Amazon To March Into Indonesia With $600 Million: Winners And Losers
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Amazon.com has said it plans to expand its e-commerce empire to Indonesia, with a $600 million investment for the first year.
It makes perfect business sense. Indonesia’s e-commerce space is only about $3.2 billion in sales, a tiny fraction of its $150 billion retail market. Indonesia is also the world’s 4th most populous country with 250 million population.
When Amazon moves in, the market shudders. Who are the movers and shakers in the Indonesian e-commerce space right now?
It turns out Amazon will be competing with start-ups backed by Alibaba Group and its buddy SoftBank.
Lazada, a direct-sales marketplace that spans the entire ASEAN, has 75% of its transactions coming from Indonesia. It was founded by Rocket Internet and was recently valued at $1.5 billion through an investment from Alibaba. It generated $1 billion GMV last year and made $275 million in sales.
Tokopedia is an Indonesian pure play. It is backed by SoftBank and Sequoia Capital.
Bukalapak is smaller than Tokopedia and is 49% owned by local media conglomerate PT Elang Mahkota Technologi, or Emtek Group.
Warehouse logistics companies can benefit if Indonesia’s e-commerce picks up. Mega Manunggal Property is one stock we can look at.
Questions & Answers
Q.What is the total value of Amazon's initial investment in the Indonesian market?
What is the total value of Amazon's initial investment in the Indonesian market?
Amazon plans to invest $600 million in Indonesia during its first year of operation. This significant outlay marks their entry into the country's e-commerce sector, which currently has relatively low sales figures compared to the wider retail market.
Q.Which companies are Amazon's main competitors in Indonesia's e-commerce sector?
Which companies are Amazon's main competitors in Indonesia's e-commerce sector?
Amazon will face competition from Lazada, which is backed by Alibaba, and Indonesian pure-play companies Tokopedia and Bukalapak. Tokopedia is supported by SoftBank, while Bukalapak has a significant stake owned by local conglomerate Emtek Group.
Q.How large is the current e-commerce market in Indonesia compared to its total retail market?
How large is the current e-commerce market in Indonesia compared to its total retail market?
Indonesia's e-commerce market currently generates around $3.2 billion in sales annually. This is a small fraction when compared to the country's overall retail market, which is valued at a much larger $150 billion.
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