How to win over… the dynamic Indonesian consumer

With a population of over 270 million and a median age of 29, Indonesia has emerged as a beauty powerhouse in recent years. This positive trajectory is driven by Indonesia’s burgeoning population, which, ​according to the World Health Organisation (WHO), is projected to increase by 14% to over 320 million by 2050.

According to the report, Next Generation Indonesia, 52% of Indonesia’s large population are young people aged 16 to 35. The population isn’t just growing – it is young, tech-savvy, and beauty-obsessed.

The State of the Global Islamic Economy 2023/24 Report published by DinarStandard reported that Muslim consumers’ spending on cosmetics was estimated at US$84bn in 2022 and was forecasted to grow at a CAGR of 8.9% to reach US$129bn by 2027.

The same report highlighted that Indonesia along with India were the largest markets for beauty. Indonesia has emerged as one of the most attractive beauty markets over the past few years despite the challenges posed by a global pandemic. This has spurred the growth of beauty, particularly skin care.

According to data from Mintel, skin care has been skyrocketing since 2021. It projected that it would surpass USD800 million by 2026, underscoring the increasing consumer interest in skin care.

Out of the top 10 beauty categories in Kantar’s 2023 Indonesia Beauty Trends Report, six were skin care, with sunscreen topping the charts. Micellar water, toner, cleanser, serum and moisturiser followed respectively.

According to Kantar, the growth of beauty was being driven by upper- and middle-class consumers. It reported that the beauty value growth by affluency was being driven by a 24% increase among upper-class consumers and an 11% increase among the middle class.

“The Indonesian consumer is a dynamic consumer. They are willing to try something new just as long the product is of good quality and the price is right,” said Abigial Clementine, e-commerce and international expansion, Somethinc, a major local brand.

What’s more, the market’s evolution is driven by the development of its domestic beauty industry, which is answering the surge in demand for halal-certified and natural products, along with a focus on multifunctional and innovative solutions.

Domestic brands are capitalising on this by incorporating local ingredients, traditional beauty practices, and sustainable packaging, which resonate strongly with consumers.

“The most exciting aspect of the Indonesia beauty market is the fusion of local brands with global trends. For instance, we are seeing local companies adopting popular skin care products and incorporating both trendy ingredients and local ingredients. We’re also seeing local brand collaborating with big celebrities from Korea, which is bringing more fun and engagement to the market.” said Reyna Ramadhana, global marketing assistant manager at AXIS-Y.

The K-influence in Indonesia

Like its South East Asian neighbours, Indonesia has also been swept up by the Korean wave. This is a far-reaching phenomenon that spans food, music, fashion, and beauty. For South Korean cosmetic brands, Indonesia is a key market in its SEA ambitions.

Ramadhana told CosmeticsDesign-Asia that Indonesian consumer’s skin care goals are heavily influenced by K-beauty and work to achieve the same ideal of flawless glass skin.

“Indonesians are really enthusiastic about skin care and want to achieve that glass skin look that Korean skin care is known for. Mostly, they are looking for brightening-type products,” she said.

AXIS-Y is a vegan Korean skin care brand known for its solution-oriented solution with its 6+1+1 Advanced Formula approach. This combines six plant-based ingredients, one core ingredient to address specific skin concerns, and one advanced skincare technology to ensure the product’s effectiveness.

The brand has become popular among beauty aficionados for its commitment to transparency, eco-friendly practices, and skin-positive messaging.

According to Mintel, Indonesian consumers, particularly women, are becoming more attentive to product ingredients and claims. It reported that about 60% of Indonesian female consumers check packaging for information on ingredients and claims, reflecting a desire for transparency and informed purchasing decisions.

The Korean brand launched in 2019 and it quickly gained a following in Indonesia. According to the brand, its Indonesian TikTok account amassed 100,000 followers with an average monthly growth rate of 30,000 by November 2020.

Another challenge the brand has faced is the prevalence of counterfeit products being sold in the market.

