According to statistics from Bank Indonesia, the online shopping transaction volume in Indonesia reached US$5.3 billion in 2016-2017. It is expected that by 2020, the online shopping transaction volume will reach US$130 billion, which is considered a very promising and optimistic amount. No wonder local and international e-commerce companies are competing for the “big cake” of Indonesia’s e-commerce market.
(I) The layout of e-commerce giants
Domestic industry “big guys” such as Alibaba, JD.com, and Tencent have been laying out in Southeast Asia for a long time. They have invested, cooperated, and controlled, and even raised local “unicorns”. In August 2017, Alibaba invested US$1.1 billion in Tokopedia, an Indonesian local e-commerce company.
JD Indonesia was established in Indonesia in 2016 and is the first stop for JD to deploy the Southeast Asian market. Not only Alibaba is targeting the Indonesian market, but eBay, far away in California, has also cooperated with Telkom and invested US$35 million in Blania. Shopee, one of the most active e-commerce platforms in Singapore, has successfully entered the Indonesian e-commerce market, and its mobile client ranks first in Android and iOS mobile application downloads.
(II) Possesses the potential to become the largest e-commerce market in Southeast Asia
The growth of the middle class has provided fertile soil for the development of e-commerce in Indonesia. Indonesia is even seen as the largest e-commerce market in Southeast Asia in the future. Indonesia’s potential for developing e-commerce is mainly reflected in the following three aspects.
1. Huge population base
Indonesia is the fourth most populous country in the world. In 2018, the total population reached 268 million, ranking first in Southeast Asia. In the entire population structure, people under the age of 30 account for nearly 70%, that is, there are a lot of young people, and the main force of online shopping is young people.
2. The land area ranks first in Southeast Asia
Indonesia, known as the “country of ten thousand islands”, is the largest country in Southeast Asia in terms of land area. The entire land area is 1.9 million square kilometers, ranking among the top in the world, and the sea area is even larger, up to several million square kilometers. Moreover, Indonesia also controls the Strait of Malacca, an important international trade channel, which can be said to be “adding wings to a tiger”.
3. The penetration rate of the Internet and mobile phones has increased year by year
Indonesia’s Internet penetration rate is 53.7%, which has tripled in 5 years, fully demonstrating the potential for the development of the Internet market and confirming the Indonesian market’s desire for mobile e-commerce.