Makassar
Surabaya 1.7 million
Greater Jakarta areas 2.9 million
Bandung
Bekasi: 2.4 million
2.5 million
Depok: 1.8 million
South Tangerang: 1.3 million
Tangerang: 1.7 million
Source: Ministry of Home Affairs
As compared to their rural counterparts, urban consumers exhibit a set of very different behaviours. For
instance, they tend to be more digitally savvy, and have higher expectations for customer and service levels. They
are also likely to spend more on necessities as well as discretionary items, such as travel, welfare, and leisure
items on a per capita basis, and prioritise convenience, with a greater reliance on Modern Trade outlets and
e-commerce deliveries.
However, with greater urbanisation and migration to urban centres, several urban-specific challenges are also
beginning to pose challenges for many consumer companies. These include the need to cope with frequent
traffic congestion and floods in a megacity context, such as Jakarta, with more resilient logistics and operation
systems.
Increased focus on health and wellness
Indonesian consumers are also increasingly conscious about the way the food that they consume is produced,
and prioritising healthier choices in their purchase decisions. In many Tier 1 cities, for example, healthy and
organic products have been gaining popularity despite their hefty price tags and limited distribution channels.
The fitness sector, including fitness centres, health supplements, and wearables, is also experiencing an uplift.
The wearables market, in particular, is expected to witness a double-digit growth rate of about 16% in 20195. This
opportunity has not escaped the attention of players across a variety of different industries: for instance, the
Indonesian ride-hailing giant, Go-Jek, has begun to offer fitness classes through its mobile application platform.
Indeed, consumers are leveraging the use of technology for their health and wellness needs. App-based health
care services, for instance, are gaining widespread adoption on the back of the growth in smartphone and mobile
Internet penetration rates. In 2019 alone, Indonesian health care start-up Halodoc raised USD 100 million in
funding6, while its competitor, Alodokter, raised USD 33 million7.
3 "Urban Population by Province”. 2010-2035. Central Bureau of Statistics. https://www.bps.go.id/statictable/2014/02/18/1276/persentase-penduduk-daerah-perkotaan-
menurut-provinsi-2010-2035.html
4 "Population of Cities in Indonesia (2019)”. World Population Review. http://worldpopulationreview.com/countries/indonesia-population/cities
5 "Sector Capsule: Wearable Electronics in Indonesia”. 2019. Euromonitor.
6 "Healthcare firm Halodoc raises about US$100m in Series B, B+ rounds”. The Business Times. 25 July 2019. https://www.businesstimes.com.sg/garage/healthcare-firm-
halodoc-raises-about-us100m-in-series-b-b-rounds
7 "Indonesia’s healthcare superapp Alodokter raises $33M in Series C funding”. MobiHealthNews. 16 October 2019. https://www.mobihealthnews.com/news/asia-pacific/
indonesia-s-healthcare-superapp-alodokter-raises-33m-series-c-funding
05Deloitte Consumer Insights | Dawn of the digital age in Indonesia
Deloitte Consumer Insights
In this sixth edition of the Deloitte Consumer Insights, we capture some of the latest preferences and behaviours
of the Indonesian consumer uncovered by the recent consumer survey conducted by Deloitte in Bandung, Jakarta,
Makassar, Medan, and Surabaya in the first half of 2019. We begin by examining the overall consumer sentiment
and spending patterns, before delving into specific buying behaviours and brand preferences. Finally, we will
analyse their communication channels and buying channels.
Methodology
The survey was conducted during the first half of 2019 across 1,500 households through face-to-face interviews in
five major cities: Bandung, Jakarta, Makassar, Medan, and Surabaya. The respondent sample was constructed to
be representative of Indonesia’s overall population in terms of age, gender, monthly household income level, and
geographical distribution.
Respondents were surveyed on their consumer sentiment, spending patterns, buying behaviours, communication
channels, and buying channels across the following product categories:
Basic Necessities Household & Personal Care
• Packaged Foods • Household Cleaning Products
• Confectionery • Personal Hygiene Products
• Beverages (Non-Alcoholic) • Cosmetics & Beauty Products
• Beverages (Alcoholic)
• Clothing & Footwear Welfare & Leisure
• Welfare & Savings
Housing & Transportation • Leisure & Holidays
• Transportation • Credit Card Instalments
• Communications & Media • Books
• Housing & Utilities • Tickets
Consumer Electronics Others
• Audio & Video Electronics • Tobacco
• Household Appliances (Major) • Pet Food
• Household Appliances (Small)
• Mobile Phones, Digital Cameras & Other Gadgets
06Demographics of survey respondents
Deloitte Consumer Insights | Dawn of the digital age in Indonesia
Age distribution
Age group, years
15-24
25-34
50% 50% 35-49
Demographics of survey respondents
Demographics of survey respondents 50-64 19%
Geographical distribution Gender distribution
Monthly household income distribution
Makassar Monthly household income level, IDR million
17%
Jakarta Less than 1 6%
Age distribution
33% 1-2 19%
Age group, years
2-3
Medan 17%
3-5 15-24
5-7.5 8% 25-34
respondents 16% 17%
7.5-10 6%
50% 50% 35-49
More than 10 5%
Bandung
Surabaya 50-64
Age distribution
Monthly household inc
Age group, years
Makassar Monthly household incom
15-24 25%
17%
Jakarta Less than 1 6
25-34 26%
33% 1-2
35-49 30%
2-3
50-64
Medan 17% 19%
3-5
5-7.5
Monthly household income distribution
7.5-10 6%
Monthly household income level, IDR million 16% 17%
More than 10 5%
Less than 1 6% Bandung
Surabaya
1-2 19%
2-3 25%
3-5 31%
5-7.5 8%
7.5-10 6%
More than 10 5%
07Deloitte Consumer Insights | Dawn of the digital age in Indonesia
1. Overall consumer sentiment
Overall optimism levels remain unchanged from
the previous edition of the survey, but geographical
differences are highly correlated with levels of
infrastructure development.
Varying sentiments across cities
Overall, optimism levels remained constant from 2018 levels, with 89% of survey respondents indicating
a positive sentiment (see Figure 3). This optimism is likely a reflection of the current pace and stability of
Indonesia’s economic growth: for the last 14 consecutive quarters, Indonesia has consistently maintained its
economic growth rate within the narrow range of 4.9-5.3%8.
Figure 3: Overall consumer sentiment
15% 11% 11%
19%
85% 89% 89%
81%
Negative
Positive
2016 2017 2018 2019
Source: Deloitte Consumer Insights Survey (2016, 2017, 2018, and 2019)
This sentiment, however, is not evenly distributed across cities. Specifically, while levels of optimism have
increased amongst survey respondents in Jakarta and Surabaya during the last three years, they have decreased
amongst survey respondents in Bandung, Makassar, and Medan (see Figure 4).
