DISSECTING INDONESIA MARKET AND IT’S E-COMMERCE OPPORTUNITIES IN 2016

A SPECIAL REPORT HANDBOOK :
DISSECTING INDONESIA MARKET AND
IT’S E-COMMERCE OPPORTUNITIES IN 2016

TABLE OF CONTENT
Introduction
Dissecting Indonesia Market
Key Drivers and Main Obstacle to
E-Commerce Growth
E-Commerce Logistics
and Delivery
E-Commerce Now
Conclusion

Introduction
We all appreciate the future growth prospects of
Indonesia ecommerce market and how this industry is
becoming center of attraction for some global brand
retailers to expand their market channel. As CLSA 2015
reported, Indonesia e-commerce sales in 2016; expected
to have US$ 25 billion.
Online retailing in Indonesia is poised for an e-liftoff. As
has already happened in China, this major structural
theme will have sizeable ramifications for offline retail.
Online shopping in Indonesia will be huge, rising to almost
11% of total retail sales by 19CL.
Indonesia has the best online retail growth prospects
among Asean countries. Key drivers will be a mix of its
huge, young population; an extremely under penetrated
offline sector; relatively high levels of mobile-internet
penetration and large and accelerating levels of private
and direct-equity investment into the sector.
This handbook released by 8Commerce based on
credible reports from CLSA, wearesocial, e-marketer,
Nielsen, Kadence 2015 and Macquarie Research 2016.
Source: wearesocial.com
© 2016 8Commerce. All Rights Reserved. | 8commerce.com | A scalable end to end e-commerce enabler and fulfillment for Indonesia coverage and market | 03
A Special Report Handbook 2016 |

Facts and Findings
•  Online retail spending/capita in the USA is 63x higher than Indonesia.
•  Indonesia is the world’s fourth most populated country, 256 million.
Online retail sales to reach 10.7% by 2019. The Indonesian eCommerce
Association expects the total online market to treble between 2014 and
2016, to Rp 283tn (US$24bn in 2016) and to reach US$130bn by 2020.
•  As survey by CLSA 2015, indicates that 83% of online shoppers in
Indonesia only made their first domestic online purchase in 2015, and
predicted will re-purchase more in 2016 and next.
•  Globally, B2C online retail sales/capita has tended to take off when
mobile-internet penetration hits 35%.
•  Average mobile data speeds in Indonesia are only 1.7 mbps, while in China
is 4. mbps and South Korea is 8.8 mbps.
•  Only 2 of Indonesian adults have credit card, while figures for bank
accounts are 36%.
•  In Indonesia, less than one-third of the top-30, best selling apparel brand
across all channels are local. While in India and China, the share is two-
thirds.
•  C2C currently dominates in Indonesia and Thailand but this should change
over the next five years. Industry experts believe Indonesia’s B2C e-
commerce market is the fastest growing in Southeast Asia, even though
C2C classifieds players are the first-movers; even the top two local C2C
marketplaces, Tokopedia and Bukalapak, are beginning to shift to the B2C
model.

Social Media Well Connected
There are more Facebook users in a seen than in the USA.
Jakarta is in second place with 7.4m users. Indonesia as a
whole, is a relative laggard, but is still Facebook’s fourth
largest market globally by users. (wearesocial, 2016)

Source: wearesocial.com
Growth of Online Retail
Indonesian are also becoming more familiar with online
shopping. For instance, Zalora used to get an average of two
phone calls/messages per order two years ago, but this has
fallen to one per order (vs.. European fashion websites which
get customer queries on only 5% of orders). Online retail is
attractive for big city dwellers who prefer to avoid traﬃc
jams and for those who live in areas far from shopping malls.
The Indonesia E-commerce Association (idEA) believes that
the number of shoppers will grow from 15mn to about 75mn
by 2020 in Indonesia, which is about 30% of the entire
population. (Macquarie, 2016)


