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Indonesia Digital Transformation Outlook Briefing 2016

Indonesia Digital Transformation Outlook Briefing 2016
ASEAN & Indonesia e-Commerce Outlook

Indonesia Digital Transformation Outlook Briefing 2016

  1. 1. Spike Choo Country Director, Indonesia INDONESIA DIGITAL TRANSFORMATION OUTLOOK BRIEFING 2016 ASEAN & Indonesia e-Commerce Outlook 1
  2. 2. 2 Year in Review: Global Key Highlights of 2015 • Asia E-Commerce flexes its muscle • Alibaba Singles’ Day sales reached USD 14.3Bn • India’s e-Commerce grew ~40% in 2015 to USD 7.5Bn • SEA e-Commerce to double to $15Bn by 2019 from $6.5Bn 22 • Wearables goes mainstream • Apple Watch debut; mainstream watchmakers join the fray • Activity trackers make it to top 10 X’mas shopping lists • More niche wearables (kids , elderly , etc) emerges 33 • Cross industry disruption will continue to accelerate • More disruptive services from Uber and the likes; UberCargo in HK, GoJek’s Food Delivery, WeChat’s WePay, etc • Fintech continues to evolve, ie Crowd-finance, Digital Banking 44 • Startup investment is cooling down • Number of mega deals (100Mn & above) drop to <20 • Several tech IPO perform badly despite lowering their IPO price or shares (eg Square, Etsy, Shopify, First Data etc) 11
  3. 3. 3 ASEAN e-Commerce Market Overview • Robust growth (~25% YoY) but market still small compare to China and US • Positive factors driving e-Commerce growth in APAC such as sizable and youthful population, robust economic growth from and higher domestic spending ASEAN 6, China & US e-Commerce Market Size, 2015-2019, USD Billions Source: Frost AnalysisASEAN 6 refers to SG, MY, ID, TH, PH, VT 6.5 217.3 277.0 14.8 411.6 430.0 ASEAN 6 China US 24.9% 24.1% 11.6% ASEAN 6, China & US Population, 2015E, Millions 553.2 1,375.0 321.2 ASEAN 6, China, US, 2015 2019 CAGR
  4. 4. 4 Indonesia e-Commerce Market Snapshot 750 1,100 1,350 1,850 2,400 2,950 3,800 2013 2014 2015 2016 2017 2018 2019 31.1% Indonesia e-Commerce Market Size, 2015-2019, USD Millions 1. Positive demographics profile 2. Robust economic growth 3. High ICT adoption 4. Large number of local players GROWTH DRIVERS KEY RESTRAINTS 1. Poor logistics infrastructure 2. Large unbanked population 3. Low adoption of cashless payment 4. Limited ICT competency
  5. 5. 5 Growth Drivers of Ecommerce A fast growing economy with a young population and increasing income Real GDP & Disposable Income Level $896 $1,207 $2,148 $2,464 2015 2019 Real GDP (USD, BN) Disposable Income (USD) 3.5% 7.8% 28% 64% 8% 0-14 15-59 60 and above Indonesia Population by Age Group, 2013 Indonesia Internet User Forecast 73.0 88.5 104.0 119.5 135.0 0% 10% 20% 30% 40% 50% 60% 0 50 100 150 2015 2016 2017 2018 2019 Internet Users (million) % population CAGR = 16.6%
  6. 6. 6 Growth Drivers of Ecommerce Highly saturated & competitive landscape with good mix of local and global players Niche B2C Multi-category C2C B2B2C Brokers
  7. 7. 7 Key Restraints of Ecommerce Poor land infrastructure and inaccessibility of banking services are key challenges Indonesia Banking Population (millions) 39% 64% 61% 36% 2014 2019 Banked Population Unbanked Population 8% 13% 20% 25% 26% Logistics Cost Share to GDP of selected ASEAN Countries, 2014 1% 3% 1% 51% 4% 29% 11% Other Electronic Payment Cheques Cash Prepaid Card (Pre-loaded with money) Debit Card Credit Card Preferred Online Payment Mode, Q3, 2013