Of note is the fact that these differences in consumer sentiment are highly correlated with the levels of major
infrastructure activity in these cities. In Jakarta, for instance, the first phase of the Mass Rapid Transit system was
launched earlier in 2019, with several other projects, including the Light Rapid Transit9, and Jakarta Outer Ring
Road 2 tollway, due to be completed by early 202010. In Makassar, on the other hand, the expected launch date of
its railway track project has been delayed from 2018 to 202011.
8 "June 2019 Indonesia Economic Quarterly: Oceans of Opportunity”. The World Bank. 1 July 2019. https://www.worldbank.org/en/country/
indonesia/publication/june-2019-indonesia-economic-quarterly
9 "Administrative Issues; Jakarta LRT Launch Delayed Again”. Tempo. 3 June 2019. https://en.tempo.co/read/1211948/administrative-issues-
jakarta-lrt-launch-delayed-again
10 "Three sections of JORR 2 toll roads will be completed in March 2020”. IDN Financials. 23 September 2019. https://www.idnfinancials.com/
news/28791/sections-jorr-toll-roads-completed-march
11 "Indonesia Infrastructure Report, Q3 2019”. Fitch Solutions.
08Deloitte Consumer Insights | Dawn of the digital age in Indonesia
Figure 4: Consumer sentiment by city (2017-2019)
2017 59% 21% 20%
Bandung 2018 74% 24% 2%
2019 67% 23% 10%
2017 57% 24% 19%
Jakarta 2018 67% 19% 14%
2019 79% 14% 8%
2017 78% 20% 2%
Makassar 2018 83% 14% 3%
2019 67% 21% 12%
2017 45% 28% 27%
Medan 2018 73% 17% 11%
2019 58% 28% 14%
2017 51% 27% 22%
Surabaya 2018 68% 20% 12%
2019 73% 17% 10%
Optimistic Moderate Pessimistic
Source: Deloitte Consumer Insights Survey (2017, 2018, and 2019)
Prudence reigns
Despite their optimism, survey respondents continue to demonstrate prudence in their plans for future
expenditure, with only 17% indicating plans to increase their expenditure (see Figure 5). This prudence is evident
across all monthly household income levels. Indeed, even amongst survey respondents with the highest monthly
household income levels – who also express the highest optimism levels – plans for increased expenditure
remain fairly conservative (see Figure 6).
Figure 5: Overall plan for future expenditure
17%
29% 26%
33%
83%
71% 74%
67%
Increase
Decrease/Maintain
2016 2017 2018 2019
Source: Deloitte Consumer Insights Survey (2016, 2017, 2018, and 2019)
09Deloitte Consumer Insights | Dawn of the digital age in Indonesia
Figure 6: Consumer sentiment and plan for future expenditure by monthly household income level
Monthly household
income level,
IDR million
Consumer sentiment Plan for future expenditure
Less than 1 66% 10% 24% 18% 55% 27%
1-2 68% 10% 22% 20% 54% 26%
2-3 74% 12% 15% 18% 52% 30%
3-5 70% 9% 20% 17% 47% 36%
5-7.5 72% 12% 16% 17% 45% 38%
7.5-10 72% 8% 20% 14% 43% 43%
More than 10 86% 11% 13% 48% 39%
3%
Optimistic Moderate Pessimistic Increase Maintain Decrease
Source: Deloitte Consumer Insights Survey (2019)
One interesting observation, however, is that even a negative consumer sentiment may not necessarily translate
into plans for decreased future expenditure: amongst the optimists, only 15% plan to increase their expenditure;
while amongst the pessimists, 23% of them intend to do so (see Figure 7). Overall, survey respondents in
Bandung are keen to spend more across all product categories, while survey respondents in Surabaya appear to
be the most conservative (Figure 8).
Figure 7: Plans for future expenditure by consumer sentiment
Optimistic 15% 49% 36%
Moderate 25% 47% 28%
Pessimistic 23% 43% 34%
Increase Maintain Decrease
Source: Deloitte Consumer Insights Survey (2019)
Figure 8: Plans for future expenditure by city
Household & Housing & Consumer
Basic Necessities Personal Care Transportation Welfare & Leisure Electronics Others
Bandung 36% 64% 50% 50% 25% 75% 28% 72% 31% 69% 40% 60%
Jakarta 44% 56% 57% 43% 49% 51% 38% 62% 39% 61% 55% 45%
Makassar 36% 64% 26% 74% 31% 69% 24% 76% 27% 73% 70% 30%
Medan 37% 63% 50% 50% 37% 63% 38% 62% 45% 55% 45% 55%
Surabaya 75% 25% 60% 40% 67% 33% 60% 40% 58% 42% 22% 78%
Intended increase in spending
Less than 10% More than 10%
Source: Deloitte Consumer Insights Survey (2019)
10Deloitte Consumer Insights | Dawn of the digital age in Indonesia
2. Spending patterns
There has been a general trend towards increased
expenditure on Consumer Electronics product
categories, but some differences across monthly
household income levels were also observed.
Uptick in expenditure on Consumer Electronics
Overall, monthly household expenditure has been growing at a compound annual growth rate of 1.3% from
2017 to 2019. In terms of allocation, we observed a significant decrease in expenditure on Basic Necessities,
accompanied by a sharp increase in expenditure on Consumer Electronics. Specifically, Basic Necessities now
accounts for only 28% of total monthly household expenditure, down from the levels of 43% and 35% in 2017
and 2018 respectively, while the allocation to Consumer Electronics has nearly doubled to 20% from 11% in 2011.
We also continue to observe an inflection point at the IDR 5-7.5 million monthly household income level, which
has held constant since our first edition of the survey in 2014. This inflection point remains a reliable indicator
of the point at which consumers make the shift from prioritising basic needs to making a greater number of
discretionary purchases, and appears to be especially stark in the Consumer Electronics category, with survey
respondents in the IDR 5-7.5 million segment allocating the greatest proportion of their monthly household
expenditure to this category (see Figure 9).