More Favourable Environment
for E-Commerce Growth
Based on our discussions with the ICT Minister, as part of stimulus package #10, the
government has removed e-commerce from the negative investment list, and now allows
foreign investment for e-commerce marketplaces such as Tokopedia which are valued above
Rp100bn. The government expects the new rule will provide wider funding opportunities for
start-ups willing to expand their businesses. Several foreign investors have showed their
eagerness to invest in e-commerce to grab a piece of Indonesia’s large market. (Macquarie,
2016)
The Indonesian government has ﬁnally completed the e-commerce roadmap draft, which will
form the basis for future guidelines regulating the sector.
The roadmap will cover critical aspects of the industry such as funding, taxation,
communication infrastructure, conference that these are the seven points the government
will work on in order to achieve an e-commerce transaction values of $130 bn by 2020.
The ﬁnance ministry is currently drafting a tax mechanism for e-commerce
companies and transactions

Faster network speed :
The government’s initiative to reform 1800MHz spectrum to
make spectrum assignments more eﬃcient (contiguous
blocks vs previously fragmented blocks) was completed as
planned in Nov 2015 and incumbent operators followerd
quickly with commercial LTE services. While coverage is
limited to key city centres and LTE device penetration is still
low, the improved user experience has spurred accelerating
demand for LTE service, which has already led to telcos
planning accelerated rollouts in key population centers.
Though smartphone penetration is still low at 35%, The
smartphone market is grew
The smartphone market grew 55% YoY in 1Q16 and accounts for
more than half of the total handset shipments. The $50-$100
price range represents nearly half of the total smartphone sales.
As LTE devices enter this price range we expect the 5% LTE device
penetration to hit an inﬂexion point and drive a further change in
user online habits including towards e-commerce.

Availability of cheaper mobile phones :
The cheapest smartphone available today is a niche product
from smartfren and costs Rp 499.000 (US$35). Entry level 4G
LTE smartphones from Sony, Lenovo, Xiaomi are available in
Indonesia and range between Rp 1 – 3mn (US$76 to Rp230).
The locally made Bolt Powerphone is priced at about Rp 2mn
(US$150), and local brand Polytron has been able to build a 4G
LTE smartphone in a similiar price bracket that is compatible with
several carriers.
(Macquarie, 2016)

(Macquarie, 2016)
Increased Fibre Broadband
Availability
Incumbent fixed line operator PT Telkom
has been aggressively rolling out its fibre
network, and as at Dec 15 10mn homes
were passed out of Indonesia’s 61mn
households, with 1mn subscribers on fibre
of copper / fibre hybrid (VDSL)
connections.
Despite the low GDP per capita levels (US
$3,500/month) demand remains very
strong with the key limitation currently,
typical of early fibre rollouts in all
countries, a lack of skilled technicians to
handle fibre installations. From an e-
commerce standpoint, improved fibre
connectivity also introduces new channles
for content owners to monetise their
content.
Logistics Enablers:
Since the Go-jek motorcycle service app
launched in January 2015, the company has
gone from 1,000 registered drivers on its
platform to 200,000 across five locations
in Indonesia, including Jakarta and Bali. The
Go-jek motorcycle services is an app, and
delivers more efficient and cheaper last
mile logistics. According to several news
articles, Go-jek has seen a dramatic
increase in users due to infrastructure
issues in Jakarta, and we think that it still
has significant growth potential.
This has improved the logistics issues
surrounding e-commerce. As this reporting
on the making, there is an updated news
that MatahariMall.com officially engages
Grab to be one of their partner in last mile
delivery.
Enabling Ease of E-Payment Still
An Ongoing Process:
While the majority of electronic
payments are still done through ATMs,
we are seeing a higher proportion of
mobile banking transactions, at 18% of
total electronic transactions in 2015
(vs. 15% in 2014). However, the total
transacted value remains flat.
We think that the landscape remains
fragmented, with around 20 official
players, and expect consolidation in this
space to help ease online payments.

