In recent articles, we have emphasized many times that with the rapid development of Internet and mobile e-commerce market, Indonesia will become the next battleground of capital and business. In relation to consumer finance and payment (referring to our previous industry reports), the e-commerce market is undoubtedly the largest and continues to grow. Despite the Indonesian government's optimistic forecasts, many investment institutions are also very optimistic about this market. Macquarie expects Indonesia's electricity market to reach 65 billion dollars in 2020, while the IDC forecast is 22 billion dollars. However, with the influx of more capital and new players, the growth of the market will be further accelerated.

In 2017, the total income of B2C and C2C in Indonesia was 7 billion US dollars, of which the fashion market is the main consumer market, and it is predicted that the fashion market will continue to grow at a rate of over 20% and become a market segment after the toy market's growth rate of second yuan.

Many consumers in the mobile terminal

It looks like a market with great potential, but why is it an important opportunity now? Although at present, the entire electricity supplier system, there are some links to be developed, but in the market first win principle, many investors and game player have fall over each other. Indonesia's good Internet penetration (51%, 132 million users) and mobile network penetration (47%, 123 million users) make the e-commerce platform easy to reach many consumers.

In 2017, the electricity users increased to 28 million with the growth rate of 20%. Meanwhile, the average cost of users was 250 dollars, which is expected to reach 375 US dollars in 2022.

Compared to computers (32%), Indonesians are more dependent on mobile phones (69%) on the Internet. Of these users, 32% of people searched for content through mobile phones. 9% of users searched for goods through smart phones, which was three times more than that of computer users.

However, the conversion rate of Internet users to e-commerce users is only 21% at present. Why is this? Bad online shopping experience is the main reason why consumers give up online shopping.

According to the survey of MARS Indonesia, more than half of the respondents had never bought anything online. They still prefer offline shopping. More than 30% of respondents didn't trust online shopping very much. Those who had experienced online shopping experience showed that user experience was not very good in online shopping process: for example, no trial before shopping, product quality was not as good as expected, fake risk existed. But there are some positive feedback, such as online shopping can save a lot of time, and very practical.

Online shopping consumption process

From a rational consumer perspective, in Indonesia, such an immature e-commerce market, many factors may bring bad user experience, which leads users to abandon online shopping.

While electric business players are busy integrating infrastructure and improving ecosystem, downstream businesses such as payment and logistics should focus on optimizing user experience and building user trust. Who can solve these problems first, can take the lead in the competition.

Great changing e-commerce layout

In 2017, the news of Ali's 1 billion 100 million dollar injection into Indonesia's largest C2C e-commerce platform Tokopedia was sensational. This is another major move for Ali to expand the Southeast Asian market after controlling Lazada.

In the past year, from the point of view of traffic, the market competition in Indonesia is fierce and significant. Industry giants like Lazada and Blibli maintain their steady market share, while C2C platforms such as Tokopedia and Bukalapak ushered in a huge increase in traffic volume (30%). Small - sized foreign players, such as Zalora and Qoo10, are also trying to improve their access and achieve good results. Due to the listing plan of SEA, Shopee traffic volume has been increased by 115% under the stimulation of a series of preferential policies, and Shopee has become the top five players in Indonesia's e-commerce platform.

On the other hand, local players, such as Bhinneka and Elevenia, appear to be unable to cope with the crazy expansion of foreign giants.

As more and more consumers prefer online shopping mobile phone, some of the big game player who also benefited from its app operations. Web is the first 6 of the e-commerce platform, and its app is ranked in the top ten of Google Play Store. This competition will continue this year, and many players will be eliminated. As can be seen from the above table, Lazada and Tokopedia invested by Ali have occupied half of the Web end traffic, while Shopee, the main mobile platform, has better app performance than other providers. It is foreseeable that the next competition will be more intense. However, at the same time, because of the good potential of Indonesia market, some other players, including our customers, are still looking for opportunities to enter Indonesia's market and expand.

Regulatory environment

In 2016, the Indonesian government promulgated 44 regulations, announced for the investment of more than US $7 million 400 thousand in foreign business enterprise, the government allowed 100% of its holdings, in addition, foreign investment shall not exceed 49%. Earlier in 2015, the government launched a three hour investment registration service, which shortened the registration time from the original 21 days to 3 hours. From these initiatives, we can see that the Indonesian government has spared no effort in attracting investment.

In 2017, the Indonesian finance minister revealed that Indonesia was about to release the new tax law of the e-commerce industry. The new regulations will provide comprehensive tax guidance for international and local e-commerce enterprises, covering the enterprise income tax and value-added tax of the entire e-commerce chain. and