JAKARTA (The Jakarta Post/ANN): Despite being a new player in the country’s digital payment scene, ShopeePay, the e-wallet arm of online marketplace Shopee, has become a market leader amid the e-commerce boom during the pandemic.
Established in 2018, it has captured the majority of Indonesia’s digital wallet market share by being on the price offensive, in the form of vigorous discounts and cashback offers.
ShopeePay had the highest user penetration at 68 per cent, outperforming other e-wallets such as OVO (62 per cent), DANA (54 per cent), GoPay (53 per cent) and LinkAja (23 per cent), according to a survey by a market research firm NeuroSensum that took place from November 2020 to January this year.
GoPay and OVO have been in the market since 2016 and 2017, respectively.
“As a newcomer, ShopeePay rapidly became users’ favoUrite digital payment solution. This makes ShopeePay a strong contender among other e-wallets in the market, ” said Neurosensum Indonesia research manager Tika Widyaningtyas.
She went on to say that ShopeePay’s success was due to the platform’s smart user experience and interface, its simplicity of use and the boost of “appetising promotions” for both online and offline consumers.
The pandemic has accelerated e-commerce and contactless payment in the country. With limited physical contact and mobility, more people have opted for online transactions, from shopping to paying bills.
Redseer Southeast Asia recorded growth from 75 million to 85 million online shoppers during the pandemic, with Indonesia’s gross merchandise value (GMV) for 2020 estimated at US$40 billion, the third-highest in the world.
Bank Indonesia (BI) has projected record double-digit growth in digital transactions this year, with a notable acceleration of digital banking and e-commerce transactions.
The value of e-commerce transactions is projected to grow by 33.2 per cent year-on-year (yoy) to Rp 337 trillion (US$24 billion) this year from an estimated Rp 253 trillion in 2020.
“Our focus now is to push for digital payment adoption in Indonesia, for online and offline users, ” ShopeePay Indonesia campaign and growth marketing head Cindy Candiawan told The Jakarta Post on May 6.
“Especially during the pandemic when contactless payment has become essential.”
Nailul Huda, an economist with the Institute for Development of Economics and Finance's (INDEF), attributed ShopeePay’s rolling out of promotions to its parent company Sea Group's fund-raising since its initial public offering (IPO) in 2017.
ShopeePay is a payment products of SeaMoney, the digital payment and financial services arm of Singapore’s technology company Sea Group.
The group booked a $1.3 billion gross profit last year. Therefore, ShopeePay has the fuel to keep rolling out a series of cashback offers and discounts. According to Sea’s full-year 2020 financial report, SeaMoney’s sales and marketing expenses increased by 430.3 per cent to $415.4 million.
The increase was mainly due to “our efforts to drive adoption of our mobile wallet services, ” the report stated.
“This success is still difficult to follow by other e-wallet players, ” Nailul told the Post on Monday.
He went on to say that one strategy competitors could opt for is by creating an ecosystem and increasing market share through mergers and acquisitions. Once competitors, such as ride hailing Gojek and e-commerce Tokopedia, merge their assets, they could lessen the company’s costs and increase the promotion budget.
“ShopeePay has become the e-wallet market leader. The industry’s competition is inseparable from ‘discount war’ and this is because Indonesian consumers are price sensitive, ” he said, adding that consumers still consider price as the top factor for buying goods.
GoPay and OVO have been turning away from pouring cashback and discounts.
“We do not see promotions as our main strategy to retain consumer loyalty. We see it as a reward for our users, ” GoPay managing director Budi Gandasoebrata said on Monday.
He went on to say that the company believed that consumers put more consideration on e-wallet safety and ease of use rather than promotions when choosing a digital wallet. Similarly, OVO corporate communication head Harumi Supit said the company considered promotions an “education tool” that attracted new users to try using digital payment, which was why OVO also rolled out major promotional campaigns in its early days.
“But our focus now is to develop more financial services, as well as expanding our ecosystem and use cases. By continuing development, consumer loyalty will be created.
Nailul of INDEF also said ShopeePay’s rise to prominence was boosted by Shopee’s increasing popularity as the pandemic drove people to shop online.
According to iPrice, Shopee’s monthly online traffic has toppled Tokopedia since the fourth quarter of 2019 and continued until the end of last year. - The Jakarta Post/Asia News Network