“
According to Kenneth Bishop, Managing Director of Facebook
SEA :
“Mobile News Feeds are the new storefront for retailers looking to reach
Southeast Asia’s mobile first consumers. For Indonesians, mobile devices
are where they discover products and make purchases.
We know that on Facebook, 44% of Indonesian online shoppers search for
product information, leading them to make purchases based on
recommendations and feedback from their personal connections.
Southeast Asia is home to some of the fastest growing countries for
Facebook and Instagram. Indonesia is driving this growth with 82 million
people on Facebook, and 94% of them connecting through mobile
devices. We’re committed to building solutions and products to help
ecommerce companies in Indonesia build and grow their business.
Indonesia already has the highest
number of internet users in Southeast
Asia at 75m and this should continue to
grow over the next few years.
Indonesia’s internet penetration is
already the lowest at 30%, but we
estimate this could double by 2020 to
about the same level as Malaysia
currently
Improving Internet and Smartphone Penetration
At the heart of e-commerce and online growth is improving internet and smartphone penetration. According
to tech minister Rudiantara, consumers will pay only Rp 400.000 for 4G smartphones. 4G technology is
beginning to enter Indonesia on a large scale, and all three major operators are currently engaged in country-
wide 4G infrastructure upgrades. While Indonesia has a mobile phone penetration of over 100%, as little as
33% are smartphones and only about 5% 4G capable devices.
Most of the growth in internet users will be coming fom mobile rather than fixed broadband. While efforts to
expand fixed broadband coverage is progressing, its large geographical expanse and being and archipelago
does mean that it will be a long time before all Indonesians will have access to wired high-speed broadband,
and untill then mobile will be the primary conduit for most Indonesians to access the internet.

Payment and Trust Issues
A study conducted by Kadence, part of Starcom
Mediavest Group, indicated that the biggest concern
customers have for online shopping is product quality,
followed by payment security.
80%
60%
Nielsen reported that 80% of Indonesia
shoppers read reviews on social media and
do research online before they make their
purchases oﬄine.
The same source also found that
60% of Indonesian shoppers are not
conﬁdent in providing their credit
card information onlne.
The reasons for the lack of trust include:
missmatch between listed products and
actual purchases,lapses in last mile delivery,
scams involving money transfer and phising
websites.
Lack of customer trust was also encountered in the US in the early stages of ecommerce
development and that did not stop the rapid growth in the sector. We think Indonesia will likely
slowly overcome the barrier of lack of customer trust, slowly transitioning from COD payments
once the trust is built and follow the same path as the US in the next few years

(Macquarie, 2016)

6%
8%
10%
10%
14%
17%
20%
51%
73%
Purchase price in foreign currency
Tendency to overspend
Eﬃciency of customer service
Late in delivery
Personal information being tracked and shared
Lack of physical touch and feel of the item to buy
Complicated return of goods policies
Payment security
Product quality (eg counterfeit)
Concerns about Online Shopping
319
400
473
565
770
1100
1064
271
514
833
1243
1233
1606
1996
2009 2010 2011 2012 2013 2014 2015
Electronic Transaction Volume BreakdownInternet transaction
M-banking transaction
ATM transaction

Customer Shopping Behaviour
The survey below, dated 2015, was conducted by Kadence,
which is part of Starcom Mediavest Group, which attempts
to assess Indonesian’s online shopping behaviour.
Women will be the main demographic driving ecommerce,
they influence directly and indirectly 75% of the online
purchases. Women spend more time online and buy more.
Being able to offer them inspiration and the products they
are looking for will be key to win the market. (Macquarie,
2016)
1%
13%
32% 33%
12%
9%
0%
10%
20%
30%
40%
15-19 20-24 25-29 30-34 35-39 40-45
Respondent Profile by Age Group
37%
31% 31%
28%
30%
32%
34%
36%
38%
Senior High
School
Academy /
College
Bachelor degree
Respondent Profile by Educating Level

22%
41%
37%
0%
10%
20%
30%
40%
50%
SES A SES B SES C1
Respondent Proﬁle by Social Economic Status
20%
44%
24%
0%
10%
20%
30%
40%
50%
Upper 1 Upper 2 Middle
Respondent Proﬁle by Social Economic Class
Macquarie, 2016
According to the survey, SES A has started to
purchase online since this year, while future online
shopping will be driven by consumers in older age
groups, those from SES B and C1 (Macquarie, 2016).

