![Page 1: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/1.jpg)
MINT- The New Emerging Markets:
IndonesiaCBS 2015 Barcelona
October 29, 2015
www.intersticeconsulting.com
![Page 2: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/2.jpg)
Agenda
I. Prospects for e-commerce in Indonesia
II. Comparing the relative opportunity
III. Advice on entering the Indonesian e-commerce market
![Page 3: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/3.jpg)
I. Prospects for e-commerce in Indonesia
![Page 4: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/4.jpg)
Indonesia’s place in the world
![Page 5: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/5.jpg)
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
![Page 6: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/6.jpg)
Major population centres
9.8 million
2.8 million
2.1 million
1.5 million
1.6 million2.4 million
Bandung .
![Page 7: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/7.jpg)
One of the largest economies
Source: IMF
![Page 8: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/8.jpg)
Some images of Jakarta
![Page 9: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/9.jpg)
Some images of Jakarta
![Page 10: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/10.jpg)
Some images of Jakarta
![Page 11: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/11.jpg)
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% CAGR2011-2014
![Page 12: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/12.jpg)
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
![Page 13: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/13.jpg)
Indonesian and ASEAN Internet users
Source: UBS (2014)
Calculations of Internet users and penetration
![Page 14: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/14.jpg)
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.
![Page 15: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/15.jpg)
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
![Page 16: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/16.jpg)
Indonesian market characteristics
Language
Popular social media platforms
Mobile
C2C e-commerce
Investment restrictions
![Page 17: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/17.jpg)
State of online retail
Source: MarkPlus Insight
![Page 18: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/18.jpg)
Indonesia’s “Cyber Monday”
![Page 19: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/19.jpg)
OLX
![Page 20: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/20.jpg)
Kaskus
![Page 21: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/21.jpg)
Tokopedia
![Page 22: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/22.jpg)
Blanja
![Page 23: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/23.jpg)
Lazada
![Page 24: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/24.jpg)
Rakuten
![Page 25: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/25.jpg)
Zalora
![Page 26: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/26.jpg)
JD
![Page 27: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/27.jpg)
II. Comparing the relative
opportunity
![Page 29: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/29.jpg)
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 $799.5 billion
Average GDP growth (2011-2014) 2.9% 5.7% 5.2% 4.5%
Sources: World Bank, populationpyramid.net
![Page 30: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/30.jpg)
Indonesia within MINT
Source: World Bank
Household final consumption expenditure (annual % growth)
![Page 31: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/31.jpg)
Indonesia within MINT
Source: World Bank
Household final consumption expenditure per capita (constant 2005 US$)
![Page 32: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/32.jpg)
Indonesia and the wider ASEAN region
E-commerce market size
($ billion, 2013)
![Page 33: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/33.jpg)
Indonesia and the wider ASEAN region
Source: UBS (2014)
Estimates of ASEAN market potential
![Page 34: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/34.jpg)
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
![Page 35: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/35.jpg)
Some more local competitors
Source: idEA
![Page 36: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/36.jpg)
III. Advice on entering the Indonesian e-commerce
market
![Page 37: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/37.jpg)
Adjust expectations to an emerging market mindset
Source: Presta E-Commerce, UBS
Typical e-commerce conversion rates:USA => 3%ASEAN => 0.3% - 1.6%
![Page 38: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/38.jpg)
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
![Page 39: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/39.jpg)
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
![Page 40: MINT: The New Emerging Markets: Indonesia (2015)](https://reader036.vdocuments.net/reader036/viewer/2022062412/5a65f5c07f8b9a21248b4d11/html5/thumbnails/40.jpg)
Leighton Peter Prabhu Managing Partner [email protected] 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.