Presentation about the e-commerce market in Indonesia including economic analysis, conversion rate comparisons to developed markets and other Southeast Asian markets, market-entry strategies, and localization options for cross-border e-commerce sellers to Indonesia.

1. MINT- The New
Emerging Markets:
Indonesia
CBS 2015 Barcelona
October 29, 2015
www.intersticeconsulting.com

2. Agenda
I. Prospects for e-commerce in
Indonesia
II. Comparing the relative opportunity
III. Advice on entering the Indonesian
e-commerce market

3. I.
Prospects for
e-commerce
in Indonesia

4. Indonesia’s place in the world

5. Some key facts
Source: populationpyramid.net
World’s 4th most populous
country
Archipelago > 18K islands
Largest Muslim country
Dutch colony from
1800-1945
Median age of 28
Population growth rate of
1% annually
44% of the population
already live in cities

6. Major population centres
9.8 million
2.8 million
2.1 million
1.5 million
1.6 million
2.4 million
Bandung .

7. One of the largest economies
Source: IMF

8. Some images of Jakarta

9. Some images of Jakarta

10. Some images of Jakarta

11. Retail sales
Source: AT Kearney
Retail sales declined slightly from $337
billion in 2013 to $326 billion last year
Total retail sales area grew 14.5% as
retailers continue to be drawn to
Indonesia’s large population and
growing middle class
The government recently announced
plans to invest a record $22 billion in
infrastructure projects, which will help
improve retail infrastructure
$326 billion
in 2014
3.5% CAGR
2011-2014

12. Major foreign retailers have arrived
Major foreign retailers such as
The Body Shop, Uniqlo and
Galeries Lafayette are drawn by
the immense size of the
Indonesian market
However, AT Kearney research
ranks Indonesia only 12th out
of 30 emerging markets for
retail friendliness
Constraining factors include
inefficient import processes,
weak transport infrastructure,
and

13. Indonesian and ASEAN
Internet users
Source: UBS (2014)
Calculations of Internet users and penetration

14. State of online retail
Sources: SingPost, idEA, UBS
Of the roughly 75 million Internet users in Indonesia last year,
around 5.9 million had shopped online
UBS Research on Indonesian e-commerce (2014)
E-commerce conversion rate of 0.3%
Average order value of US$23.31
The Indonesia E-commerce Association (idEA) estimates that e-
commerce will triple from $8 billion in 2014 to $25 billion by 2016.

15. Factors underpinning e-commerce
“Leapfrogging”of bricks & mortar retailers
in the regions
Youthful population
Mobile and smartphone penetration
Intensive users of social media
Growing spending power

16. Indonesian market characteristics
Language
Popular social media platforms
Mobile
C2C e-commerce
Investment restrictions

17. State of online retail
Source: MarkPlus Insight

18. Indonesia’s“Cyber Monday”

19. OLX

20. Kaskus

21. Tokopedia

22. Blanja

23. Lazada

24. Rakuten

25. Zalora

26. JD

27. II.
Comparing the relative
opportunity

28. Indonesia vs. the West
Source: populationpyramid.net

29. Indonesia within MINT
GDP per capita in
US$ at PPP (2014)
$16,950 $10,517 $5,911 $19,226
GDP per capita in
current US$ (2014)
$10,230 $3,492 $3,203 $10,530
Total GDP in current
US$ (2014)
$1,282.7 billion $888.5 billion $568.5 billion $799.5 billion
Average GDP
growth (2011-2014)
2.9% 5.7% 5.2% 4.5%
Sources:World Bank, populationpyramid.net

30. Indonesia within MINT
Source:World Bank
Household final consumption expenditure (annual % growth)

31. Indonesia within MINT
Source:World Bank
Household final consumption expenditure per capita (constant 2005 US$)

32. Indonesia and the wider
ASEAN region
E-commerce
market size
($ billion, 2013)

33. Indonesia and the wider
ASEAN region
Source: UBS (2014)
Estimates of ASEAN market potential

34. Why Indonesia?
Indonesia has the most immature online market in ASEAN, with only 31%
internet penetration, but also has by far the largest population, leading
shopping websites achieve 121m traffic hits per month currently, the
largest in the region

35. Some more local competitors
Source: idEA

36. III.
Advice on entering the
Indonesian e-commerce
market

37. Adjust expectations to an emerging
market mindset
Source: Presta E-Commerce, UBS
Typical e-commerce conversion rates:
USA => 3%
ASEAN => 0.3% - 1.6%

38. Marketplaces for customer
acquisition
Work with established marketplaces to build
brand recognition and leverage online
consumers
As business grows, additional options to improve
profitability and efficiency become feasible
Optimizing local storage and fulfillment
Direct marketing to existing customers

39. Adapt to Indonesian consumers
Risk-averse and brand-loyal: 63% of Indonesian
consumers only buy products from brands they
already know (McKinsey).
Acutely price sensitive, driven by promotions
and discounts
Value social and personal approach

40. Leighton Peter Prabhu
Managing Partner
lsp.prabhu@intersticeconsulting.com
Twitter: lsp_prabhu
Mob +65 8447 0069 (Singapore)
Contact information
Interstice Consulting provides market entry support to foreign
enterprises expanding to Southeast Asia.
Typical services include: company registration and administration,
search for business partners, digital marketing strategy.
Through our associated co-working project in Singapore,“The
OutPost”, we also offer flexible office facilities to our clients.