51%
16%
2%
7% 5%
1%
5% 4% 4%
0%
10%
20%
30%
40%
50%
60%
Fashion Gadget Computer
software or
hardware
Beauty care Air ticket / tour Baggage and
luggage
Healthcare Food and
beverage
Household
electronics and
furnishing
Most Often Purchase
Macquarie, 2016
Fashion
Top 3 Purchases
Gadget Beauty Care

Most Popular Payment Methods
by Purchase Category
Beauty Healthcare Software/Hardware Gadget
Transfer
Internet Banking
Using debit card
Using credit card
Cash on delivery
Fashion Baggage & Luggage Air Ticket & Tour Booking
Transfer
Internet Banking
Using debit card
Using credit card
Cash on delivery
65%
16%
10%
4%
4%
22%
4%
6%
12%
56%
63%
26%
6%
1%
4%
21%
13%
5%
12%
50%
61%
2%
23%
9%
5%
75%
2%
14%
3%
6%
26%
43%
7%
18%
6%
Macquarie, 2016

Macquarie, 2016
Easier to browse
No time to buy offline
Online price cheaper
Only available online
Flexible transaction
Membership benefits
42%
37%
30%
21%
7%
2%
60%
26%
26%
10%
20%
2%
77%
24%
72%
8%
6%
0%
64%
27%
74%
8%
16%
1%
Beauty Healthcare Software/Hardware Gadget
Easier to browse
No time to buy offline
Online price cheaper
Only available online
Flexible transaction
Membership benefits
54%
41%
30%
27%
18%
2%
46%
35%
64%
9%
7%
8%
55%
57%
35%
4%
42%
1%
Fashion Baggage & Luggage Air Ticket & Tour Booking
Most Common Reasons
to Purchase Online

Key Drivers and Main Obstacle to
E-Commerce Growth
Key Drivers to E-Commerce Growth
Indonesia is a Large Addressable Market.
There are 256 million people, with 51% are young – below 31 years old. Indonesia in
particular has an extremely large, potential addressable e-commerce market, which in
turn is likely to attract more players, both domestic and foreign, and more capital than
other ASEAN markets. Indonesia is a market that global and regional e-commerce
leaders such as Amazon, Alibaba and Flipkart cannot ignore and we see a strong
likelihood that some of these will become directly involved in the market over the next
few years.
Larger addressable market = more players, more online SKUs and more capital. Too
big for global and regional e-commerce majors to ignore. Indonesia population is
nearly four times that of Thailand.
Currently Indonesia has large penetration on Customer to Customer (C2C) that
still dominate in online player, and that is the basic reason why OLX and other
same focus e-commerce platform are still popular among others. This
condition also happened in Thailand, but most e-commerce experts believe it
will change over the next 5 years.
CLSA, 2015

Interesting fact is within Indonesia,
66% of non-Java online shoppers
spend more than US$20 on e-
commerce per month versus 44% in
Java, ex-Jakarta and only 37% in
Jakarta itself. We think this reﬂects the
relative lack of oﬄine merchandise
choice outside Java and especially
outside Jakarta. (CLSA, 2015)

The Rise of The Young.
A young population tends to hinder current e-commerce growth, but acts as a driver for future growth.
Indonesia has a much younger population than the USA and China. Some 51% of Indonesia’s
population is under the age of 30 (CLSA, 2015).
Indonesia’s relatively young population may partly explain why per-capita online-shopping expenditure
at an estimated US$15 is still low in both absolute terms and relative to the likes of Thailand (US$53).
Young consumers tend to be more tech-savvy and internet literate than their older counterparts and as
this former demographic moves into higher disposable income brackets, they should be an important
driver of online retail growth.