Figure 9: Breakdown of monthly household expenditure by monthly household income level
1% 1% 1% 1% 1% 1% 1%
4% 5% 4% 4% 3% 5% Others
8% 4%
7% 6% 7% 6% 9% 6% 7%
2% 5% 2% 2% 2% 2% Consumer
4% 3% 3%
2% 6% 5% 5% Electronics
6% 4% 6%
5% 4% 6% 7% 6%
5% 4%
4% 4% 4%
4% 5% 7% 6%
5% 3%
6% 6%
4% 7% 4% 8% Welfare &
9% Non- 12%
Necessities Leisure
11% 12% 9% 14%
72% 11%
5% 11%
11%
6% 4% 4%
8% 10%
4% 7% 5% 11%
8% 3% 7% 3% Housing &
8% 1% 6% 3% 3% 8%
7% 4% Transportation
3% 8% 6% 5% 3%
5% 3% 9%
5% 4% 4% 5%
6% 5% 4%
3% 6% 5% 3% 4% 3% Household &
3% 4%
5% 5% 4% 5% 7% Personal Care
6% 4% 3%
4% 3% 4% 5%
Basic
Necessities 3% Basic
28% 23% 21% 22% Necessities
19% 18% 19% 17% 14%
2019 Less than 1 1-2 2-3 3-5 5-7.5 7.5-10 More than 10
Monthly household expenditure, IDR million
Basic Necessities Household & Personal Care Housing & Transportation Welfare & Leisure Consumer Electronics Others
Packaged Foods Household Cleaning Transportation Welfare & Savings Audio & Video Electronics Tobacco
Beverages (Non-Alcoholic) Products Communications & Media Leisure & Holidays Household Appliances (Major) Pet Food
Cosmetics & Beauty
Clothing & Footwear Housing & Utilities Credit Card Instalments Household Appliances (Small)
Products
Personal Hygiene Mobile Phones, Digital Cameras
Products & Other Gadgets
Source: Deloitte Consumer Insights Survey (2019)
11Deloitte Consumer Insights | Dawn of the digital age in Indonesia
Different expenditure patterns across income and cities
Overall, several differences in expenditure patterns can be observed across the different monthly household
income levels. For example, survey respondents with higher monthly household income levels tend to allocate
more towards Welfare & Leisure, while survey respondents with average monthly household income levels spend
more on Consumer Electronics, and those with lower monthly household income levels spend more on Tobacco
(see Figure 10).
Figure 10: Expenditure patterns across product categories
Basic Necessities Household & Personal Care
Percentage Percentage
of monthly of total
household monthly
expenditure household
expenditure
Less 1-2 2-3 3-5 5-7.5 7.5-10 More Less 1-2 2-3 3-5 5-7.5 7.5-10 More
than 1 than 10 than 1 than 10
Monthly household income level, IDR million Monthly household income level, IDR million
Housing & Transportation Welfare & Leisure
Percentage Percentage
of total of total
monthly monthly
household household
expenditure expenditure
Less 1-2 2-3 3-5 5-7.5 7.5-10 More Less 1-2 2-3 3-5 5-7.5 7.5-10 More
than 1 than 10 than 1 than 10
Monthly household income level, IDR million Monthly household income level, IDR million
Consumer Electronics Others
Percentage Percentage
of total of total
monthly monthly
household household
expenditure expenditure
Less 1-2 2-3 3-5 5-7.5 7.5-10 More Less 1-2 2-3 3-5 5-7.5 7.5-10 More
than 1 than 10 than 1 than 10
Monthly household income level, IDR million Monthly household income level, IDR million
Source: Deloitte Consumer Insights Survey (2019)
12Deloitte Consumer Insights | Dawn of the digital age in Indonesia
3. Brand preferences and buying
behaviours
A desire to purchase more premium products was
observed across all monthly household income levels.
Survey respondents also expressed an interest to
explore alternative options for their next purchase.
Perception matters Non- Clothing Cosmetics Audio Major Small Digital
Alcoholic Personal Household
Total Food Confectionary Alcoholic Beverage and
Hygiene
/ Beauty
Cleaning
Video Household Household Gadgets Cigarettes Pet Food
A number of common Foreign Beverage brands, Footwear
particularly in the Household &
Care Personal
Electronic Care
Appliances category,andare often
Appliances
Product Accessories
perceived by survey respondents to be Local. As a result, Local brands continue to dominate brand preferences
17.4% 0.1% 0.3% 0.8% 4.8% 4.2% 1.6% 2.6% 0.6% 57.2% 53.9% 41.7% 70.6% 0.5% 6.4%
across most product categories, except in the Audio & Video Electronics, and Mobile Phones, Digital Cameras
82.6% 99.9% 99.7% 99.2% 95.2% 95.8% 98.4% 97.4% 99.4% 42.8% 46.1% 58.3% 29.4% 99.5% 93.6%
& Other Gadgets categories, where Foreign brands are preferred. In other Consumer Electronics categories,
such as Major
Local Household Appliances and Small Household Appliances, Local brands seem to be almost as
Foreign
competitive as Foreign brands (see Figure 11).
A significant difference in brand preferences, however, can be seen at a city level. Specifically, survey
respondents in Jakarta – the commercial hub and most populous city in Indonesia – expressed the highest
preference for Foreign brands (see Figure 12). This result could be the combination of a higher exposure to
Foreign brands in this megacity, as well as higher levels of disposable incomes.
Figure 11: Brand preferences by monthly household income levels
Mobile
Monthly Phones, Digital
household Beverages Personal Cosmetics Household Audio & Household Household Cameras
income level, Packaged (Non- Beverages Clothing & Hygiene & Beauty Cleaning Video Appliances Appliances & Other
IDR million Foods Confectionery Alcoholic) (Alcoholic) Footwear Products Products Products Electronics (Major) (Small) Gadgets Tobacco Pet Food
2% 1%
Less than 1 100% 100% 100% 100% 98% 100% 99% 100% 39% 61% 48% 52% 58% 43% 26% 74% 100% 100%
1% 2% 1% 4% 1%
1-2 100% 100% 99% 100% 98% 99% 96% 99% 49%51% 50.8%49% 63% 37% 39% 61% 100% 100%
2% 1% 3% 1%
2-3 100% 100% 100% 64% 36% 98% 99% 98% 100% 44% 56% 50% 50% 61% 39% 35% 65% 100% 99%
1% 4% 3% 2% 1% 1%
3-5 100% 99% 100% 92% 8% 96% 97% 98% 99% 41% 59% 46% 54% 60% 40% 28% 72% 99% 100%
7% 2% 2% 1% 1% 7%
5-7.5 100% 100% 100% 100% 93% 98% 98% 99% 43% 57% 44% 56% 60% 40% 28% 72% 99% 93%
4% 3% 2% 8% 12%
7.5-10 100% 100% 96% 100% 97% 98% 92% 100% 38% 62% 36% 64% 56% 44% 23%77% 100% 88%
2% 7% 1% 2% 18%
More than 10 100% 100% 98% 100% 93% 99% 98% 100% 43% 57% 47% 53% 47% 53% 24% 76% 100% 83%
Local Foreign
Source: Deloitte Consumer Insights Survey (2019)
13Deloitte Consumer Insights | Dawn of the digital age in Indonesia
Figure 12: Brand preferences by city
Digital
Beverages Personal Cosmetics Household Audio & Household Household Cameras
Packaged (Non- Beverages Clothing & Hygiene & Beauty Cleaning Video Appliances Appliances & Other
Foods Confectionery Alcoholic) (Alcoholic) Footwear Products Products Products Electronics (Major) (Small) Gadgets Tobacco Pet Food
1% 2% 2% 2% 1% 11%
Bandung 100% 100% 99% 100% 98% 98% 98% 99% 41% 59% 47% 53% 58% 43% 37% 63% 100% 89%
1% 6% 5% 1% 2% 9%
Jakarta 100% 100% 99% 94% 95% 99% 98% 100% 38% 62% 39% 61% 63% 37% 24% 76% 100% 91%
29% 6% 6% 8% 2% 2%
Makassar 100% 100% 100% 71% 94% 94% 92% 100% 60%40% 66%34% 61%39% 48% 52% 98% 98%
1% 1% 3% 3% 8% 1% 3% 5%
Medan 100% 99% 99% 100% 97% 97% 92% 99% 38% 62% 60% 40% 60% 40% 31% 69% 98% 95%
2% 1%
Surabaya 100% 100% 100% 100% 98% 99% 100% 100% 62% 38% 61% 39% 60% 40% 34% 66% 100% 100%
Local Foreign
Source: Deloitte Consumer Insights Survey (2019)
Push for premiumisation
Our survey findings revealed that 19% of survey respondents have chosen to purchase higher-priced products
amongst their purchase options within the same product category (see Figure 13), an increase of 4% from 2018.