The brand briefly departed Indonesia before returning in 2023 with a strong anti-counterfeit campaign to address the growing concerns of fake products sold by unauthorised resellers in e-commerce.

To counter this, Axis-Y introduced the Hidden Tag app to verify product authenticity. By scanning the hologram Hidden Tag label on each product, consumers can check the hidden security numbers to confirm whether their product is genuine.

According to Ramadhana, acne control, and skin brightening are top priorities for its Indonesian consumers.

“Ingredients such as retinol and niacinamide are particularly sought after for their acne-fighting and brightening effects. Products promising to lighten or brighten skin tend to sell out quickly, as many consumers desire glowing, clear skin,” she said.

The brand’s most popular products among Indonesians, the Mugwort Mask and Dark Spot Correcting Serum reflect this.

Indonesia’s local beauty producers are not immune to the influence of K-beauty. Somethinc, which claims to have over 50% market share locally, has produced products that respond to the current K-beauty trends, incorporating ingredients such as salmon DNA and spicules.

The brand has also partnered with South Korean celebrities to engage with its consumers, which also consumer Korean pop culture.

“From a marketing perspective, we collaborate with several local and international celebrities and brand ambassadors. Notably, we have partnered with well-known figures such as Han So Hee and NCT Dream from Korea, alongside Indonesian talent,” said Clementine.

While the K-beauty brands are well-regarded by Indonesians Ramadhana emphasised that Indonesian consumers were extremely price sensitive. Foreign brands like AXIS-Y face the major challenge of competing with both local and foreign players that offer more attractive pricing.

“We really can't compete with the local brand because of the price. It’s very hard for us because we have to pay for taxes like import tax. So, we really focus on the quality of our products and the K-beauty ingredients we use. Indonesian consumers trust Korean beauty products for their advanced formulations and proven results, making them willing to invest in premium products like ours,” said Ramadhana.

Moving forward, Ramadhana expects Indonesia’s beauty consumers to increasingly demand transparency from brands.

“I think Indonesian consumers are very aware of what’s in their products. I think they will care more about things like clinical tests from now on. They already know what’s the ingredient in your product but they will start asking for the exact percentage of the ingredient in the formula.”

Local brands bring it on

Like China​, Indonesia has a blossoming domestic beauty scene with established local brands like Wardah, or newer brands like Somethinc, Dew It, and Rosé All Day. Armed with the local perspective, these brands create products that are uniquely aligned with Indonesian needs and lifestyles.

The local scene is further driven by Sociolla, Indonesian omnichannel beauty powerhouse. Sociolla was established in 2015 as an e-commerce platform but has since expanded into brick-and-mortar with over 60 stores spanning around 40 cities across the archipelago.

Furthermore, the rise of social media influencers and e-commerce platforms has broadened product accessibility and amplified local brands, accelerating market expansion and fostering a strong sense of national pride in homegrown beauty innovations.

The beauty retailer has been instrumental in helping domestic brands thrive, further boosting the competitiveness of the local industry.

One of the most established Indonesian beauty brands today is Somethinc, which was named the top local brand on TikTok in the first quarter of 2023.

The brand launched in 2019 with just three serums and has since expanded to over 200 SKUs across skin care, makeup body care, and hair care. Today, it is available through online platforms such as Shopee, TikTok, Tokopedia, Lazada, and Blibli, as well as in general trade and modern trade outlets.

“At Somethinc, our mission is to empower and boost the confidence of millennials and Gen Z, helping them achieve their maximum potential. We pride ourselves on delivering not only innovative products but also the right solutions at the right time, all while maintaining strong relationships with our customers,” said Clementine.

She echoed Ramadhana’s comments about the importance of getting the price right for Indonesian consumers.

However, affordable pricing does not mean less performance or lower quality, Clementine stressed. She noted that the brand’s consumers are just as demanding as other consumers. For instance, they are seeking out potent ingredients such as retinol as well as multifunctional products.

