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Indonesian e-commerce veterans analyze market status
2018-06-22 View: 3978
The Indonesian e-commerce market, with a population of 265 million, has become hot in recent years. Recently, JD.com accepts Google’s US$5.5 million and Shopee’s parent company’s US$575 million financing. It is estimated that a large part of the financing will also be burned in the Indonesian market.
However, if we want to tap out the potential of the Indonesian market, the challenge is still not small.
one
Of all e-commerce orders in Indonesia, 50% are still confined to Greater Jakarta (Jakarta, Bogor, Debo, Tangerang, Burkasi), 30% are from other parts of Java, and the remaining 20% It is unevenly distributed in other parts of Indonesia. The competition in Jakarta is quite fierce (smaller parts logistics costs have been reduced to RMB 3 in a single day). Although the choice of shopping on the outer island is not Jakarta, the geographical dispersion is a real problem. Therefore, if you want to drive user traffic and conversion rates in other unpopular areas, you need to put in a lot of marketing and other funds.
two
For most e-commerce platforms and sellers, cash on delivery and bank transfer are still the mainstream payment methods in the market. Developing a user's payment behavior from cash and transfer to electronic/cashless payment is destined to be a protracted battle, but fortunately Go-Pay (Go-Jek's wallet) and GrabPay (Grab's wallet, currently borrowing Lippo OVO's licenses are appearing more and more frequently in the market, and many users are gradually becoming accustomed to this new way of electronic payment, so electronic payments are expected to be able to replace cash payments and bank transfers in the future. As for who will be laughing in the payment field, it remains to be seen.
Go-Jek's e-wallet Go-Pay appeared on street food stalls. This new payment method has quietly changed the consumer habit of using cash.
three
Social e-commerce is prevalent in Indonesia. Looking at the current market situation, the market share of commodity trading through Facebook and Instagram we estimate is basically the same as the “traditional” e-commerce share. Although there is no official channel to query how big the social e-commerce market is, according to data from some third-party logistics companies, non-enterprise users have a market share of 25% to 35%, and this figure is still continuing. Growing.
Indonesian sellers selling products on Instagram
four
For Indonesia's more than 17,000 islands, the development of the last-mile logistics business is still full of challenges. We have seen that many friends of e-commerce do not have a good solution when they finally have to infiltrate remote islands. However, under the support of the government’s strong funds, some new airports, ports, highways and bridges have also been put into construction, and the status of the last one-mile logistics has gradually improved. Even in the eastern part of the country that had been forgotten in the past, President Zoko has already promoted the corresponding infrastructure. With the gradual improvement of the infrastructure, the cost of the last kilometer of logistics is also expected to decrease, especially for areas outside Java. After all, distribution logistics orders in areas other than Java are more expensive than shipping from Singapore to Indonesia.
Fives
In the domestic e-commerce supply chain design, how to ensure lower operating costs become more and more critical. Many logistics distribution centers are built outside of Greater Jakarta, and many third-party logistics companies also focus their investments on areas outside Greater Jakarta. This will not only bring the goods closer to the target market, but will also reduce the distribution costs of the last-mile logistics. From the perspective of long-term development, some companies have begun to invest in third-tier cities other than Java to develop their businesses by leveraging increasingly sophisticated infrastructure. We believe that there are still many opportunities for investors to invest in logistics.
six
The audiences faced by Indonesia's B2C cross-border e-commerce in the development process are the growing middle class and Millennials who have never seen international brand physical stores in Indonesia. With the e-commerce import legal provisions becoming clearer in terms of customs clearance costs, customs duties and taxes, there will be more and more international brands of online stores opening up delivery options to Indonesia. As a result, consumers can easily purchase international brands of clothing, the government can impose import tariffs, and these international brands do not need to invest in physical stores in Indonesia to assess the potential of their own brands in the Indonesian market. (At the same time, some of our friends do not need to make a special trip to Singapore to extract personal consumer goods from the US e-commerce platform).
Seven
However, with the continuous development of e-commerce, the transportation capacity of the Sukarno-Hatta International Airport (CGK) in Jakarta will become very tight. After all, CGK is still the main route for Indonesia's air import logistics. With the continuous expansion of the e-commerce market, the Kertajati International Airport in Majalenka, West Java will be opened to alleviate the pressure on CGK transportation. In the near future, with the deeper expansion of the Indonesian e-commerce market, other logistics import channels such as Palembang, Denpasar and Markassar will also be opened. Our friends at Lion Air (Lionair, Indonesia's largest airline) have also been exploring the entry of goods from Manado, North Sulawesi (should be the nearest second-tier and third-tier cities in Indonesia).
to sum up
Despite facing many challenges, the development of the Indonesian e-commerce market cannot be ignored. The trend of passing the Chinese technology giants to Indonesia and the amount of investment in the market also confirmed the confidence of everyone in the Indonesian e-commerce market.