Furthermore, the drive to purchase more premium products is not only limited to survey respondents who
intend to increase their expenditure. Although only 20% of survey respondents indicated plans to increase their
consumption within the next two years (see Figure 14), 45% of survey respondents indicated that they would
purchase higher-priced products on their next purchase.
Figure 13: Preference for different price options
25% 56% 19%
Lower price Same price Higher price
Source: Deloitte Consumer Insights Survey (2019)
Figure 14: Plans to change expenditure levels within the next two years
20% 8% 72%
Yes Maybe No
Source: Deloitte Consumer Insights Survey (2019)
14Deloitte Consumer Insights | Dawn of the digital age in Indonesia
This trend can be observed across all monthly household income levels, but is especially pronounced in the IDR
5-7.5 million segment, where more than half would consider a more premium option for their next purchase (see
Figure 15). For consumer companies, this represents a latent opportunity to introduce more premium options
that offer better quality products at higher prices.
Figure 15: Plans to increase expenditure levels within the next two years and preference for different
price options for next purchase by monthly household income level
Plans to increase expenditure levels within the next two years Preference for different price options for next purchase
Less than 1 12% 7% 81% 36% 61% 4%
1-2 16% 8% 76% 34% 59% 7%
2-3 19% 8% 73% 42% 50% 8%
3-5 21% 7% 72% 49% 46% 6%
19% 7% 74% 51% 44% 5%
5-7.5
7.5-10 25% 7% 68% 48% 46% 7%
More than 10 23% 13% 64% 44% 50% 7%
Yes Maybe No Better price or quality
Alternative with similar price or quality
Similar price and quality
Source: Deloitte Consumer Insights Survey (2019)
Demand for alternatives
At the other end of the spectrum, about 72% of survey respondents indicated that they do not have plans to
increase their expenditure levels. However, more than half of them indicated that they are considering the
purchase of alternative products. Specifically, 54% of survey respondents who have purchased lower-priced
options and 50% of those who have purchased similar-priced options are exploring the purchase of alternative
products for their next purchase (see Figure 16).
Figure 16: Preference for different price options for next purchase amongst survey respondents
who have made similar purchase decisions
Lower price 40% 54% 6%
Same price 45% 50% 5%
Higher price 55% 40% 5%
Better price or quality
Alternative with similar price or quality
Similar price and quality
Source: Deloitte Consumer Insights Survey (2019)
15Deloitte Consumer Insights | Dawn of the digital age in Indonesia
In addition, we observed that survey respondents with average monthly household income levels appear to be
more willing to purchase a higher-priced product in the future, as compared to survey respondents with lower or
higher monthly household income levels (see Figure 17), which perhaps indicates their aspirations and desires
for an improved standard of living. Although evident across all product categories, survey respondents across all
monthly household income levels also express a pronounced interest in purchasing higher-priced options for the
Consumer Electronics categories (see Figure 18).
Figure 17: Preference for different price options for next purchase amongst survey respondents
who have made similar purchase decisions by monthly household income level
Monthly
household
income level,
IDR million Lower price Same price Higher price
Less than 1 39% 55% 6% 31% 69% 52% 45% 3%
1-2 25% 68% 7% 33% 58% 9% 51% 48% 1%
35% 54% 11% 45% 46% 8% 50% 45% 5%
2-3
47% 45% 8% 48% 47% 5% 52% 46% 2%
3-5
48% 49% 3% 50% 47% 3% 45% 41% 14%
5-7.5
7.5-10 40% 49% 11% 46% 52% 2% 64% 32% 4%
30% 70% 38% 55% 7% 62% 31% 8%
More than 10
Better price or quality Alternative with similar price or quality Similar price and quality
Source: Deloitte Consumer Insights Survey (2019)
Figure 18: Preference for different price options for next purchase amongst survey respondents who
have made similar purchase decisions by product category
Basic Necessities Household & Personal Care Consumer Electronics Others
Lower price 42% 54% 4% 35% 57% 8% 46% 46% 8% 31% 61% 8%
Same price 46% 48% 6% 44% 52% 4% 46% 50% 4% 21% 62% 17%
Higher price 53% 43% 5% 53% 40% 8% 63% 34% 3% 32% 56% 12%
Better price or quality Alternative with similar price or quality Similar price and quality
Source: Deloitte Consumer Insights Survey (2019)
16Deloitte Consumer Insights | Dawn of the digital age in Indonesia
Decision drivers
Overall, Price and Quality remain the key purchasing decision drivers for survey respondents (see Figure 19). More
specifically, Price plays the most important role for Basic Necessities and Household & Personal Care categories,
while Quality, Price and Trust are more important considerations for Consumer Electronics categories (see Figure 20).
Figure 19: Overall purchase decision drivers
Price 21%
Quality 18%
Trust 12%
Taste 9%
Availability 8%
Promotion 7%
Health 5%
Innovation 5%
Safety 5%
Smell 5%
Packaging 5%
Source: Deloitte Consumer Insights Survey (2019)
Figure 20: Purchase decision drivers by product category
Basic Necessities Household & Personal Care
Price 22% Price 20%
Quality 14% Quality 17%
Trust 8% Trust 12%
Taste 18% Taste 1%
Availability 8% Availability 9%
Promotion 6% Promotion 6%
Health 7% Health 11%
Innovation 3% Innovation 3%
Safety 3% Safety 6%
Smell 6% Smell 8%
Packaging 5% Packaging 6%
Consumer Electronics Others
Price 21% Price 22%
Quality 24% Quality 12%
Trust 17% Trust 9%
Taste 1% Taste 20%
Availability 8% Availability 6%
Promotion 8% Promotion 3%
Health 1% Health 4%
Innovation 10% Innovation 2%
Safety 7% Safety 2%
Smell 1% Smell 14%
Packaging 3% Packaging 6%
Source: Deloitte Consumer Insights Survey (2019)
17Deloitte Consumer Insights | Dawn of the digital age in Indonesia
A detailed analysis by product category
As purchase decision drivers vary between product categories, we will examine several product categories
in greater detail, and explore some of the untapped opportunities that exist for consumer companies.