  8. 8. 8 Credit & Debit Card Payment Market Growth Cash is still the predominant payment mode for offline transaction Estimated 113 million ATM+Debit cards and 17 million credit cards in circulation at the end of 2015. – Debit card outnumber credit card by about 6.7 to 1 – Total annual credit card transaction value is ~1.3 times higher than debit cards. – Average annual transaction per credit card is 16, per debit card is 3 – The average transaction value per credit card is about IDR1Mn compare to IDR605K for debit card Source: Bank Indonesia, Frost Analysis Annual Transaction Value, 2010-15(E), IDR Bn Annual Transaction Volume, 2010-15(E), Mn 194.7 271.2 111.7 342.5 2010 2015(E) Credit card ATM+Debit Card 158.7 269.9 65.3 207.3 2010 2015(E) Credit card ATM+Debit Card 224.0 477.2 16.3% 306.4 613.7 14.9% 13.6 16.9 48.9 113.5 2010 2015(E) Credit card ATM+Debit Card Credit, ATM+Debit Cards in Circulation, 2010-15, Mn 62.5 130.4 15.9% Source: Bank Indonesia
  9. 9. 9 2010 2015(E)2010 2015(E)2010 2015(E) E-Money Payment Market Growth Fast growing user base with high volume but small-value transaction First E-Money product (Gazcard) was launched by Pertamina in 2006 in collaboration with Bank Mandiri, BNI and BRI. Numerous banks, telco, gaming and other companies have launched numerous e-money instruments (both cards and server based products) – More than half of issuers are Banks follow by telecom (T-Cash, XL Tunai) & others (Doku, Artajasa’s Mynt, etc) – Most cards focus on Retail & Transportation, follow by online & bill payment – Average value per transaction ~IDR10,000, Annual transactions per card ~12 Source: Bank Indonesia, Frost Analysis Annual Transaction Value, 2010-15(E), IDR Bn E-Money Transaction Volume, 2010-15(E), Mn 0.7 5.3 50.1% 26.5 537.3 82.5% E-Money Accounts in Circulation, 2010-15(E), Mn 7.9 45.4 41.8% Source: Bank Indonesia
  10. 10. 10 Indonesia – Ecommerce Summary Most promising market in ASEAN in the long term • E-Commerce in Indonesia looks a lot like the early years in China • High growth potential due to favourable key factors such as rising income level, youthful population, maturing of e-Commerce offerings, etc • However, short-term obstacles such as poor infrastructure, high logistics costs and low access to credit and debit cards will remain a drag on growth Indonesia E-Commerce Enablers Maturity Infrastructure and Resource Pool Availability of Skilled Labour Infrastructure Upgrading Banking/ Logistics Readiness Regulatory Consumer Protection Laws Electronic Transaction Laws E-Commerce Investment Schemes Consumer Readiness Ability to consume ICT Literacy Broadband & Device Adoption Government Schemes & Support E-commerce Adoption Grants & Fundings for enterprises ICT Education and Training
  11. 11. 11 Predictions for 2016 Consolidation expected especially for E-Commerce firms1 Hybrid O2O Business Models to emerge2 M-Commerce transaction to account for ~35%, up from ~25%3 Online payment using credit card, debit card, e-banking, etc to exceed COD and OTC payment by end of 2016 4
  12. 12. 12 F&S E-Commerce & E-Payment Capabilities Custom Research a) Market Landscape Assessment & Sizing b) Competitive Market Intelligence c) Market Feasibility Study i IPO & DD Advisory a) IPO Prospectus Support b) Commercial Due Diligence c) Portfolio Valuation Custom Consulting a) Strategy Development b) Product and Service Roadmap Development c) Go-To-Market Planning d) Partnership Profiling and Scanning Market Research Growth Consulting Financial Advisory
  13. 13. 13 Thank You All Rights Reserved, Copyright ©

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