Is Amazon ready to enter Indonesia with $600m war chest?

Amazon boxes are seen stacked for delivery in the Manhattan borough of New York City, January 29, 2016. REUTERS/Mike Segar

After India, US-based e-commerce giant Amazon may be looking at pitching its tent in south-east Asia’s largest market, Indonesia, with a reported investment plan of $600 million.

Amazon is preparing to enter the Indonesian market, local media has reported quoting Indonesia E-commerce Association (idEA) Chairman Daniel Tumiwa.

According to unconfirmed reports, Amazon will invest $600 million for its first year in the country.

Going by its size, Tumiwa said, he believed there was no local player who could match the formidable US player in terms of technology or capital. Citing the Indian example, he said, in local media reports, Amazon captured major market share in just a year even though there were well entrenched players such as Flipkart and Snapdeal.

The strongest funded e-commerce player in Indonesia is probably Mataharimall.com, which is backed by the Lippo Group conglomerate, owned and controlled by the powerful Riady family. Mataharimall had said it would commit $500 million of investment to become the largest e-commerce in Indonesia.

In second position comes C2C marketplace Tokopedia, who recently raised $147 million in its latest financing round in April. That round brought Tokopedia’s disclosed funding to a total of $247.7 million.

There is also trading platform BukaLapak, which secured an undisclosed amount of funding from the Emtek Group, and Lazada, that had been bought by Alibaba for $1 billion in one of the biggest deals in the region this year. Other players include Zalora Indonesia, bhinneka.com, OLX, Blibli, and Elevania.

Amazon’s reported entry into Indonesia comes at a time when regulations are opening up allowing foreign ownership in e-commerce companies of a certain size and scale. The growing middle-class and smartphone-savvy population also add to the attractiveness of the country.

Indonesia is also mulling a roadmap that will form the basis for future guidelines regulating the e-commerce sector. The roadmap will cover critical aspects of the industry such as funding, taxation, communication infrastructure, logistics, cyber security, consumer protection and education.

The e-commerce sector, which is currently highly regulated in Indonesia, has been a subject of heated discussion in the public sphere.

Indonesia’s B2C e-commerce demand alone is expected to grow by 51 per cent within the next five years, reaching $13.8 billion within the next five years. But, from the supply side, only 27 per cent out of 56.5 million SMEs are considered “ready” to go online. Indonesia is hoping some of the initiatives for the sector would enable the industry to reach $130 billion in transactions by 2020.

Also Read:

Alibaba buys Rocket Internet-controlled Lazada for $1b, expands SEA footprint

Indonesia: Matahari to up stake in Mataharimall.com to 10%

Indonesia Dealbook: Tokopedia’s offer for merchants; Erajaya eyes $1.6b sales

Indonesia’s e-commerce players Kaskus, Bukalapak explore IPO plans

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.