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Indonesia is arguably the most important internet market in Southeast Asia as a result of its sheer size, emerging middle class, and digitally savvy population.

The annual global digital ecosystem report by We Are Social says Indonesia has 132.7 million internet users, which points to a penetration rate of 50% of the population. 130 million of these use some form of social media, showing how plugged in Indonesians are when it comes to documenting their lives online or using platforms like YouTube to consume content.

Source: We Are Social

With half of the Indonesian population still offline, there’s massive potential for ecommerce ventures, smartphone manufacturers, as well as brands building products to appeal to millennials in the country.

Other countries in Southeast Asia – Malaysia, Singapore, Thailand, and the Philippines for example – may have higher internet penetration rates but their smaller populations can’t compete with Indonesia in terms of volume.

It’s these numbers that have forced investors to take notice.

study by Google and AT Kearney indicated that venture capital activity in Indonesia has grown 68X in the past five years, driven mainly by growing interest in ecommerce and ridesharing.

Total VC activity in the first eight months of 2017 was recorded at US$3 billion – more than double the number for the entirety of 2016, which was US$1.4 billion.

The same study predicted the volume of investments in Indonesia will continue to grow in the foreseeable future because VC investment as a percentage of GDP in Indonesia is actually lower than its Southeast Asian counterparts.

Source: Google / AT Kearney

What are Indonesians doing on the web?

Indonesian residents love the internet. 79% of survey respondents in the We Are Social report said they logged on to the web at least once a day. The average daily time spent online was almost 9 hours with approximately 5 hours dedicated to social media and streaming music.

Source: We Are Social

The majority of web traffic in Indonesia comes from mobile phones, facilitated by the availability of cheap smartphones to the Indonesian population coming online for the first time; sidestepping desktops and PCs directly.

Access to mobile has also caused excitement around fintech as only 36% of Indonesians possess bank accounts and only 3% have credit cards. If e-wallet platforms get it right, there are 125 million mobile internet users waiting for easy banking.

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Indonesians are also increasingly using the internet to embark on their product buying journeys. 45% of Indonesian netizens search online for a product or service to buy with a similar number landing on an online store and 40% make ecommerce transactions at least once a month.

Source: We Are Social

Fashion & beauty categories attract the highest amount of spend online, almost double that of electronics despite having a lower basket size than consumer appliances like mobile phones, cameras, and wearable gizmos.

It was estimated that Indonesians spent close to US$10.3 billion online in 2017.

Source: We Are Social

Dizzying statistics aside, the Indonesian market still has plenty of space to grow.

Expect heightened competition in the years to come as incumbents jostle for space and keep raising large war chests to outmuscle opponents. VCs, especially with an entrenched position in the market, can’t afford to back down now – there’s too much skin in the game for them to consider any hasty exits.

Recent developments already demonstrate how investors are taking a long-term view of the market. Alibaba injected over a billion dollars in local ecommerce marketplace Tokopedia last year. JD.com, Alibaba’s direct rival in China, has opened fulfillment ccenters across Indonesia with a view to keep expanding. And homegrown unicorn Go-Jek is rapidly transforming into a Wechat-esque ‘super app’ with users able to do everything from hail motorbikes to get their plumbing fixed, and pay for it via e-wallet.

Mens sana in corpore sano.

The latin phrase means “a healthy mind in a healthy body”, and is a widely spread antidote in wellness communities, but how much of the population actually devotes time to exercise on a regular basis? And is it even a priority in developing countries?

To understand the attitude towards fitness in Indonesia, ecommerceIQ surveyed 30 young Jakartans, ages 20 to 35 years old, about their habits. 73 percent of respondents said they didn’t participate in sports and/or fitness regularly due to busy work schedules (22) and 23 percent claimed to be too shy to do fitness or sports alone (7). A single respondent didn’t know how to exercise.

An Indonesian booking platform named DOOgether aims to change the attitude of urban Indonesians and help them overcome common obstacles like the mentioned above for not exercising. The startup connects sports enthusiasts in Greater Jakarta with a database of over 80-100 fitness studios, gyms and sport centers offering zumba and basketball.

The company will be capturing a piece of the Indonesia fitness services market estimated to reach revenues of approximately USD$298 million by 2020.  

“Essentially DOOgether is a community that enables people to book sports activities that suit their schedules and also encourage beginners to try new activities,” says Fauzan Gani, CEO and co-founder of DOOgether.

“Based on last year’s performance, we believe we can convince more studios to list on our platform as we see a rise in fitness awareness among Indonesians.”

