The major driver of economic growth is its middle class, which has grown by around 12% annually since 2002. This cohort has a healthy appetite for imported, high-quality products, making Indonesia the fastest growing beauty and wellness market in Asia, especially for female consumers.

There’s also a growing trend of urban men spending more on cosmetics and skincare products, with the sale of men’s grooming products increasing by 7.6 percent in 2019.

(Source: Euromonitor International, Beauty and Personal Care in Indonesia, August 2020).

Adding to the dynamic is the recently-shrinking middle-class with reduced disposable incomes due to impending global recession, making spending on personal items such as personal care, fashion and electronics stripped to bare essentials.

Because of these, Indonesia market is a little bit tricky to break into when you don't have a deep marketing budget.

Under Indonesian law, all imported products must be represented by an Indonesian partner, which must register the products with appropriate government bodies before it can be marketed online or in-store. Depending the HS Code of your product, majority of products requires registration with different government bodies.

• For all cosmetics and other personal care products, Badan Pengawas Obat dan Makanan ("BPOM") is the equivalent of the Therapeutic Goods Act (“TGA”) in Australia or the Food and Drugs Agency (“FDA”) in the United States. BPOM is the main body that regulates the importation of beauty products, cosmetics, food, supplements and drugs to Indonesia. The process of obtaining product registration with BPOM can take between three months to three years, with rapidly changing rules and legislation.
• For textile and toys articles, Sertifikasi Nasional Indonesia (“SNI”) must be obtained before the products can be freely sold in Indonesia.

On top of navigating a world of legalities and red tapes, a brand wishing to enter Indonesian distribution channels must also take into account the difference in margin expectation from both offline and online operators, which in turn will affect your sales strategy to the region.

A typical offline presence in the premium import market will require brand to provide a minimum of 35-40% margin to the store.

A further 5%-10% marketing support in the form of general rebates, conditional rebates, listing fees, display fees and promotional event support are to be expected to faciliate offline modern retail chain presence.

By contrast, an official shop in either Shopee or Tokopedia marketplace will be subjected to a 12-15% marketplace commission (depending on your product categories).

In short, our distribution strategy for your products will largely dependent on your margin expectation.