JAKARTA, INDONESIA - Media OutReach - 16 February2021 - Accordingto L.E.K. Consulting's latest insights, Indonesia'se-groceries market is nearing a turning point in drivers of penetration. In thebroader Asian context, operators in the space have enjoyed success in marketslike China and South Korea.

COVID-19is likely the catalyst that leads to a step-change in Indonesia's e-grocerypenetration that could be worth USD 5B-6B Gross Merchandise Value (GMV) by2025, with possible upside risk. Against the backdrop of developing trends inthe market, the pandemic likely propelled adoption of online groceries by 2-3xin 2020. With ~65% of the population lying below the age of 44 years and anurban population demonstrating an impulsive buying behaviour, favourablecustomer demographics is a key contributor to the success of e-groceriespenetration. The report further delves into customer demographics, explainingthat ~65% of buyers opt for convenience -- a salient feature of e-groceries.Digital enablement is also an underlying driver for its growth as 96% of thepopulation has a mobile phone and 76% can access the internet.

"Asobserved in other Asian markets like China and South Korea, younger shoppersare more likely to make online purchases and with improving internet access anddigital enablement, this savvy consumer type, has bolstered demand for online groceries.These markets have reached critical mass of 5% penetration or more. Withsimilar trends observed in the dynamic Indonesian economy, the e-grocery marketis poised to grow further accelerated by the pandemic" explained Manas Tamotia,head of the technology practice at L.E.K. Consulting's Southeast Asia office.

Moreover,e-commerce penetration in Indonesia hit 6% in 2019, as compared to less than 1%in 2014. On the supply-side, a range of players and models have emerged to meetconsumers' needs. Across the offline-to-online model, online market model andaggregator model, prominent names like Carrefour, Alfaonline.com, happyfreshand more have stimulated demand.

Aglobal consultancy firm, L.E.K.'s research points out that modern retailingis nascent in Indonesia relative to other markets, nonetheless, it is a USD~20B industry with USD ~9B spent in hyper- and supermarkets. As COVID-19catapults global sectors into the digital era, it is highly likely thate-groceries take up more share in the market in the coming years, given the higherprevalence of technology and e-commerce adoption today.

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