Because of the huge market potential, any form of investment can be considered as a long-term development. Judging from the current situation of Indonesian e-commerce, Indonesia is expected to become the world’s fourth-largest economy by 2050, so it is important to leave a footprint in this market and find the timing for getting on.
However, if we want to tap out the potential of the Indonesian market, the challenge is still not small.
one
Of all e-commerce orders in Indonesia, 50% are still confined to Greater Jakarta (Jakarta, Bogor, Debo, Tangerang, Burkasi), 30% are from other parts of Java, and the remaining 20% It is unevenly distributed in other parts of Indonesia. The competition in Jakarta is quite fierce (smaller parts logistics costs have been reduced to RMB 3 in a single day). Although the choice of shopping on the outer island is not Jakarta, the geographical dispersion is a real problem. Therefore, if you want to drive user traffic and conversion rates in other unpopular areas, you need to put in a lot of marketing and other funds.
two
For most e-commerce platforms and sellers, cash on delivery and bank transfer are still the mainstream payment methods in the market. Developing a user's payment behavior from cash and transfer to electronic/cashless payment is destined to be a protracted battle, but fortunately Go-Pay (Go-Jek's wallet) and GrabPay (Grab's wallet, currently borrowing Lippo OVO's licenses are appearing more and more frequently in the market, and many users are gradually becoming accustomed to this new way of electronic payment, so electronic payments are expected to be able to replace cash payments and bank transfers in the future. As for who will be laughing in the payment field, it remains to be seen.
Go-Jek's e-wallet Go-Pay appeared on street food stalls. This new payment method has quietly changed the consumer habit of using cash.
three
Social e-commerce is prevalent in Indonesia. Looking at the current market situation, the market share of commodity trading through Facebook and Instagram we estimate is basically the same as the “traditional” e-commerce share. Although there is no official channel to query how big the social e-commerce market is, according to data from some third-party logistics companies, non-enterprise users have a market share of 25% to 35%, and this figure is still continuing. Growing.
Indonesian sellers selling products on Instagram
four
For Indonesia's more than 17,000 islands, the development of the last-mile logistics business is still full of challenges. We have seen that many friends of e-commerce do not have a good solution when they finally have to infiltrate remote islands. However, under the support of the government’s strong funds, some new airports, ports, highways and bridges have also been put into construction, and the status of the last one-mile logistics has gradually improved. Even in the eastern part of the country that had been forgotten in the past, President Zoko has already promoted the corresponding infrastructure. With the gradual improvement of the infrastructure, the cost of the last kilometer of logistics is also expected to decrease, especially for areas outside Java. After all, distribution logistics orders in areas other than Java are more expensive than shipping from Singapore to Indonesia.
Fives
In the domestic e-commerce supply chain design, how to ensure lower operating costs become more and more critical. Many logistics distribution centers are built outside of Greater Jakarta, and many third-party logistics companies also focus their investments on areas outside Greater Jakarta. This will not only bring the goods closer to the target market, but will also reduce the distribution costs of the last-mile logistics. From the perspective of long-term development, some companies have begun to invest in third-tier cities other than Java to develop their businesses by leveraging increasingly sophisticated infrastructure. We believe that there are still many opportunities for investors to invest in logistics.
six
The audiences faced by Indonesia's B2C cross-border e-commerce in the development process are the growing middle class and Millennials who have never seen international brand physical stores in Indonesia. With the e-commerce import legal provisions becoming clearer in terms of customs clearance costs, customs duties and taxes, there will be more and more international brands of online stores opening up delivery options to Indonesia. As a result, consumers can easily purchase international brands of clothing, the government can impose import tariffs, and these international brands do not need to invest in physical stores in Indonesia to assess the potential of their own brands in the Indonesian market. (At the same time, some of our friends do not need to make a special trip to Singapore to extract personal consumer goods from the US e-commerce platform).
Seven
However, with the continuous development of e-commerce, the transportation capacity of the Sukarno-Hatta International Airport (CGK) in Jakarta will become very tight. After all, CGK is still the main route for Indonesia's air import logistics. With the continuous expansion of the e-commerce market, the Kertajati International Airport in Majalenka, West Java will be opened to alleviate the pressure on CGK transportation. In the near future, with the deeper expansion of the Indonesian e-commerce market, other logistics import channels such as Palembang, Denpasar and Markassar will also be opened. Our friends at Lion Air (Lionair, Indonesia's largest airline) have also been exploring the entry of goods from Manado, North Sulawesi (should be the nearest second-tier and third-tier cities in Indonesia).
to sum up
Despite facing many challenges, the development of the Indonesian e-commerce market cannot be ignored. The trend of passing the Chinese technology giants to Indonesia and the amount of investment in the market also confirmed the confidence of everyone in the Indonesian e-commerce market.
Because of the huge market potential, any form of investment can be considered as a long-term development. Judging from the current situation of Indonesian e-commerce, Indonesia is expected to become the world’s fourth-largest economy by 2050, so it is important to leave a footprint in this market and find the timing for getting on.