Clothing & Footwear
Most survey respondents preferred Local brands in the Clothing & Footwear category. Our survey revealed
that a whopping 96% of survey respondents expressed this preference, a significant increase from 86% in
2018.
However, preferences and share of mind do not always converge: both Local and Foreign brands appear
to have equal share of mind amongst survey respondents, with five Local brands and five Foreign brands
making up the top 10 purchased brands in this category. One possible explanation for this could be the
fact that Local brands tend to be preferred for their affordability in terms of Price and Promotion, whereas
Foreign brands tend to be preferred in terms of Quality and Trust (see Figure 21).
The majority 70-80% of survey respondents spend about IDR 0.1-0.5 million per month on Clothing
& Footwear, with the proportion varying significantly by age group (see Figure 22). Specifically, survey
respondents aged 25-34 tend to allocate larger amounts to this product category, and tend to be more
willing to purchase higher-priced items. In terms of frequency, about 87% of survey respondents indicated
that they prefer to purchase Clothing & Footwear items on a quarterly basis.
Figure 21: Purchase decision drivers for Clothing & Footwear
22%
Overall Quality 30%
Price 28%
21%
Trust 11%
24%
6%
Innovation 6%
Promotion 14%
1%
5%
Safety 14%
Availability 11%
1%
Packaging 4%
2%
Others 3%
Local Foreign
Source: Deloitte Consumer Insights Survey (2019)
Figure 22: Monthly expenditure on Clothing & Footwear by age group
2% 3% 1% 5%
10% 17%
20% 16%
Monthly household
40% income level,
38% 30% IDR million
44%
2-5
1-2
0.5-1
39% 36% 37%
27% 0.2-0.5
0.1-0.2
9% 6% 8% 10% Less than 0.1
15-24 25-34 35-49 50-64
Age group, years
Source: Deloitte Consumer Insights Survey (2019)
18Deloitte Consumer Insights | Dawn of the digital age in Indonesia
Cosmetics & Beauty Products
Overall, Local brands are overwhelmingly preferred in the Cosmetics & Beauty Products category. This
trend is evident across all monthly household income levels, but appears to have gained the most traction
in the segment with monthly household income levels of more than IDR 10 million, where the preference for
Local brands increased by about 15% from 2018.
Four out of the five top purchased brands in this category are Local, with a Local Halal brand dominating
the charts. This observation reflects the rise of Halal Cosmetics & Beauty Products in Indonesia, as many
Muslim individuals believe it is their religious duty to use Halal cosmetics.
Amongst female survey respondents – who accounted for the majority of Cosmetics & Beauty Products
purchases – Price, Quality, and Trust were the most important considerations (see Figure 23). On average,
each Cosmetics & Beauty Products purchase was worth about IDR 0.05-0.1 million (see Figure 24). In terms
of frequency, the majority 67% preferred to make purchases on a monthly basis, while 22% preferred to
make the purchases quarterly. This suggests room for consumer companies to market products that are
packaged in bulk or large packs, instead of the small and medium pack sizes that are currently the most
dominant form of packaging.
Figure 23: Purchase decision drivers for Cosmetics & Beauty Products (female survey respondents only)
Price 19%
Quality 19%
Trust 15%
Health 11%
Safety 10%
Availability 7%
Promotion 7%
Packaging 5%
Innovation 4%
Smell 2%
Taste 1%
Source: Deloitte Consumer Insights Survey (2019)
Figure 24: Average expenditure on Cosmetics & Beauty Products per purchase
1%
12% 2%
18%
20% Monthly household
income level, IDR million
1-2 0.05-0.1
30% 0.5-1 0.025-0.05
0.2-0.05 0.01-0.025
15% 0.15-0.2 Less than 0.01
3% 0.1-0.15
Source: Deloitte Consumer Insights Survey (2019)
19Deloitte Consumer Insights | Dawn of the digital age in Indonesia
Consumer Electronics
The preference for Local brands in the Consumer Electronics categories saw a significant increase in
this edition of the survey, except in the Small Household Appliances category, where the high levels of
preference for Local brands have been consistently maintained (see Figure 25).
Across all Consumer Electronics categories, we also observed the rise of Chinese brands. One reason for
this could be the ability of Chinese brands to strike the right balance between affordability and range of
technological capabilities, as survey respondents continue to prioritise Quality, and Price in their purchase
decisions (see Figure 26).
Figure 25: Brand preferences for Consumer Electronics categories
1% 1%
7% 16%
19% 23% 17%
38% 38%
48% 54% 13% 20%
33% 32%
6% 2% 4%
4% 3% 17%
4% 2%
2%
36% 13%
35% 31% 58% 58% 2%
43% 46%
2% 3% 15% 29%
8% 11% 6%
2018 2019 2018 2019 2018 2019 2018 2019
Audio & Video Household Household Mobile Phones,
Electronics Appliances (Major) Appliances (Small) Digital Cameras
& Other Gadgets
Chinese Japanese Korean Western Local
Source: Deloitte Consumer Insights Survey (2018, 2019)
Figure 26: Purchase decision drivers for Consumer Electronics
Mobile Phones,
Audio & Video Household Household Digital Cameras &
Electronics Appliances (Major) Appliances (Small) Other Gadgets
23% 23% 26% 24%
22% 22% 20% 21%
18% 13% 17% 14%
8% 14% 3% 10%
Chinese 13% 12% 6% 11%
5% 4% 11% 9%
8% 8% 13% 7%
1% 3% 2% 2%
3% 2% 2% 2%
31% 24% 26% 24%
27% 23% 16% 19%
14% 17% 18% 16%
Japanese 10% 8% 4% 10%
9% 4% 11% 10%
5% 11% 11% 6%
5% 7% 9% 8%
3% 5% 4%
2% 2% 3%
22% 23% 22% 24%
26% 26% 24% 22%
16% 15% 17% 20%
10% 7% 8% 5%
Korean 7% 12% 9% 10%
7% 1% 4% 3%
8% 7% 15% 10%
2% 6% 1% 1%
2% 3% 1% 4%
24% 17% 33% 32%
21% 30% 26% 29%
22% 27% 6% 13%
Western 2% 3% 13% 5%
6% 16% 4%
13% 6% 19% 17%
13% 3% 2%
25% 23% 22% 24%
18% 19% 23% 24%
19% 16% 17% 17%
12% 11% 8% 10%
Local 10% 9% 8% 8%
7% 11% 9% 7%
4% 8% 7% 6%
3% 1% 2% 2%
2% 3% 4% 3%
Quality Price Trust Innovation Promotion Safety Availability Packaging Others
Source: Deloitte Consumer Insights Survey (2019)
20Deloitte Consumer Insights | Dawn of the digital age in Indonesia
Making healthier choices
Overall, we observed a general trend towards greater health-consciousness. Despite their premium pricing,
healthier options in Food & Beverage categories are gaining popularity amongst survey respondents. Survey
respondents in Jakarta and Surabaya, in particular, expressed the highest preference for healthier options. In
addition, an overall greater level of health-consciousness was also observed amongst those with higher monthly
household income levels (see Figure 27). In terms of health considerations, survey respondents tend prioritise
four key features: High Vitamins & Minerals, Low Cholesterol, Low Fat, and Low Sugar (see Figure 28).