E-commerce Extremely Nascent.
Another factor explaining the low per capita online shopping spend, but which also
demonstrates the growth potential is that many online shoppers in Indonesia are new to
e-commerce.
CLSA (2015) survey results of online shoppers show that 97% of online shoppers in
Indonesia have only begun shopping online since 2014 and outside of java, this
percentage rises to 99%. Indeed, 83% of Indonesian online shoppers have only begun
doing so in 2015. This makes online retailing far more nascent than in the other large
Asean markets, with only 37% of Thai and Malaysian and 51% of Philippine online
shoppers having purchased online for the ﬁrst time since 2014. Indonesia have only just
started shopping online. 97% of Indonesian online shoppers have only started to do so in
the past two years.

Although nascent, online-shopping frequency is relatively high

Although Indonesians are the newest to online shopping within the big-four Asean markets, they are already shopping
online more frequently than their Malaysian and Philippines counterparts: 25% of our survey panel of Indonesia online
shoppers are now shopping more than five times a year versus 28% for our Malaysian and 25% for our Philippines
respondents. Only the relatively more mature Thai market has a higher level of online-shopping frequency with 48% of
respondents shopping more than five times a year.
The Indonesian figures rise to 42% in Jakarta but logically fall away to 31% outside of Java.
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CLSA, 2015


High Share of Shopping Budget Allocated to Online
Retail Already.
What % of your overall non-food, shopping budget was spent
online in the past year?
The population who spend non food shopping budget more than 10%
Java non Jakarta Jakarta Non Java
57%
57% of Indonesia online shoppers already allocate more than 5%of their total, non-food, shopping budget
to online shopping. Although nearly all Indonesian online shoppers are new to this form of shopping, they
already allocate a higher share of their non-food, shopping budget to online purchases than their Asean
counterparts.
Within Indonesia, the allocation is interestingly higher outside o Jakarta which hints at stronger future online-
shopping growth outside of the capital.

CLSA, 2015

Indonesia’s 10 largest retail groups by revenue have a total of 18,987
stores, easliy the largest store count in Asean and even more than
the top-10 chains in China (6,415) – although this reflects the much
more fragmented composition of China’s offline retail industry.
However, Indonesia’s top chains by revenue are dominated by small-
scale supermarkets and convenience stores. If these two format are
stripped out – and the main reason for doing this is that we do not
see these formats as especially vulnerable to e-commerce – then
the Indonesian store count drops to only 2,178 and the retail GFA
falls from 7.51 m2 to 4.00 m2.
Offline Retail Extremely
Underpenetrated

When it comes to popular e-commerce merchandise, there is limited offline competition. The lack of offline
penetration means that there is a huge potential void for the online channel to fill and once consumers get
accustomed to online shopping, there tends to be no going back. It is rare that there is an abrupt change and
consumers revert back to the offline retail channel.
The lack of offline retail penetration will be especially pronounced outside Jakarta and it is no surprise that leading
e-commerce companies now drive an average of 44% of their sales on average outside of Jakarta and amost
one-fifth outside Java.
CLSA, 2015


With only 6% fixed line broadband penetration, the
lowest among the big-four Asean markets, Indonesian
consumers will be increasingly reliant on mobile
devices for their online-shopping requirements. The
good news is that mobile internet penetration is
already decent and mobile tariffs low even though
average mobile data speeds are still extremely slow.
The findings from e-commerce company interviews
indicate that an average of
Online Shopping
Driven by Mobile
of all online-shopping
traffic is already on
mobile devices48%
of transactions all
online-shopping on
mobile devices17%
Although poor mobile internet connections and slow mobille data
speeds are major hurdles, it is also noteworthy that a greater share
of Indonesian online shoppers have high numbers of online-
shopping apps on their mobile devices versus their counterparts in
the large Asean markets :
of Indonesian online shoppers have
more than three online-shopping apps
on their phones.
45%
CLSA, 2015


With no Indonesian e-commerce or internet companies of any size
yet to be listed, the level and the pace of private-equity and direct
industry funding into the sector are good barometers of how the
sector is developing and, importantly, the growth potential that
professional investors and industry attach to the sector.
Increased levels of funding allow both existing and new companies
to expand in the crucial areas of SKU and staﬀ count as well as
marketing, logistics, IT and mobile-related spending. All of this
helps propel industry growth.
Large Relative Private-Equity
Funding Rising Rapidly
The two big deals have been the US$100m
from Softbank and Sequoia and the US$500m
investment into the establishment of
MatahariMall,
although private-equity deal with most of the funding
coming from the controlling shareholder group (Lippo).
These funds are only a commitment and have not been
invested yet.
CLSA, 2015


