E-Commerce Indonesia: Great Opportunities, Rules to Watch
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Indonesia has more than 100 million active internet users, and e-commerce penetration is on the rise. Tokopedia, Shopee, and Lazada are some of the major players in this market. However, Japanese companies that enter without preparation are often surprised by the operational challenges they face.
VAT and Cross-Country Taxes
Cross-country e-commerce transactions may be subject to Value Added Tax (VAT) and income tax liability, depending on the type of transaction and applicable conditions. The taxation mechanism can also differ, depending on whether you sell through a local marketplace or your own website.
Make sure your business taxation scheme is clear before you start selling.
Product Labels and Certifications
Imported products sold online must still meet Indonesian standards and regulations. Requirements may include Indonesian-language labels, halal certification if required, as well as clearance from BPOM for certain products, such as cosmetics and processed foods.
The Marketplace may suspend the display of the product if the required documents are incomplete.
Logistics and Shipping Costs
Indonesia is an island nation. The cost and time of interisland delivery can be much higher and longer than expected.
Choose a fulfillment center that is close to your primary customer. In addition, take shipping costs into account as part of a pricing strategy to keep the product competitive.
Content and Language
Just using English on the product page is not enough. Indonesian consumers tend to more easily understand and respond to content tailored to the local market, from product descriptions and photos to Indonesian-language customer reviews.
Investing in content creation and writing marketing materials that fit the characteristics of local consumers can help increase sales conversions.
Reviews and Reputation
Customer ratings and reviews play an important role in building trust and increasing product visibility in the marketplace.
The strategy of uploading the product and then leaving it unmanaged will not be effective. You need a team that can respond quickly to customer questions and complaints, including in English.
Entering the Indonesian e-commerce market requires a different preparation than the Japanese market. PT Kebun Teknologi Indonesia helps Japanese companies understand and deal with regulation, taxation, and operational challenges in running an online business in
Indonesia.