Figure 27: Preference for healthier options in Food & Beverage categories by city and monthly
household income level
Bandung 32% 53% 16%
Jakarta 68% 24% 5% 3%
Makassar 37% 37% 23% 3%
Medan 39% 42% 14% 6%
Surabaya 65% 30% 4%
1%
Monthly household
income level, IDR million
Less than 1 36% 37% 21% 5%
1-2 53% 31% 12% 4%
2-3 56% 32% 10% 2%
3-5 58% 31% 9% 2%
5-7.5 58% 32% 6% 3%
7.5-10 59% 35% 6%
1%
More than 10 49% 43% 6%
1%
Always choose healthier option Often choose healthier option
Rarely choose healthier option Never choose healthier option
Source: Deloitte Consumer Insights Survey (2019)
21Deloitte Consumer Insights | Dawn of the digital age in Indonesia
Figure 28: Health considerations for Food & Beverage categories by city and monthly household
income level
2%
Bandung 32% 22% 17% 13% 5% 5% 5%
Jakarta 37% 22% 15% 10% 7% 4% 4%2%
2% 2%
Makassar 32% 20% 12% 20% 6% 6%
2% 2%
Medan 25% 25% 27% 13% 3.3% 3%
Surabaya 39% 29% 11% 12% 8% 2% 2%
Monthly household income level,
IDR million
2%
Less than 1 31% 26% 19% 17% 1% 4%
2% 3%
1-2 36% 25% 11% 15% 4% 4%2%
3%
2-3 28% 28% 13% 18% 4% 4%
1% 2%
3-5 35% 27% 14% 13% 4% 4%
1% 2%
5-7.5 44% 17% 17% 11% 5% 4% 1%
2.2%
7.5-10 25% 40% 10% 12% 5% 4.9%
More than 10 42% 24% 19% 6% 2% 4%
2% 2%
High Vitamins & Minerals Low Sugar High Protein High Calcium
Low Cholesterol Low Fat High Fibre Boost Stamina
Source: Deloitte Consumer Insights Survey (2019)
22Deloitte Consumer Insights | Dawn of the digital age in Indonesia
4. Buying channels
With the proliferation of various retail formats,
including e-commerce, capturing the Indonesian
consumer’s share of wallet requires consumer
companies to be at the right place, at the right time.
A diverse channel mix
Although Modern Trade channels have continued their rapid expansion across Indonesia’s retail landscape,
Traditional Trade channels such as Warungs, Wet Markets, and Street Hawkers continue to hold their ground
(see Figure 29). In particular, since the 2016 edition of this survey, Warungs have maintained their dominance,
emerging as the top preferred buying channel amongst survey respondents (see Figure 30).
Ultimately, Indonesian consumers utilise a diverse mix of retail channels: while Modern Trade channels appeal
to them with consistent branding, and a diverse range of products, Traditional Trade channels are better able to
cater to localised demand amongst small bases of regular customers. For example, Warungs offer small store
formats with higher penetration rates in residential areas, where they can be closer to the consumer. Warungs
also benefit from the perception of lower prices, and offer consumers the option of buying products in smaller
packaging sizes.
Figure 29: Overall preference for Modern Trade and Traditional Trade channels
57% 62% 63%
68%
43% 38% 37%
32%
2016 2017 2018 2019
Modern Trade Traditional Trade
Source: Deloitte Consumer Insights Survey (2016, 2017, 2018, and 2019)
Figure 30: Preference for buying channels
Warungs 24%
Minimarkets 23%
Hypermarkets 11%
Wet Markets 10%
Brand Stores 9%
Supermarkets 7%
Electronics Chain Stores 7%
Individual Electronics Stores 7%
Street Hawkers 3%
Source: Deloitte Consumer Insights Survey (2019)
23Deloitte Consumer Insights | Dawn of the digital age in Indonesia
The preference for Modern Trade and Traditional Trade channels, however, varies by monthly household income
level and city. Overall, we observed a positive correlation between a preference for Modern Trade channels and
monthly household income levels (see Figure 31), as well as a stronger preference for Modern Trade channels in
Bandung and Surabaya (see Figure 32).
Figure 31: Preference for Modern Trade and Figure 32: Preference for Modern Trade and
Traditional Trade channels by monthly household Traditional Trade channels by city
income level
Monthly household income level, IDR million
Less than 1 56% 44%
Bandung 67% 33%
1-2 55% 45%
2-3 Jakarta 62% 38%
60% 40%
3-5 64% 36%
Makassar 54% 46%
5-7.5 65% 35%
Medan 50% 50%
7.5-10 65% 35%
More than 10 69% 31% Surabaya 66% 34%
Modern Trade Traditional Trade Modern Trade Traditional Trade
Source: Deloitte Consumer Insights Survey (2019) Source: Deloitte Consumer Insights Survey (2019)
In terms of product categories, our survey revealed that a mix of Modern Trade and Traditional Trade channels
are generally preferred for the purchase of Basic Necessities, with Makassar and Medan showing a stronger
preference for Traditional Trade channels. Modern Trade channels are typically preferred for the purchase of
Personal Hygiene Products and Household Cleaning Products, and nearly exclusively preferred for the purchase
of Consumer Electronics (see Figure 33).