CLSA, 2015
The growth in online retail spending is reﬂected in similar large online advertising growth. In the four
years to 2014, online advertising grew at a Cagr of 323%, admittedly from a very low base Online
Advertising now accounts for 4% of total advertising spending, up from almost 0% in 2010. Growth
has been at the expense of print advertising spending , up from almost 0% in 2010.
Growth has been at the expense of print advertising. Given our expectations that online retail sales
will reach almost 11% of total retail sales by 2019. It is likely that online advertising can reach at least
a low-teen percentage by that year. While we expect most of the gains to continue to be at the
expense of print media advertising, we also believe that beyond a three-year timeframe, that there is
potentially some risk to TV advertising especially in the free-to-air segment.
Online Advertising Rising
Sharply Oﬀ a Low Base
58.38%
1.38%
32.34%
0.03%
3.98% 3.89%
TV Radio
Print Cinema
Outdoor Online
Online Advertising Spending Breakdown 2014

CLSA, 2015
Few Strong Local Consumer
Brands
One of the obstacles in expanding merchandise assortment and the
SKU count in Indonesia is that there are few local consumer brands,
especially in the popular online categories.
If we look at the 30 best-selling apparel brands in
Indonesia in all channels (offline and online), only
around a quarter of these are local brands.
A lack of local brands hampers online SKU acceleratiion, makes it
harder to oﬀer low prices and may stiﬂele online seller margins
Roughly only one quarter of the top 30 best selling
apparel brands across all channels are local ones in
Indonesia and local apparel brands among the top
30 bestsellers, only have a combined market share
of only 2%.
Main Obstacle to E-Commerce Growth


High Levels of Import Duties and
Taxes
Although there has been an Asean-China free trade agreement in place for
several years. and with the official schedule reducing import duties to zero on many
consumer goods, several key consumer categories especially in apparel and footwear,
still attract duties and these duties vary within the Asean markets. In addition, the
various Asean markets have different levels of VAT and GST and these vary from
product to product.
Indonesia has an additional “import income tax” for unregiestered importers
which is calculated as 7% of the customs, freight and insurance value. However, since we
have chosen to ignore freight and insurance charges, this tax is calculated off the
product value at the port plus the import duty. In other names The Asean-China free
trade agreement, appears to be in name only.
With the exception of some consumer electronics items such as mobile phones, there are stilll
import duties on goods manufactured in China on almost all consumer goods imported from china.
When the import income tax and VAT is added, Indonesia has consistently high mark-ups
stemming from import duties and other taxes.
Duties and taxes lead to a 35% mark-up in Indonesia on cotton
dress imports from China but for mobile phone imports from
China attract no duties across Asean . CLSA, 2015


Slow Mobile Data Speeds and Poor
Internet Connections
Although Indonesia has decent levels of mobile internet penetration
and mobile e-commerce usage, higher levels of adoption are being
hampered by slow data speeds and general poor internet connectivity,
average mobile data speeds are 2.7 times faster in
China than Indonesia. In Indonesia average mobile
data connection speeds are at 1.7Mbps, 32%
slower than in Thailand.
Online shoppers view poor internet connections as a greater problem
Jakarta Non JavaJava non Jakarta
45% 52% 36%
We heard many complaints that customers regularly experience internet
disconnections during the shopping and payment process, especially on mobile
devices.