The startup was founded in 2016 by Fauzan and his friend Helmy Ikhsan, now COO of DOOgether, after their own difficulty finding suitable sports classes in Jakarta. It was a stark contrast to their university days in Australia.

“Helmy and I were discussing the headache of booking the right sport venue near,” shares Fauzan. “We decided to solve our own problem.”

Introducing Itself to Jakartans

In December 2016, the startup closed an undisclosed amount of seed funding from Indonesian businessman and chairman of Inter Milan, Erick Thohir, after bootstrapping from day one.

Having money meant aggressively launching on mobile through both an iOS and Android app less than one year later to reach more users. By working with fitness influencers in Indonesia, the company was also able to build a strong social media following and invite the masses to its trademark offline event like DOOday.

The full day event, held 2-3 times a month, invites all users to participate in a unique themed activity such as yoga on top of a helipad or combining mini-soccer and zumba.

One of DOOgether’s trademark offline event DOOday.

An average of 50 participants attend for smaller scale events offer zumba and yoga and 240 participants for larger scale events like mini soccer cups or basketball competitions.

Speaking with ecommerceIQ, Fauzan says the company’s focus is more on offline to acquire and educate Indonesians about the benefits of fitness. For the founder, these offline touchpoints are crucial for an early stage startup to promote its platform and build a community.

Are Indonesians ready to get active?

The startup appears to compete with popular subscription based fitness apps like Singapore-based GuavaPass, but Fauzan doesn’t consider the company as a competitor.

“What GuavaPass offers is membership with a monthly fee of roughly IDR 1 million (USD$75.20). We offer flexible classes on a pay as you go model. Our biggest competitor is how users spend their time doing anything but going to the gym like being stuck in traffic or hanging out at the movies,” laughs Fauzan.

BMI Research predicts that spending on sports, camping and open-air recreational activities in Indonesia will grow by an average of 11.6 percent year on year with the market forecast at IDR 3.8 trillion in 2021, up from 2.5 trillion IDR (USD$186 million) in 2017.

Strong growth in spending on sports and outdoor activities in Indonesia (IDR billion) and IDR % y-o-y growth). Graphic credit: BMI Research/ National Bureau of Statistics

The increased spending on outdoor activities seems to correlate with the growing population of young adults (20-35 years old) in the country – 1.45 million in 2017 to roughly 86 million by 2021. The hyper marketed Asian Games 2018 set to start in August will also increase the interest in fitness.

Growing young adults segment to drive sports spending of young adults in Indonesia (20 – 39 years old), ‘000 Graphic credit: BMI Research/ UN

By the end of December 2017, DOOgether claimed to offer more than 100 fitness studio and gym partners, with available to be booked more than 3,000 classes per month. Fauzan believes that in 2018, DOOgether can double its numbers.

But before the company can serve more users in Indonesia, it will need to solve a few bugs with its technology. During the interview, Fauzan noted that his team is currently working to improve the interface to help users find information more easily on its mobile application.

Fauzan strongly believes that for DOOgether to become a one-stop sport platform, it needs to value feedback from its users and always be hungry for more.

“We will continue to focus on being the biggest sports platform and ecosystem in Indonesia. The country is filled with over 250 million people and anyone can love sports, whether it is an individual or a team activity,” said Fauzan.

We hope to bring the entire industry together and help Indonesians be healthier in just one click.”

Here’s what you should know today:

1. Singapore banks go digital to help SMEs and startups

DBS Bank and OCBC Bank have launched digital services to help startups and small-medium enterprises (SMEs) with their administrative process.

One bank claimed it has cut down the process of opening a business to 30 minutes. Both DBS Bank and OCBC Bank have gone paperless with their banking efforts targeted at businesses.

At DBS, through the platform DBS Get Set, entrepreneurs can set up their business within a day. Small business owners can appoint a company secretary to help incorporate their business with the Accounting and Corporate Regulatory Authority (ACRA) and open a bank account at the same time.

Over at OCBC, the process has been digitalised with the use of iPads, which does away with the use of paper forms and creates an end-to-end digitalised process that saves time.

Read the full story here

2. Bhinneka plans to sell 30% shares on IPO in 2020

Indonesia’s oldest online store, Bhinneka, plans to sell 30% of its shares in an initial public offering (IPO) in 2020, and raise funds to expand the business.

The company is now pushing for a healthy grow to prepare for the IPO, they initially planned the IPO for 2018 but decided to postpone. The company has raised $22 million from local venture capital firm Ideosource.

