Social Commerce Gains Momentum in Indonesia Thanks to Regional Users

Danik Indriati is a housewife who works as a reseller agent in the social commerce application Super. Every week, she collects orders for groceries and other daily consumer goods on her social media channels. He then ordered this product on Super and personally delivered it to the customer a few days later.

“A friend introduced Super to me. At first I was not interested because the operation looks complicated. However, it turns out that the features and instructions are easy to follow,” he told KrASIA. Currently, Indriati has around 120 customers, mainly fellow housewives who live in the neighborhood—Tegalsari Regency in Surabaya, East Java, Indonesia.

“Super sells items at wholesale prices, so I can resell them at a slightly higher price and make a profit,” he said. “Customers like to shop through me because they don't have to go to the market or grocery store so they can save money that would otherwise have been spent on petrol or public transportation,” Indriati added.

Founded in 2018, SoftBank-backed Super provides affordable goods to residents in Indonesia's tier-2 and tier-3 cities by leveraging social commerce and efficient logistics chains. The platform is currently available in 22 cities in East Java and South Sulawesi and facilitates thousands of resellers such as Indriati.

Indriati enjoys her freelance role as a reseller agent as she can earn extra income without leaving her children alone at home. He earns up to IDR 2,5 million (USD 142 to USD 177) per month, he said, higher than the 2021 provincial minimum wage in East Java, IDR 1,86 million (USD 132).

Danik Indriati, Super reseller agent. Documentation: Super

Solving retail problems in the region

Super is one of several social commerce platforms that have emerged in Indonesia over the last three years. Other startups in the sector include Evermos, KitaBeli, Chilibeli, RateS, and Woobiz, which primarily target customers in tier-2 and tier-3 cities. In areas such as Indonesia, social commerce become very popular due to adoption E-commerce still low due to high shipping costs and lower internet penetration.

Most consumers in small cities start their online shopping journey on social media platforms such as Facebook Marketplace or WhatsApp groups, where they can easily reach sellers who live nearby and offer a selection of products. hyperlocal.

“Rural retail has two major challenges—high prices and low transaction volume per household. In Indonesia, daily products are often more expensive in rural areas compared to tier-1 cities due to poor road conditions across the country and supply chain costs,” Super CEO Steven Wongsoredjo told KrASIA.

Community buying could be the answer to these challenges, he said. “We use community leaders and agents to stimulate more transactions in the community so they get attractive prices.” Local retailers are also responsible for shipping goods over long distances, which eases Super logistics and supply chain costs.

According to Steven, this model has helped Super reduce product prices by an average of 10–20% for retailers, who can then earn a margin from their sales while still offering competitive prices to rural city dwellers.

Sector social commerce has proven to be an easy target for investors in 2021. KitaBeli brings in USD 10 million from Go-Ventures in March, Super pocketed USD 28 million from SoftBank Last April, and Evermos collected USD 30 million from UOB Venture Management on September .

In touch with the halal economy

Company social commerce which focuses on the halal economy Evermos specifically targets the Muslim community, which makes up 86,7% of Indonesia's entire population. The company provides halal products and other goods to Muslim customers while following a sharia-compliant approach.

Islamic principles require that business be conducted honestly and properly, Evermos co-founder Ghufron Mustaqim told KrASIA. "This means that resellers are required to write honest product descriptions with appropriate images, arrange for timely delivery, and provide an easy refund process," he said.

(left to right) Evermos President Arip Tirta, Co-Founder Ghufron Mustaqim, CEO Iqbal Muslimin, and Co-Founder Ilham Taufiq. Documentation: Evermos.

By following the sharia concept, people will be more confident to participate in e-commerce transactions, especially in rural communities, where users are still reluctant to buy online for fear of the potential for counterfeit products or low-quality goods. Building trust is very important, added Ghufron.

"We are not 100% sharia yet, but we are heading there by upholding sharia business principles," explained Ghufron. “Our community is aware of the concept of sharia and maintains this ethics. For example, they will complain if they find an image with a model wearing inappropriate clothing that goes against Islamic principles.”

So far, business is going well for Evermos. The startup has increased its gross merchandise value more than 60 times in two years, and currently has more than 100.000 active resellers—mostly women—in 500 districts in tier-2 and tier-3 cities across Java. More than 95% of the products on the platform are sourced from local MSMEs, with Muslim clothing and household appliances being the best-selling categories, said Mustaqim.

He noted that Evermos is an inclusive platform, as many of its retailers and brand owners are non-Muslims. “Ethics and principles in sharia business are universal. We are open to anyone who wants to join Evermos.”

Growth projection

Both Steven from Super and Ghufron from Evermos are confident in development social commerce in Indonesia. The country is expected to see millions of new internet users from the region every year, social commerce can be a bridge for these users to increase online shopping activities.

Moreover, the economic growth of tier-2 and tier-3 cities will beyond growth in metropolitan areas in Indonesia over the next five years, according to a report by Alpha JWC and Kearney. The study highlights that the market share of cities lower than the national gross domestic product will grow from 3% to 5% by 2030, reaching a value of USD 77 billion. It's clear that startups that tap into consumers outside the metro area have a wide market opportunity.

"In social commerce, one company cannot dominate all markets, because each region has different supply chain challenges. Companies will have their own niche and strengths, which will further drive the industry as a whole,” said Ghufron.

Evermos will continue to focus on halal products with a sharia-compliant approach, said Ghufron. At the same time, Super will target expansion outside Java, especially in Eastern Indonesia, added Steven.

“While most startups grow in Jakarta, we hope to be the first to grow big in Eastern Indonesia, which is a hidden gem with huge growth opportunities,” said Steven.

-This article was first released by KRASIA. Re-released in Indonesian as part of the collaboration with DailySocial