Capturing Indonesia’s beauty wave: A blooming market with immense potential

Indonesia, a rapidly growing economy with the world’s fourth-largest population, is emerging as a significant market for the global beauty and personal care industry. This sector is currently valued at US$7 billion and is projected to reach US$10 billion by 2027, with a healthy annual growth rate of 10%.

The World Bank predicts that Indonesia’s economy will continue to be resilient by 2026, with an average GDP growth rate of 5.1% annually. The new young generation, rising disposable income, growing middle class, and expanding economy all give beauty firms a plethora of prospects, both domestically and globally.

At the heart of this growth is the rise of local brands that are carving out their niche by offering products tailored to Indonesian skin types, climate, and cultural preferences. As local brands continue to understand and respond to these nuanced needs, there is a genuine opportunity for Indonesia’s beauty industry to establish a unique identity and impact the regional and global beauty market.

Rising demand for quality and ethical skincare products

The rise in skincare demand is undeniable. At the recent East Ventures Summit 2024, Yaumi Fauziah Sugiharta, Co-Founder and CEO of BASE, emphasized the sector’s growth potential.

This is in line with more general consumer trends, which show that Indonesian consumers are becoming more interested in skincare and are looking for products that offer tangible skin health advantages. For instance, the demand for UV protection has grown substantially, fueled by widespread education on the importance of sunscreen usage. Many brands—local and global that are penetrating the Indonesian market—have capitalized on this to cater to the growing demand.

Furthermore, there is an apparent shift toward more customized, locally-produced skincare products; brands are sourcing ingredients from Indonesia to cater to local skin conditions. This move reflects a larger trend known as “glocalization,” in which cosmetics are adapted to local customer preferences while adhering to global trends.

Not only that, consumers today are including more halal-certified and eco-friendly products in their skincare routines. Eco-consciousness is becoming a key consideration among consumers, especially moms, and the younger generation. “There’s a significant rise in demand for cruelty-free and sustainable products, especially among Gen Z and millennial consumers,” Judithya Pitana, Editor-in-Chief of Popbela.com at IDN, remarked.

The full East Ventures Summit 2024 session featured three beauty industry players: Yaumi Fauziah Sugiharta, Judithya Pitana, and Armand Amadeus, Co-Founder and COO of Diri Care. For more insights, watch the full panel below.

Hybrid beauty, the intersection of skincare and makeup

Hybrid beauty products seamlessly blend the benefits of skincare with the aesthetic appeal of makeup and are starting to become a game-changer in the beauty industry.

ESQA Minimalist Blurring Serum Skin Tint SPF 35 PA++ blends together five skincare ingredients into a breathable makeup base. Photo courtesy of ESQA.

This innovative category offers consumers the best of both worlds: effective skin-nourishing ingredients combined with appearance-enhancing results. The popularity of hybrid skincare is rising as consumers seek multifunctional products that make routines easier and simpler.

This shift presents a unique opportunity for brands to thrive by investing in hybrid innovations. These innovations can capture a broader audience—ranging from skincare enthusiasts to makeup lovers—while setting themselves apart in a crowded market.

By aligning with trends such as natural ingredients, sustainability, and multifunctionality, beauty brands can build deeper consumer loyalty and expand their market share. 

Offline retail will still be here for the next century 

The growth of e-commerce in Indonesia cannot be understated. However, for this industry specifically, online presence might not be sufficient. When Sociolla, Indonesia’s trusted and most complete online shopping destination for beauty products, first started in 2015, e-commerce was “one of the most interesting tech industries.”

Sociolla kicked off its journey as an online-only platform. After a while, the firm faced difficulties from both sellers’ and buyers’ sides: customers stressed that they needed to try these beauty products first-hand before buying, while sellers needed to convince buyers without physical experience. Hence, an offline presence was necessary.

“While it is true that [brands] are going digital to disrupt the market, offline retail will never cease,” said Christopher Madiam, Co-Founder and CEO of Social Bella, at the recent East Ventures Summit 2024 session. “During the pandemic where everyone invested in their online technology, Sociolla did the exact opposite and hugely invested in our offline platforms. We managed to secure the best locations for our stores, expanding very fast.”

Even in tier-2 and tier-3 cities, the excitement for beauty products was palpable, further fueling Sociolla’s growth. Behind this success was a foundational lesson: understanding the local market, the pulse of emerging trends, and the shifting needs of consumers.

What truly makes Sociolla’s story remarkable is its constant balancing act between ambition and adaptation. By building a scalable, efficient technology platform, Sociolla not only ensured seamless integration of its online and offline channels but also maintained consistent pricing, a notoriously tough challenge in retail.

Through all of this, it has become evident that beauty in Indonesia is more than skin deep—it’s a reflection of a growing middle class, youthful energy, and a local pride that Sociolla is proud to champion, even in times of uncertainty.

This resonates especially with brands that also offer services and treatments at clinics like Diri Care. Diri Care operates an omnichannel model offering prescription-grade skincare products—which are more personalized, potent, and efficient—and professional consultations online and offline through Diri Clinic.

“Our customers increasingly seek personalized, digital-first experiences, which we deliver through our Diri Care application and social media engagement,” said Diri Care’s Co-Founder and COO, Armand Amadeus.

The Diri Care app allows consumers unlimited access to the clinical team for consultations—so long as they repurchase Diri Care products. The clinical team also proactively does occasional check-ups on the customers. This way, Diri Care can retain high brand loyalty.

While digital platforms are transforming the way consumers engage with beauty brands, Diri Care does not neglect its offline presence. For example, those who are battling acne may seek further treatments to treat their acne scars after using Diri Care’s products, which can only be done offline at the clinic.

The next chapter for Indonesia’s beauty scene

There are several key factors that are expected to drive continued growth in Indonesia’s beauty market:

1. Market penetration: Compared to other countries, Indonesia still has a significant headroom to grow. 
2. Urbanization and modernization: As more Indonesians move to urban areas, they are exposed to global beauty trends, leading to higher demand for premium, sophisticated beauty products.
3. Youthful demographics: Indonesia has a large, tech-savvy population of Gen Z and millennials, making it an attractive market for beauty brands. These younger consumers are not only more likely to experiment with new beauty products but also gain higher purchasing power.
4. Technological integration: Startups can quickly discover and understand consumer demands through direct-to-consumer (D2C) sales and analytics, which enables them to reiterate their products faster in response to the shifting market landscape. Additionally, thanks to technology, startups may better manage their marketing efforts.

East Ventures will continuously support the beauty startup ecosystem by facilitating growth opportunities and enhancing its presence in the market. We have invested in Sociolla, BASE, Diri Care, and ESQA within our portfolio companies. Additionally, we provide guidance to ensure seamless operations so that businesses can naturally achieve better visibility and growth.

If you are a startup founder building in the beauty sector, send your pitch here