Low Fixed Broadband Penetration
and Connection Speeds
It will always be easier to get someone to shop on mobile
devices if they have already had online retail experience on a PC,
where the screen and keyboard size is much bigger and
connectivity speeds tend to be higher. Fixed-line broadband
penetration/household is just 6% in Indonesia, easliy the lowest
among large Asean markets.
CLSA, 2015
Average ﬁxed-line broadband
connection speeds in
Indonesia
Thai speeds faster
than Indonesia.
3.4Mbps
2.2Mbps

At almost every meeting that we had in Indonesia with online
retailers, management spoke about shortages of staff talent,
especially for hadrware and software engineers and for digital
marketing talent.
Talent Shortages

Salaries in these areas are being bid up aggresively and staff poaching is
common with targeted staff often offered 5—100% increases in
remuneration packages to leave.
CLSA, 2015

E-Commerce Logistics & Delivery
Infrastructure is important for the success of e-commerce companies, especially
those with no bricks and mortar presence, and particulary with issues such as free
delivery, order rescheduling, cancellation, returns and cash-on-delivery. Minimizing turn
around times is also key, as this often leads to word-of-mouth publicity, feedback and
customer retention for the online retailer.
Lazada for example, will deliver goods in 1-3 days for Jakarta and the Greater Jakarta
are and 4-9 days outside Jakarta. It still takes more than double the time to ship
goods outside of Jakarta, which is a big growth impediment, given the demand for
online products is typically from second or third tier cities.
Logistics players in Indonesia are evolving rapidly, while some retailers are adapting to
the logistical challenges thorugh ‘online to offline’ offerings, as customers can pick up
in store, while mataharimall.com for example, is setting up pick up location points at
post offices to eease delivery and customer collection.
32
Logistics / Delivery Issues
CLSA, 2015
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33
© 8Commerce.com All Rights Reserved. 2016 | A scalable end to end e-commerce enabler and fulﬁllment for Indonesia coverage and market |
Indonesia marketplace players mostly have logistics
infrastructure of its own but still most of the players use a third
party for last mile delivery (see our table for more details).
As a famous choice of package deliveries JNE has developed
their own e-commerce IT that is integrated with e-commerce
operational from one of their biggest client -Lazada, in order to
run seamless order process connected with seamless last mile
delivery.
Company Logistics Delivery
Berrybenka Owned Outsource
Bilna Owned Outsource
Blibli Owned Owned & External
Bobobo Owned Outsourced
Mataharimall Owned Outsourced
Zalora Owned Owned
Tokopedia Not used Outsourced
Indonesia
Marketplace with
Logistics and
Delivery
CLSA, 2015

34
Indonesia average delivery time in Jakarta are the fastest of any
of capital cities among the big four Asean markets
21 HOURS
2 DAYS
However deliveries outside Jakarta is among the slowest which
also reach most expensive cost than other Asean countries,
especially in east Indonesia.
Here’s shipping
simulation delivery cost
around Indonesia
comparison according
to JNE.
Delivery Area Price
Jakarta IDR 9.000
Aceh IDR 51.000
Surabaya IDR 19.000
Medan IDR 30.000
Pontianak IDR 30.000
Makassar IDR 36.000
Sorong IDR 88.000
*weight 1kg, shipment from jakarta
CLSA, 2015

35
DELIVERYLOGISTICSORDER
e-Commerce Enabler Function on Logistics –
Delivery Integration
INTEGRATION
BENEFITS
Internal External
Boost operational eﬃciency Real time order status
Brings clearer operational views Best online shopping experience

As what happened in United States, e-Commerce market has been very
common and turned into basic needs for most consumer there.
Consumer convenience shopping experience both online and offline store is
what most matters in USA, and most online players try to work best in
presenting these two channels supporting each other to reach bigger sales.
As what we defined it as integrated omni channel, we might assume that it
would be the future e-commerce for the nearly upcoming year.
This condition seems doesn’t happen yet in varies countries including Indonesia.
Online retail has had some impact on traditional retail which present more of a
threat, where traditional bricks and mortar retailers incorporate online strategies
into their overall strategies.
E-Commerce Now
We assume that e-Commerce presents a threat to
traditional retailers, as the convenience and
affordability factor is appealing to customers.