Figure 33: Preference for Modern Trade and Traditional Trade channels by product category and city
Mobile
Phones, Digital
Beverages Personal Cosmetics Household Audio & Household Household Cameras
Packaged (Non- Beverages Clothing & Hygiene & Beauty Cleaning Video Appliances Appliances & Other
Foods Confectionery Alcoholic) (Alcoholic) Footwear Products Products Products Electronics (Major) (Small) Gadgets Tobacco Pet Food
29% 24% 24% 4% 3% 8% 5%
Bandung 51% 49% 50% 50% 53% 47% 71% 76% 64% 36% 76% 56% 44% 96% 97% 92% 95% 43% 57% 36% 64%
26% 3% 5% 12% 2%
Jakarta 52% 48% 53% 47% 47% 53% 53% 47% 57%43% 58% 42% 74% 50% 50% 97% 95% 88% 98% 30% 70% 46% 54%
35% 32% 2% 1% 10% 1%
Makassar 42% 58% 41% 59% 40% 60% 26% 74% 65% 47% 53% 68% 50% 50% 98% 99% 90% 99% 34% 66% 40% 60%
34% 29% 1% 1% 5% 4%
Medan 44% 56% 48% 52% 45% 55% 66% 57% 43% 44% 56% 71% 42% 58% 99% 99% 95% 96% 17% 83% 36% 64%
32% 19% 2% 1% 6%
Surabaya 57% 43% 58% 42% 49% 51% 68% 63% 37% 81% 66% 34% 98% 99% 94% 100% 32% 68% 30% 70%
Modern Trade Traditional Trade
Source: Deloitte Consumer Insights Survey (2019)
24Deloitte Consumer Insights | Dawn of the digital age in Indonesia
5. Communication channels
Although traditional media channels continue to
be preferred, we are also witnessing the growing
importance of online reviews in influencing the
consumer’s purchase decision, particularly on online
marketplace platforms.
Traditional media maintains dominance
Despite the continued growth in the uptake of digital and online media, traditional media continues to dominate,
with TV, In-Store Promotions, and Friends & Colleagues remaining the preferred communication channels (see
Figure 34). One reason for this could be the Indonesian consumer’s heavy reliance on endorsements from their
inner circles, and these in turn tend to still be strongly influenced by traditional media campaigns.
Figure 34: Preferred communication channels
TV 25%
In-Store Promotions 18%
Friends & Colleagues 17%
Relatives 13%
Brochures/Flyers 8%
Outdoor Billboards 5%
Social Media 5%
Events 3%
Experts 1%
Magazines 1%
Newspapers 1%
Radio 0.5%
Mobile Applications 0.5%
News Portals 0.4%
Company Websites 0.3%
Blogs 0.2%
Source: Deloitte Consumer Insights Survey (2019)
Online search behaviour
Overall, 45% of survey respondents have relied on online reviews when making purchase decisions, with
younger survey respondents showing higher reliance (see Figure 35). When searching for online reviews, survey
respondents also typically preferred to use marketplace platforms, such as Lazada, Shopee, and Tokopedia,
perhaps due to the wide range of alternative products available for comparison (see Figure 36).
Social Media platforms, on the other hand, appear to be less frequently used: our survey results indicated that
only 5% of survey respondents prefer to use Social Media channels in their search for product information. One
reason for this could be the perception that these channels are reserved for communicating or staying in touch
with friends or relatives. However, as consumers become more tech savvy and sophisticated in their product
search, we expect Social Media channels to play a more important role in the near future.
25Deloitte Consumer Insights | Dawn of the digital age in Indonesia
Figure 35: Online review activity by age group
Age group, years
15-24 45% 55%
25-34 40% 60%
35-49 60% 40%
50-64 86% 14%
Have not read online reviews Have read online reviews
Source: Deloitte Consumer Insights Survey (2019)
Figure 36: Online review channels by age group
Age group, years
15-24 46% 33% 10% 8% 3%
25-34 46% 36% 10% 6% 2%
35-49 48% 33% 6% 9% 4%
50-64 54% 24% 4% 17% 1%
Marketplace platforms Blogs
Social media platforms Independent reviews
Video-sharing platforms
Source: Deloitte Consumer Insights Survey (2019)
One city that stood out in terms of its level of online review activity was Bandung, where survey respondents
relied significantly more on online reviews than survey respondents in other cities when making their purchase
decision (see Figure 37).
Online reviews also played a more important role for certain categories where it may be more difficult to
ascertain quality and fit, including Clothing & Footwear, Cosmetics & Beauty Products, and Mobile Phones, Digital
Cameras & Other Gadgets categories (see Figure 38). But the importance of online reviews should also not be
underestimated in other product categories typically seen as commodities, such as Beverages and Tobacco,
where a significant proportion of survey respondents check online reviews on a daily basis (see Figure 39).
Figure 37: Online review activity by city
Bandung 31% 69%
Jakarta 50% 50%
Makassar 67% 33%
Medan 74% 26%
Surabaya 86% 14%
Have not read online reviews Have read online reviews
Source: Deloitte Consumer Insights Survey (2019)
26Deloitte Consumer Insights | Dawn of the digital age in Indonesia
Figure 38: Online review activity by product category
Clothing & Footwear 36%
Cosmetics & Beauty Products 15%
Mobile Phones, Digital Cameras & Other Gadgets 14%
Personal Hygiene Products 7%
Confectionery 5%
Packaged Foods 5%
Household Appliances (Major) 4%
Audio & Video Electronics 4%
Household Appliances (Small) 4%
Tobacco 2%
Beverages (Non-Alcoholic) 2%
Pet Food 1%
Household Cleaning Products 1%
Beverages (Alcoholic) 0.1%
Source: Deloitte Consumer Insights Survey (2019)
Figure 39: Frequency of online review activity by product category
Packaged Foods 7% 29% 26% 37% 1.7%
Confectionery 17% 27% 16% 20% 20%
Beverages (Non-Alcoholic) 57% 5% 30% 9%
Beverages (Alcoholic) 64% 36%
Tobacco 61% 9% 10% 20%
Clothing & Footwear 7% 12% 20% 28% 34%
Personal Hygiene Products 3.2% 26% 9% 52% 11%
Cosmetics & Beauty Products 5.5% 17% 20% 37% 20%
Household Cleaning Products 7% 20% 29% 44%
Audio & Video Electronics 2% 40% 9% 47%
Household Appliances (Major) 11% 49% 39%
Household Appliances (Small) 3% 17% 20% 29% 32%
Mobile Phones, Digital
5%
Cameras & Other Gadgets 8% 21% 27% 40%
Pet Food 8% 8% 71% 12%
Every day Once to several times a week Once in 2-3 weeks
Once a month Less than once a month
Source: Deloitte Consumer Insights Survey (2019)
27Deloitte Consumer Insights | Dawn of the digital age in Indonesia
6. e-Commerce
With the introduction of new digital business models,
Indonesia’s rising Internet economy is fundamentally
changing the way its consumers behave. Looking
ahead, the rise of digital payments are also likely to
transform Indonesia into a cashless and cardless
economy.
