Indonesia and Instagram: Ready For E-Commerce Takeoff

From Facebook to Twitter and Path to Instagram, Indonesians have a proven love for digital communication. While most Indonesian users embrace social media for interacting with friends and relatives or sharing selfie photos, others are using social media for business and as online shopping platforms.

Social media has turned some young Indonesians into “celebgrams” – celebrities on Instagram – with others becoming young entrepreneurs through their creativity with everything from designing shoes to dessert-making. While Facebook has dominated Indonesia’s social media environment, the country is seeing an increasing number of young entrepreneurs turning to Instagram as a sales platform.

Some of these business owners can be as young as 10, from students selling toys and rainbow looms, to adults selling all sorts of goods, from clothes and bags to food and cakes. The trend of wearing headscarves in Indonesia has inspired several young designers to sell scarves, Muslim clothes, or Halal cosmetics on Instagram. Other entrepreneurs are trading imported goods – mainly from China – such as hand phone covers, sunglasses, and handbags.

This overwhelming rise in young entrepreneurs leveraging social media is a direct response to Indonesia’s growth in smartphone penetration – today at 24 percent up from 12 percent in 2013 – better coverage and speed of the Internet, and fast adoption rates of social media.

The trend has led me to the conclusion that e-commerce on Instagram in Indonesia has all the right elements for liftoff – good weather, a growing number of passengers, and it’s currently just waiting for runway clearance for takeoff.

Good Weather Conditions: Indonesian Consumers Are Embracing Online Shopping

My 10-year-old daughter started her first encounter with online buying on Instagram by purchasing her favorite desserts, which was followed by repeat orders. Having built trust with several buyers, she began to wonder why she couldn’t be selling on Instagram as well. She then asked us to buy her several boxes of Rainbow Loom on a trip to Hong Kong. She then learned to make the Rainbow Loom bracelets from a YouTube video, created an Instagram account, communicated with prospective buyers using BlackBerry Messenger (BBM), and uses an iPad to record and plan all her business activities.

I am amazed that a 10-year-old kid can start building an online business from an iPad, and even more surprised to discover that most of her buyers are also teenagers. This has given me an indication that buying online in Indonesia has become widely accepted, even by younger generations. And if this creative generation, who have started their early adoption to digital, are so at ease buying and selling online, it’s going to have an even greater impact as they grow up and have even more disposable income at there fingertips.

E-commerce has a promising future in Indonesia.

Growing Numbers of Passengers: Building Instagram Business Owners

Online stores on Instagram, like @mylogylollyshop, which sells prescription spectacles and sunglasses, and has nearly 150,000 followers, or @br_coll, which sells shoes and has 160,000 followers, have thousands of transactions per month, generating income of more than $20,000 a month. For young entrepreneurs, this is a lot of money, considering the minimum labor wage in Jakarta is about $200 per month.

Additionally, having more than 50,000 followers helps to generate more revenue from online promotion of their stores, being endorsed by other stores, or becoming e-commerce experts who are invited to share their experiences in public forums. Big e-commerce stores are also working closely with some Instagram store-owners to increase direct buyers to their websites or to source goods from them.

Malls like Grand Indonesia, for example, provide a marketplace for online stores to sell their products offline and meet their fellow business owners and buyers. Most established online storeowners know each other and form a community or even form a communication group to share information on unreliable buyers or unethical sellers. Some online stores are affiliated with more than 400 online stores to exchange information or cross promote their products. The community encourages more young entrepreneurs to start their own online businesses, which in turn increases the number of online stores – constantly increasing passengers.

Runway: Secure Payment & Regulation

Most business owners integrate several tools in order to run their businesses on Instagram. Instagram is the ideal platform for showcasing goods, but many use BlackBerry or Line or WhatsApp for communication. However, bank transfers remain the most popular form of payment in Indonesia – a major obstacle for e-commerce in the country.

Indonesia’s low banking population numbers, as well as a lack of security in using credit cards, has been the main reason preventing buyers from using credit cards for online shopping. On the other hand, there is no regulation in Indonesia to protect buyers, and there is limited information on whether sellers are legitimate. Lack of law enforcement when disputes occur is also a challenge to the industry.

Once the runway is cleared of these obstacles, though, e-commerce in Indonesia – using Instagram – is ready for takeoff. Overall, I believe we will start to see more exciting things come out of Indonesia in terms of e-commerce. Innovation is happening on unprecedented levels and e-commerce stores are attracting nationwide attention. All these trends will position Instagram as a marketer’s dream in Indonesia’s promising e-commerce landscape.