Indonesia is a country that would be nobody’s first thought when it comes to e-commerce. However, it may very well be on the way to becoming the next major player in the industry with the inspiration it has gained from China’s role in the market.
China made its mark on e-commerce in under a decade, starting to delve into the area and establishing significant retailers such as Alibaba and JD.com. The country has become a muse for many nations wanting to gain more of a presence in e-commerce, though few can copy the massive amounts of digital payments or number of small to medium-sized businesses that allowed China to get so far in the first place.
Slow evolution in the digital payment market has the US lagging behind in e-commerce potential growth by comparison. The role that giants of the business (mostly Amazon) play within developed countries such as the US also prevent new, smaller companies from emerging, compared to China having good management of smaller businesses within the industry.
With the growth of mobile payment options, Indonesia has made the first step of transitioning to a cashless society, with even local markets providing digital options for local merchants. Though lagging behind China’s developments by five years, Indonesia has the potential for its online market to make a giant growth spurt.
To be more specific, an August 2018 report from McKinsey & Company noted Indonesia’s e-commerce market would increase roughly eightfold by 2022 from what it was in 2017, rising from $8 billion from annual online spending to $55-65 billion by that point. The report also cited that average customer spending from each year would nearly triple by that point. The reasons for this growth are believed to be an increase in consumer trust in the market and an increase in Indonesian e-commerce businesses of varied sizes.
Indonesia is even estimated to surpass India’s amount of e-commerce sales according to the Singaporean financial publication The Business Times. In September 2018, they reported that Indonesian e-commerce transactions reached $13 billion in 2017, not far off India’s amount of $17.8 billion in the same year.
Along with being an inspiration for Indonesia, China is also a financial backer for their market’s growth, making investments in the market to propel the smaller country’s rise, including Alibaba and Tencent’s large stakes within the Indonesian market.
Accompanying this, China’s investments in artificial intelligence and big data within their retail has caused their stakes within the Indonesian market to be a lot more influential. As an example, the Indonesian company Bukalapak started integrating AI into its system last year that allowed it to achieve better personalisation features and add financing functions to display credit scores and loans to both merchants and the customer.
A virtual room may also be put in place in Indonesian markets, that Alibaba’s Taobao and Tmall marketplaces have already tried. This utilises 3D modelling that allows for customers to try on accurate replicas of clothes.
Bukalapak has proposed ideas to attempt to make itself the Alibaba of the Muslim market, such as focusing on Halal food or fashion products appropriate to Muslims.
Indonesia’s advances in e-commerce are set to bring the country into a new era, adding many new job opportunities to the market. With the once one-man task of an online vendor becoming a complex business, the thousands of jobs created through this are only expected to increase. Though not quite up to the task of being China’s equal just yet, Indonesia is set to joining the high or top tier of the industry as an unexpected success for the market.
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