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.