E-Commerce Now
The potential price competition over FMCG items. Consumer tend to check the price in
physical stores, and then go online to shop for the same item at a lower price. This has
happened in consumer electronics, and it is highly possible that it will happen in the
FMCG industry due to more and more e-commerce players emerging selling FMCG
products.
There are 3 (three) matters that
potentially described as a threat:
1
Sizeable product oﬀering. Given unlimited visual shelf space, the e-grocery can oﬀer
many more product SKUs compared to bricks and mortar platforms.
2
Price parity. Being online for manufacturers, means opportunity cutting some supply
chain cost, from production to end consumer. It also means consumer can get lower
price of every single product that sold via online.
3

We believe that online to offline retailing is one of the ways that Indonesian
retailers are positioning themselves ahead of the e-commerce race. Shoppers
tend to browse company websites at home or in the office product information
before visiting the stores to purchase. In Indonesia, consumer are also likely to
connect with their social networks to exchange opinions and get
recommendations on the merchandise under consideration.
Hence, online retailing may in fact be an advantage rather than a disadvantage to
bricks and mortar retailers due to the access it provides for customers who live in
regions that have few malls, resulting in additional sales.
Potential opportunity:
offline to online/omni channel retailing
E-Commerce Now
What is Omni Channel
Omni channel is defined as a customer oriented approach in term of advance multichannel sales utilizing by
providing integrated seamless shopping experience. Through omni channel feature, customer can do shopping both
online or offline which all inventory, stock, price, promotion, product information are integrated.
Even though, there are difference meaning among omni channel user experience and a multi channel user
experience. All omni channel experiences will use multiple channels, but not all multi channel experience are omni
channel.
Customers now and then only see The Brand as one brand. They don’t have enough mindset to deal with the brand
in website is different from the brand in mall. You can have amazing mobile marketing, engaging social media
campaigns, and well-designed website. But if they don’t work together, it’s not omni channel.

39
Conclusion
© 2016 8Commerce. All Rights Reserved. | 8commerce.com | A scalable end to end e-commerce enabler and fulﬁllment for Indonesia coverage and market |
Create one now. Try to focus on your e-commerce business as your ticket surviving your business
in the near future. Being focus in e-commerce means you have well implemented of all end to end
e-commerce operation, from having the e-commerce site which has user interface and user
experience combined best into creating convenience online shopping experience; until when the
order is received and get great feedback or review from customer
If you don’t have
any
e-Commerce, yet
There must be something wrong in setting your digital marketing strategies and
activation. It’s used to be what most happened in company because of lack of talented
digital people to optimize digital marketing that converts into sales. There are several
inbound marketing and sales platforms, optimized e-commerce analytics and
retargeting platforms. There are also organic, paid marketing and social media strategic
to grow your visitors and followers. But, what you must know is, you know how to wisely
spend the budget and choose what best digital strategy to implement. If you still not
sure to run digital marketing by yourself, you can go to proven digital agency or e-
commerce enabler that their KPI is sales conversion.
You have Online Store
but don’t Sell
Every company must develop its own unique omni-channel infrastructure, and work closely with
several departments to develop this strong strategy. While building your own program, engage
person in charge in IT, Marketing, Customer Service and sales agent or representative that
involved in the experience. Set the goal and initiative together.
After that, make sure your ecommerce is scalable using omni channel platform. It’s really
important to collaborate with ecommerce enabler that understand this multi channel and omni
channel needs. Once you get the wrong one, you will have to pay more expense, time, and
complexities. And we know it’s not good for your business.
You have Oﬄine and
Online Channels –
Consider to Set Omni
Channel Initiatives to
Make Bigger Sales

We are and end-to-end eCommerce enabler and e fulﬁllment services; specializing in ecommerce
development, warehouse and last mile fulﬁllment, store operations, multichannel management, and
performance marketing. We emphasize omni-channel capabilities which unite a digital commerce strategy
with traditional retailer and manufacturer to create reliable branded shopping experience.
With our competitive price, experienced professionals, and experienced in supply chain, we aim to be your
strategic partner for global and rising brands aiming to win eCommerce market in Indonesia.
About 8commerce

DISSECTING INDONESIA MARKET AND IT’S E-COMMERCE OPPORTUNITIES IN 2016

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DISSECTING INDONESIA MARKET AND IT’S E-COMMERCE OPPORTUNITIES IN 2016