Amazon invests in Indonesia

According to Daniel Tumiwa, the Chairman of the Ecommerce Association of Indonesia (IDEA), Amazon is coming to Indonesia with $600 million US (Kompas).

Tumiwa did not know exactly when Amazon would begin operations in Indonesia but said that the company’s first rumored entry into the region would probably follow the same pattern in other large countries.

The pattern, like in India, consists of one year of testing the waters followed by a decision on whether to stay in the game or not.

The IDEA chairman mentioned that Amazon was able to take over 50% of the Indian ecommerce market within one year, despite well-established local competitors like Flipkart. However, he also noted that they bowed out of China after one year, conceding the market to Alibaba. There are no ecommerce companies in Indonesia with the same kind of dominance that Alibaba has in China, which is why it would make sense for Amazon to enter the Indonesian market now.

Indonesia’s rapidly growing middle class, which is slowly becoming more comfortable with online shopping, makes the market potential huge. With an estimated worth of around $300 billion US, Amazon can burn through plenty of money to find solutions to Indonesia’s ecommerce problems.

A version of this appeared in Coconuts Jakarta  and Deal Street Asia on June 20. To read the full story, click here and here.

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