Bhinneka sells computers, cell phones, and IT-related products to its 1.5 million customers, including 4,000 small and medium business, ministries and provincial governments. It employs 6,000 merchants.

Read the full story here.

3. JD.com is in a dispute with two major Chinese courier companies

Chinese ecommerce platform JD.com is locked in a war with two of the country’s major courier companies, TTK Express and  YTO Express.

JD.com has excluded the two companies on its list of recommended couriers for all vendors on its platform, citing poor service as the reason.

However, both couriers beg to differ and point out the most likely reason is the competition between JD.com the shareholders of TTK Express and YTO Express; Sunning Commerce Group and Alibaba respectively.

Read the full story here.

Indonesian express and logistics courier service company, JNE revealed that 60% of its revenue from the first semester in 2016 came from ecommerce. Vice President Marketing of JNE, Eri Palgunadi stated that among the 60%, an estimated 30% is coming from the registered big ecommerce players like Blibli and Lazada.

JNE has built a lot of warehouses to accommodate the surge of ecommerce deliveries. One of them is in Wangon, Banyumas, Central Java. With the existence of this warehouse, they are hoping to push down the cost for the customers in the eastern Java area. Eri claimed now the delivery costs to this area is down to single-digit because of the closer distance.

In addition, JNE has also built a warehouse in Medan close to Silangit airport, Batam, Bandung and extending an existing one in Soekarno-Hatta airport.

Investing in technology and supporting businesses

In the beginning of the year, JNE announced that it was going to put an investment of $34.8 million to support the growing ecommerce sector in Indonesia. They will set aside $4.2 million (55 billion IDR) of investment to develop their IT infrastructure and the rest, $30.6 million (400 billion IDR) into business-supporting infrastructure like warehouse, etc.

JNE plans to expand their business area in Cikarang, Karawang and Purwakarta to support the needs of ecommerce players but despite the technology services that it provides, Eri claimed that JNE is not going to become an ecommerce-only company.

“We are still a logistics company, that’s why we are planning to develop trucking, because that is our own fleet. And then we are also setting up a warehouse in Cibatu, Cikarang of 25.000 x 3.000 sqm.” added Eri.

A version of this is appeared in Bisnis.com on July 30. Read the full article in Bahasa here


In a country where there are more active mobile phone subscriptions than people alive – 255 million people versus 326 million mobile subscribers – Indonesian telecommunications providers are in a prime position to shape the future of ecommerce and mobile commerce in Indonesia. But while the telco sector contributed 3.14% of total GDP in Indonesia in 2014 and experienced high growth of 10.36% in the same year, placing Indonesia’s mobile market as the fourth largest in the world and top ten 3G markets, have the original giants of emerging market tech kept up with the online shopping boom?

Indonesian Telcos move to ecommerce

From telecommunications to “telecommerce”

Traditionally, telco companies were the ones who have direct access to customers, but in light of the ecommerce boom, things are slowly changing. The Indonesian telecommunications sector is dominated by three big players; Telkom, Indosat Ooredoo and XL Axiata, which make up 80% of total market share in Indonesia. Not one to miss opportunities, all three companies have aided the archipelago’s ecommerce sector through investments and strategic partnerships. Below is an aerial snapshot of Indonesia’s telco landscape, the evolution from telecommunications to telecommerce.

Telkom x Blanja.com

52.6% government owned, Telkom has the largest telecommunications network and is Indonesia’s largest service provider. Telkomsel, its subsidiary for mobile providers, has control of 46% total market share with more than 152 million users.
Since 2009, the company has ventured into the local ecommerce space by investing $5 million in an ecommerce company called Plasa.com. Plasa.com later became a project under MetraPlasa and was merged with Blanja.com, a joint venture between Telkom and eBay that launched in 2012.
Following the partnership, eBay injected $9.2 million into the marketplace, shifting ownership 49% by eBay and 51% for Telkom. Additionally, the partnership meant that merchants could easily market their products quicker on a global scale and for a cheaper price through eBay’s network.
As a sign of their commitment to stake their place in the industry, the company announced that Telkom, through its subsidiary TelkomMetra, and eBay would inject a new fund of $25 million to the marketplace in April earlier this year. Telkom would lead the funding by contributing 60% of the total round, approximately $15 million. The marketplace has recorded $35 million of transaction value in 2015 and currently ranked #198 in terms of web traffic in Indonesia by SimilarWeb data. Blanja is led by Aulia Marinto as its CEO.
However, even with the aforementioned resources at their disposal, the C2C site’s growth currently is still left behind its competitors like Tokopedia and Lazada. It may be attributed to restrictions put on its vendors such as the requirement of government permits to register on the site and forbidding the sale of second-hand goods.

