Keywords: Fast Fashion, Fashion, E-Commerce, Creative Economy

What are the opportunities of the Indonesian fast fashion industry in its growing E-Commerce Industry?

Source: Planet App

Fast fashion could be defined as cheap and trendy clothing that samples ideas from catwalks or celebrity cultures, which is then turned into garments in high street stores at fast speed to meet consumer demands. One of the aims for this industry is to get the newest and hottest styles on the market as fast as possible, so shoppers can easily grasp the products while they are still high on popularity. 

Globally, the fast fashion industry reached a value of nearly USD 68.634,9 million in 2020. The market is expected to grow to USD 163,458.5 million in 2025 at a rate of 19%. The growth in this industry is mainly resulted from a rise in foreign direct investments, emerging market growth, growth in media development, and technological developments. 

Overview of the Indonesian Fast Fashion Industry

In Indonesia, the revenue of the fashion industry is projected to reach USD 9,300 in 2022, with an annual growth rate of 4.21%, resulting in a projected market volume of USD 10,526 million by 2025. One of the factors for growth in this industry includes the accelerating export growth. 

Indonesia is one of the top 10 textile producing nations in the world, it is also the 12th largest textile and apparel exporter, with major exporting destinations including the United States, European Union, and the Middle East. In addition, Indonesia’s competitiveness has improved in the textile sector, which has successfully attracted more investment because of the country’s stable economy.

The Covid-19 crisis has impacted the industry brutally. Not only that there has been a lack of new investment, there has been competition as well with the imports from abroad to Indonesia. However, this was resolved due to the fact that by 2019, Indonesia still ranked sixth because of the growing demand for apparel from the fashion industry and further expansion of e-commerce platforms which are expected to drive the market over the forecast period.

Overview of Indonesia’s E-Commerce Industry

Indonesia has the most enthusiastic users of digital technology, in which online commerce is big and growing rapidly. 30 million Indonesians are transacting online, which creates a market of at least USD 8 billion, and could grow into USD 40 billion upwards in the next five years. 

The two modes of e-commerce in Indonesia include e-commerce platforms like Lazada, Tokopedia, and Shoppee, and social commerce, which involves the buying and selling of physical goods through a social media platform. Though 60% of them are done through online commerce, it is still a prevailing media for the purchase of fashion and beauty in Indonesia (the fashion and beauty categories make up 70% of the sales). 

With the adaptation of online commerce, it is most likely that the e-commerce industry would grow about 30% due to the greater accessibility and more competitive prices for customers. The growth of the online commerce industry could impact other sectors like the logistics industry, and provide jobs to most of the Indonesian people. 

How the Fast Fashion Industry  Would Benefit Off Indonesia’s E-Commerce Industry

The Covid-19 pandemic has altered the way people shop in Indonesia. With the social distancing restrictions and the closure of shops, many Indonesians turned to online shopping. The main reasons that Indonesia shopped online during this period was due to the convenience, attractive online promotions, and of course the health mandates. With how the e-commerce industry has developed during the pandemic, it may become the preferred shopping method among many Indonesian shoppers.

This provides an opportunity for international businesses interested in expanding their fashion business in Indonesia. With the attractiveness of the e-commerce industry towards Indonesians, it is no doubt that the fashion industry will excel with the growth of the ecommerce industry. 

International Brands Who Have Penetrated the Indonesian Fast Fashion Market

There are several successful international brands who have penetrated the Indonesian market. Among them are:

1. H&M

H&M Group is one of the leading fashion companies worldwide. Its headquarters are located in Stockholm, Sweden. In 2020, the group’s total sales amounted to around USD 20.16 billion, in which USD 1.2 billion was generated in Sweden. In 2020, they were able to gain a net sales of SEK 4.833, which includes sales from online commerce. 

2. Zara

Zara is one of the biggest international fashion companies, and belongs to Inditex, one of the world’s largest distribution groups. In 2020, they were able to garner a revenue of EUR 14.129 billion.  It has more than 1,700 stores in 86 countries worldwide, including Indonesia, under the company of PT. Mitra Adi Perkasa. At the end of 2020, PT Mitra Adi Perkasa reported a net revenue of approximately IDR 8.4 trillion from its business activities in Indonesia, mainly from fashion products.

3. Uniqlo

Uniqlo is established in Japan, with headquarters in Tokyo. Its brand value reached USD 9.2 billion, and sales USD 17.2 billion in 2020. In the United States, they were able to garner 20% of sales that occur online, 15% in China, and 7.3% in Japan. With that, it is safe to assume that online commerce has a good prospect in Uniqlo. 

Future Prospects of the Indonesian Fast Fashion Industry and E-Commerce Industry

In the future, the fashion industry has a promising prospect in the future since it is one of the largest industries in the world, and is estimated to be worth more than USD 3 trillion by the end of the decade. Technological advancements like AI algorithms are predicted to help automate, personalize, and speed up the fashion space. 

In Indonesia itself, the fashion industry is helped mainly by the e-commerce industry given the pandemic. Indonesians also spend an adequate amount of time on the internet, which serves as a room of opportunity for the fashion industry to expand their products via online marketplaces. 

Enter the Indonesian Fast Fashion Industry with BRIGHT Indonesia

With the constant shift of consumer behavior and demands, it would need a lot of in-depth research about the Indonesian fast fashion industry. Therefore, to enter the Indonesian market, you would need the right local partner to assist you. 

BRIGHT Indonesia is an ideal business partner for you. We will assist you on the ground, including virtual assistants during the mission, logistical planning, and detailed communication. It can cause your company to focus on developing partnership cooperation rather than the hassles of the business trip.

BRIGHT Indonesia provides several services such as Market Insight Research, Business Partnership Engagement, Management and Strategy Consulting, and Foreign Direct Investment. The services will help your business to:

1. Assist you in expanding and developing your business by identification of potential partners.
2. Secure the agreement between client companies and future Indonesian business partners by providing a list of potentially suitable partners, arranging business meetings, and acting as a liaison.

3. Supporting our foreign client companies from the private sector with developing corporate or business unit strategies or helping your company from public sector organizations with public policy.
4. Link client companies both from the private and public sectors in global foreign direct investment (FDI) through training and assisting your company in entering FDI source countries to gather investment for your company’s local markets.

For more information, email info@brightindonesia.net.