With its talks with PT Tokopedia seemingly having reached a dead-end, China’s JD.com is now exploring new partnerships with niche e-commerce players in Indonesia, according to two people aware of the development.
The Chinese e-commerce giant is also open to making an equity investment in the archipelago’s niche players, the people cited above said.
In an email reply to DEALSTREETASIA, JD.com said it is always looking at beneficial relations in different markets but does not comment on any market rumours.
Indonesia’s niche e-commerce players stand in stark contrast to their larger, cash richer mass retail counterparts. Prominent names among these smaller, specialised e-commerce players include online furniture marketplace Fabelio, which this portal earlier reported is in talks with potential investors for a Series B round that could see it raise over $5 million.
Another well-known player is Laku6, a used phone e-commerce site that had in 2015 raised an undisclosed amount of seed funding in a round led by Singapore-based Golden Gate Ventures. JD.com is learnt to be interested in partnering with Laku6 although that relationship may not be an equity based one.
JD.com currently delivers to all of Java through its Indonesia website and aims to start catering to the island of Sumatra by the end of the year. The firm so far has been investing in setting up warehouses and a delivery network to overcome the infrastructural challenges that Indonesia poses as a developing economy. Within 12 months, it plans to build warehouses across every key city in the country.
JD.com recently also participated in a $500-million funding round raised by Indonesia’s largest online e-commerce firm Traveloka.
The Chinese firm was earlier reported to be in talks to invest hundreds of millions of dollars in Tokopedia. However, these talks appear to have fallen by the wayside. The Indonesian firm is now in discussions with JD’s rival Alibaba Group that could see the latter lead a funding round worth up to $500 million.
This portal recently reported that Meituan-Dianping, China’s largest provider of on-demand services, is also planning a foray in the archipelago’s e-commerce market. The firm is exploring all options, including picking up a stake in one of Indonesia’s leading e-commerce firms.
The flurry of activity is reflective of the potential that Indonesia, with its population of 261 million and a rapidly growing middle class, presents. Outside of China and India, it is the hottest e-commerce market in Asia. According to Macquarie Research, Indonesia’s e-commerce market is expected to grow to $65 billion by 2020 from just $8 billion now. It helps that the country’s investment service agency recently allowed 100 per cent foreign ownership in e-commerce companies for investments above 100 billion Indonesian rupiah ($7.53 million).