Indosat Ooredoo x Cipika Store

The second biggest telecommunications company in the country has 69.8 million subscribers in its database. Initially a state-owned company, Indosat was acquired by the Qatar-based telecommunication company, Ooredoo Group, in 2009 and changed its name to Indosat Ooredo in 2015. Now, the government only holds 14.29% in the company. Earlier this year, the company announced its partnership with IBM to develop and deliver solutions on IBM’s platform, Bluemix.
Through its subsidiary company IM2, Indosat has launched a marketplace called TokoOn in 2012. In 2014, the marketplace pivoted to an ecommerce platform with a new name, Cipika Store, to sell Indonesian culinary and local handicrafts. Since then, the company has added new categories in its marketplace; lifestyle, gadget, home & entertainment, books and play. It has also allowed people to buy wholesale products at cheaper prices.
The site is ranked #4166 by SimilarWeb, performing way below the two other “telecommerce” companies. Although not selling the exact same products, the site faces competition from Qlapa and KedaiKuka in its Indonesian local products category and the likes of Lazada and Tokopedia in other categories.

XL Axiata x Elevenia

XL is the first private company in Indonesia that provides mobile telephone services, which was originally established as a trading and general services company. In 2009, the company was bought by Axiata Group and since then changed its name and logo to XL Axiata. As of March 2016, it has 42.5 million users, down 19% from 52.1 million users in March 2015.
In 2013, Elevenia launched as a joint venture between XL Axiata and SK Planet, Korean telecommunications operator. The initial investment made was $18.3 million, with both companies sharing fifty-fifty ownership. Lead by James Lee as the CEO, total investment put into the marketplace to date is $110 million, placing it as one of the top three most funded startups in Indonesia.
Since the beginning of its existence almost three years ago, Elevenia has sought to differentiate itself from the other marketplaces with its seller and buyer reward points. Sellers can use the collected points to boost their sales with things like ad placements and providing buyers with discounts. Elevenia is also providing their sellers with education facilities in their ‘Seller Zone’.
Compared to the other “telecommerce” companies mentioned above, Elevenia has the best performance so far, recorded $95 million (1.3 trillion IDR) of revenue in 2015. The site is ranked #21 in the country and they are projecting five times sales growth potential for 2016. 

Key Stats of Telecommerce Companies in Indonesia, Indonesian Telcos move to ecommerce

Key Stats of Telecommerce Companies in Indonesia

Building the ecosystem

Moving into ecommerce is only one way for telcos to make the most out of the resources at their fingertips. Evidently, having direct access to users is not enough to ensure their success in online retail. Telcos need to leverage more of its networks to ensure the success of their ecommerce venture. The recent news about the participation of MDI, Telkom’s venture capital arm, in the latest bridge funding of ecommerce-enabler aCommerce is great news for building a sustainable ecommerce ecosystem.
Many changes still need to be implemented to successfully shift to ‘telecommerce’. Considering the niche market that Cipika Store is targeting, it will be hard to scale up without spending a lot of money to acquire more users. Restrictions made because of its associations with the government are most likely stifling Blanja’s growth despite Telkom having more than three times subscribers of XL Axiata. XL Axiata boasts the most successful ecommerce portfolio out of the three, probably credited to the unique valuables the marketplace offers to its sellers and customers.
Ecommerce in Indonesia is only at the beginning of what looks like a long marathon race, and despite falling short behind big players like Lazada and Tokopedia, there are still many laps for these companies to improve their stance before reaching the finish line.

Out of 189 countries, Indonesia ranks in the bottom 30% of worst countries to do business in according to the World Bank in 2014. Nonetheless, with its quarter billion population and largely untapped ecommerce potential, the archipelago is still pegged as the next big thing after India and China. Some even call Indonesia China’s little sister.

Since President Jokowi came into office in 2014, one of his main goals was to attract more foreign direct investment to Indonesia and on May 12, the President signed Presidential Regulation number 44 of 2016 that changed the rules of the Negative Investment List, a list that stipulates which sector is open to foreign investment in Indonesia as well as the percentage of foreign ownership permitted. Specifically, it changed foreign ownership laws in ecommerce business.