Lia Octavia, international head of marketing of Somethinc, highlighted the increasing popularity of makeup products with skin care benefits. For instance, Somethinc products such as its cushion foundations, tinted moisturisers, and primers contain skin care ingredients like Panthenol, Tocopheryl, and inositol, which is derived from rice bran.

This is aligned with Mintel’s research showing that Indonesian consumers are increasingly drawn to convenience, particularly in terms of product versatility. This could mean a single product serving multiple purposes or offering a range of benefits.

More than half (55%) of Indonesian consumers said that beauty or grooming products that provide additional beauty benefits offer value for money, the top choice among all options.

Regardless, balancing price and innovation is endless challenge for brands. Somethinc’s strategy is to create multiple product ranges that cater to different price segments. This allows the brand to cater to a diverse consumer base, from budget-conscious buyers to those seeking premium solutions.

This way, Somethinc maintains its strong appeal among younger consumers looking for effective products at affordable prices. Meanwhile, its higher-end range incorporates more advanced ingredients and formulations, targeting customers willing to invest in cutting-edge beauty products. This tiered approach not only broadens Somethinc's market reach but also reinforces its reputation as a brand that prioritises both inclusivity and innovation.

Indonesia’s online landscape

The advent of online shopping has been crucial to Indonesia's beauty market. E-commerce provides vast access to products across the archipelago, bridging the gap between urban centres and remote regions. With the country's high smartphone penetration and young, digitally savvy population, online shopping has become a primary channel for beauty purchases.

As one of the biggest e-commerce platforms in South East Asia, Shopee has been the most important online platform for AXIS-Y.

“Platforms like Shopee help us offer special discounts, driving further sales through online channels,” said Ramadhana.

Increasingly, however, TikTok shop has emerged as a powerful platform for beauty brands with to its ability to blend shopping with engaging, interactive content.

According to Statista, Indonesia was the country with the largest TikTok audience, with almost 157.6 million users. It is ahead of the US with around 120.5 million and Brazil with around 150.3 million users.

You can expect this digitally savvy demographic to be finely tuned into the latest beauty trends. According to a 2023 trend report by TikTok, beauty content was the platform’s fastest growing vertical.

“Beauty on TikTok is not only a thing that they consume, but also one that uplifts them to find their truest self with various ways to express themselves. Beauty trends start on TikTok and it always continues and drives participating culture within the community.”

TikTok Shop and its livestreaming features are ideal for beauty products, as it allows brands to connect directly with consumers, creating a seamless journey from discovery to purchase within the app itself.

According to Ramadhana, live streaming sessions on TikTok have proven to be effective in engaging customers directly. AXIS-Y typically runs four livestreaming sessions a day, underscoring the growing importance of live shopping experiences.

“TikTok Shop and Shopee are crucial platforms that allow brands to reach a broader audience and hold exciting live shopping events. Skin care brands leverage these platforms to make live shopping sessions engaging and fun, helping them attract attention and boost sales,” she said.

The digital landscape is not complete without its content creators.

“There’s a growing trend of Indonesians aspiring to become beauty influencers, which in turn drives demand for skin care products. We collaborate with key influencers to promote our products and increase brand visibility,” said Ramadhana.

The brand engages in key opinion leader (KOL) seeding by partnering with nano-influencers, leveraging their authentic, close-knit audiences to build genuine product buzz and increase brand visibility.

While these influencers, or ‘skinfluencers’, may have a smaller following, Ramadhana emphasised that they have a strong influencer on their followers. Their strengths lie in their knowledge, as they tend to be specialised and well-versed in skin care and know what their followers are looking for in terms of products or ingredients.

Leveraging digital platforms, especially e-commerce and social media, is essential for reaching Indonesia’s young, trend-driven market. By balancing price and innovation while engaging them online, beauty brands can capture the loyalty of Indonesia’s evolving beauty landscape and secure long-term success in this vibrant market.