Rise of the digital economy
High Internet and mobile penetration rates in Indonesia have resulted in the rapid growth of its e-commerce
market, and these developments have in turn altered the Indonesian consumer’s purchasing behaviours and
expectations. Survey respondents in Jakarta and Bandung, in particular, have been particularly quick in their uptake
of e-commerce, as compared to survey respondents in the other cities (see Figure 40).
In terms of product categories, Clothing & Footwear, Cosmetics & Beauty Products, as well as Mobile Phones, Digital
Cameras & Other Gadgets are the most common items purchased online by survey respondents (see Figure 41).
Figure 40: Distribution of e-commerce users
5%
8%
20%
9%
58%
Bandung Jakarta Makassar Medan Surabaya
Source: Deloitte Consumer Insights Survey (2019)
28Deloitte Consumer Insights | Dawn of the digital age in Indonesia
Figure 41: Online shopping activity by product category
Clothing & Footwear 51%
Cosmetics & Beauty Products 12%
Mobile Phones, Digital Cameras & Other Gadgets 10%
Audio & Video Electronics 4%
Household Appliances (Small) 4%
Personal Hygiene Products 4%
Confectionery 2%
Tickets 2%
Books 2%
Household Cleaning Products 2%
Household Appliances (Major) 1%
Pet Food 1%
Packaged Foods 1%
Tobacco 0.3%
Beverages (Non-Alcoholic) 0.1%
Beverages (Alcoholic) 0.1%
Source: Deloitte Consumer Insights Survey (2019)
Drivers and deterrents
According to the survey results, the main drivers for online shopping are lower prices, and ease of searching
for products (see Figure 42). On the other hand, several deterrents also continue to persist, including security
concerns, lack of knowledge about the online shopping process, and long delivery times (see Figure 43).
Figure 42: Drivers for online shopping
Price 24%
Practicality 23%
Ease of product search 16%
Promotions 12%
Ease of product comparisons 10%
Availability of product range 8%
Reliable reviews 7%
Source: Deloitte Consumer Insights Survey (2019)
Figure 43: Deterrents for online shopping
Security issues 24%
Lack of knowledge 17%
Long delivery times 16%
Price 16%
Difficult to return or exchange products 13%
Limited availability of product range 8%
No credit card 5%
Incorrect item delivered 1%
Not interested 0.3%
Unable to view product directly 0.2%
Source: Deloitte Consumer Insights Survey (2019)
29Deloitte Consumer Insights | Dawn of the digital age in Indonesia
Overall, survey respondents also appear to be comfortable with making online purchases. For example, the
majority of them make online purchases without performing offline checks, even for product categories such as
Clothing & Footwear and Consumer Electronics where it may be more difficult to ascertain fit and quality (see
Figure 44).
Figure 44: Online shopping behaviour
Packaged Foods 100%
Confectionery 100%
Beverages (Non-Alcoholic) 100%
Beverages (Alcoholic) 100%
Tobacco 100%
Clothing & Footwear 24% 76%
Personal Hygiene Products 40% 60%
Books 19% 81%
Tickets 36% 64%
Audio & Video Electronics 43% 57%
Household Appliances (Major) 16% 84%
Household Appliances (Small) 12% 89%
Mobile Phones, Digital Cameras
23% 77%
& Other Gadgets
Pet Food 100%
Cosmetics & Beauty Products 31% 69%
Household Cleaning Products 11% 89%
Purchase after checking product offline Purchase without checking product offline
Source: Deloitte Consumer Insights Survey (2019)
30Deloitte Consumer Insights | Dawn of the digital age in Indonesia
New business models
Across all product categories, two platforms – Lazada and Shopee – have emerged as the most preferred
e-commerce platforms in this edition of the survey (see Figure 45). Although Shopee is a new entrant to
Indonesia’s e-commerce scene, it has been able to gain market share within a short span of time through the use
of attractive promotions.
Figure 45: Preferred e-commerce channels by product category
Basic Necessities 43% 1% 8% 11% 31%
1%1%1%1%1%1%
Household & Personal Care 46% 1% 5% 8% 34%
1%1%1%1%1%1%
Welfare & Leisure 16% 2% 13% 29% 29% 2% 5% 2%
1% 1%
Consumer Electronics 41% 5% 14% 16% 19% 2% 2%
1% 1%
Others 50% 8% 42%
Lazada Bukalapak Shopee Elevania Traveloka Blanja.com Akulaku Instagram
OLX Tokopedia Blibli.com Zalora JD.ID JBA.CO.ID Facebook
Source: Deloitte Consumer Insights Survey (2019)
Other new entrants in the market also include several technology players, such as Go-Jek and Grab, who have
evolved from a single-service business model to make forays into the e-commerce market. Several other players
have also begun to introduce new digital business models in markets such as groceries, such as Happy Fresh
and SayurBox; travel booking, such as Pegipegi, tiket.com, and Traveloka; as well as payments and digital financial
services, such as Akulaku and Kredivo.
Fundamentally, these innovative start-ups are changing the way consumers behave in Indonesia. In the context
of the notorious traffic congestion in Indonesia’s cities, mobile applications such as Go-Jek provide consumers
with convenience and enable them to save time across a variety of different tasks, including ride-hailing, last-mile
delivery, financial services, and even cleaning activities.
Back to cash
In terms of methods of payment, an overwhelming majority of survey respondents indicated that they prefer
to use cash on delivery options and bank transfers for their online shopping. Indeed, this edition of the survey
witnessed a significant increase in the preference for cash on delivery options from only 3% in 2018 to 40% in
2019 (see Figure 46), a reflection of the growing concern over issues related to fraud and security. This reliance
on cash, however, looks set to change in the near future with the rise of mobile wallets and digital payments.
Figure 46: Preferred payment channels for online shopping
Cash on delivery 40%
Bank transfers at ATMs 34%
Bank transfers at Minimarkets 18%
Bank transfers on mobile banking applications 4%
Virtual accounts 3%
Bank transfers on Internet banking applications 1%
Credit cards 0.7%
Source: Deloitte Consumer Insights Survey (2019)
31Deloitte Consumer Insights | Dawn of the digital age in Indonesia
Digital payments take off
In recent years, we have witnessed the dramatic rise in the use of e-wallets, which overtook the use of
ATM and debit cards in 2018. With the entry of new digital payments players, such as Go-Pay and OVO, the
financial services landscape in Indonesia is rapidly transforming into a cashless and cardless one. Amongst
the competition, survey respondents indicated the strongest preference and usage for OVO, followed by
Go-Pay, Dana, and LinkAja (see Figure 47).
Figure 47: Preference and usage of digital payment service providers
Preference for digital payment Usage of digital payment
service providers service providers
3% 1%
10% 6%
12%
37%
17%
58%
23%
33%
OVO GoPay Dana LinkAja Others
Source: Bank Indonesia (2019)
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