Now, 100% foreign ownership is allowed for business and companies approved under the Investment Coordinating Board (BKPM). The caveat is that the ecommerce business in Indonesia needs to have a value  of at least 100 billion IDR ($7.3 million US). If a foreigner has a great idea for an ecommerce venture but without the minimum investment, they can own a minority stake in a company, up to 49% with an Indonesia counterpart.

The Investment Coordinating Board’s (BKPM) director for business development, Pratito Soeharyo, said that since October last year, any company, including ecommerce businesses worth 100 billion Rp or more could be established in just three hours under the so-called three-hour licensing facility. Since the three hours licensing facility has been introduced, any company not in the list of Negative Investment List category could be established in three hours compared to the previous 23 days it required. Ecommerce business is now one of them.

Who Benefits the Most

1. Enterprise level ecommerce corporations 

Regulation 44’s valuation threshold will encourage large and established foreign investors to set up operations in Indonesia, such as Amazon, which just announced its expansion into Indonesia on June 16 2016. 

2. Local Indonesian ecommerce startups 

The other major winners and perhaps most important of all are smaller ecommerce startups from Indonesia. The regulation will ensure that foreigners who don’t meet the threshold of $7.3 million USD will have a joint venture with a local partner. The maximum foreigners can own is a 49% stake. 

 This will help level the playing field for both foreigners and local players as they will be able to easily attract more foreign investors.

Definition of “ecommerce business”

“Ecommerce business” is defined as online marketplaces, daily deals websites, price-grabber sites, and online listing platforms. Ecommerce enabler services such as logistics companies and on-demand transportation services are also included in the category, which falls under the jurisdiction of the Ministry of Communications and Informatics.

The change in regulation is part of a larger ecommerce roadmap that is being drafted by the government. The few key topics proposed are about consumer protection, including payment gateway and estimated delivery time, and also fiscal and business entity surrounding the industry. The roadmap plan will be finalized this year.

How Ecommerce Regulation 44 in Indonesia affects current e-business

Foreign ecommerce players operating in the country were using loopholes by splitting business units in the company and registering multiple entities.

For example, one local company is established to handle fulfillment where it owns the inventory and handles everything related to delivering the product to the consumer. Another separate entity holds the IP and is registered as a web portal. The fulfillment company can have an exclusive contract with the web portal legally by Indonesian regulations. But this process of setting up multiple entities takes a lot of money, time and requires a lot of trust.

Overall, the new regulation will enable an easier process in setting up an ecommerce business or injecting new capital to the existing players. And in future cases where foreign ownership exceed the allowed percentage, they will have two years time to comply with the rules with three options:

  1. Sell their shares to the local investors,
  2. Sell their shares through the domestic capital market, or
  3. Buy the exceed ownership portion from the investors and treat it as treasury stock.  

Indonesia Ecommerce Market Potential

The changes in this regulations are expected to serve as a strong foundation to level out the playing field, giving local companies more foreign know-how and foreigners a chance to have a localized best practices as well as stimulate job growth. 2015 saw the total ecommerce sector reach $19.7 million US and employ 3404 people. With the new regulation, 24 projects were listed in Q1 2016 and the government expects to see ecommerce sales in the country rise to $25 billion US by the end of the year and reach $130 billion US by 2020.

The government expects to see ecommerce sales in the country rise to $25 billion US by the end of the year and reach $130 billion US by 2020 with Regulation 44.

Sales estimated with the expectation that the number of internet users in Indonesia will reach 280 million by 2030. It is already up to 100 million users this year according to data from the Association of Internet Providers (APJII).

Ecommerce Regulation in Indonesia - Ecommerce Foreign Investment Value in Indonesia

Source: Jakarta Post, May 2016

Indonesia versus the world of ASEAN

According to A.T. Kearney, Malaysia and Singapore have the best-established ecommerce laws in Southeast Asia. Philippines has allowed 100 percent foreign ownership for ecommerce. In Thailand and Vietnam, despite the law restricting foreign investment in various sectors, ecommerce in both of these countries is one the sectors that get the most support or promotion by the local government to attract foreign investors. Ecommerce Regulation 44 in Indonesia was taken to entice more foreign investors.

Ecommerce Regulation 44 in Indonesia - Foreign Ownership Regulations for Ecommerce in Southeast Asia

Singapore is considered the easiest country in the world to do business, whereas Indonesia has traditionally been among the hardest

With the door opened for the foreign players to play solo in the open field, it certainly attracts The Giants with a lot of money to burn. But even Goliath can be beaten by David and local players have the advantage of their market knowledge. It will take more than big capital to conquer Indonesia but no one can say that the reward won’t be worth it. 

By Rara Kinasih

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