Lippo Partners With GrabTaxi to Expand E-Commerce in Indonesia

Lippo Group, the Indonesian conglomerate founded by billionaire tycoon Mochtar Riady, will partner with GrabTaxi Holdings Pte for e-commerce deliveries in Southeast Asia’s largest economy.

The founder’s grandson, John Riady, is spearheading Lippo Group’s foray into e-commerce with a $500 million investment in MatahariMall, an online version of its Matahari department store chain. Grab, a regional ride-hailing company, will help transport and deliver goods to bolster MahatariMall’s services, the companies said in a statement Monday.

The partnership shows how local companies, familiar with consumer preferences, regulations and infrastructure challenges, are trying to tailor services to stay ahead of foreign rivals as competition heats up. Japanese e-commerce company Rakuten Inc. closed down its Indonesian unit as of March 1, while China’s JD.com Inc. has recently set up shop in Indonesia.

“Speed is really important in this business,” said Ridzki Kramadibrata, managing director of Grab Indonesia. “You need to be able to do multiple things at the same time because if you can’t do that, the market will outgrow you and you will lose your opportunity.”

Rising Incomes

MatahariMall’s site allows customers to buy on the Web and pick up items from Lippo’s stores. Its rival Tokopedia, which is backed by Japan’s SoftBank Group Corp. and Sequoia Capital, has already formed a similar alliance with Go-Jek, a motorcycle taxi booking company, to deliver purchased items to customers.

“Our combined knowledge of the Indonesian market will help us build the most effective online-to-offline experience — to ensure that online shoppers anywhere in Indonesia can receive or collect their purchases easily,” John Riady, a Lippo Group director, said in the statement.

Grab’s alliance with Lippo also underscores its aggressive market-share acquisition strategy in Indonesia, where it competes with Uber Technologies Inc. and Go-Jek. Grab’s private car-hailing service grew 30 percent in Indonesia in February, according to the statement. It has more than 50 percent of the country’s motorcycle taxi market in March, it said.

Technology startups are trying to capitalize on rising incomes and growing mobile-phone use in Southeast Asia, where 250 million consumers are now connected via smartphone and 100 million engage in online transactions, according to a report by Bain & Co. and Google Inc. released last week. The report predicts online sales across Southeast Asia to surge to $70 billion by 2020 from $6 billion now.