Amazon preparing to expand into Indonesia: E-commerce Association Chairman

There are plenty of e-commerce companies trying to crack open the Indonesian market, like Tokopedia, Matahari Mall and Lazada. But none of them have quite managed to catch on the way e-commerce giant Amazon has hooked Americans onto their online shopping services.

But now it looks like the original e-commerce superstar is setting its sights on our archipelago. According to Daniel Tumiwa, the Chairman of the E-commerce Association of Indonesia (IDEA), Amazon is coming to Indonesia.

“Amazon has announced it will open e-commerce in Indonesia. It is ready to invest 600 million US dollars (~Rp 8 trillion) for its first year here (in Indonesia),” Daniel said as quoted by Kompas today.

Daniel said he did not know exactly when Amazon would begin operations in Indonesia but did mention that the company’s entry into our market would probably follow the same pattern as its expansion into other large countries such as India: one year of testing the waters followed by a decision on whether to stay in the game or not.

The IDEA chairman mentioned that Amazon was able to take over 50% of the Indian e-commerce market within one year, despite well-established local competitors like Flipkart. However, he also noted that they bowed out of China after one year, conceding the market to Alibaba.

But there are no e-commerce companies in Indonesia with the same kind of dominance that Alibaba has in China. Which is why it would make sense for Amazon to enter the Indonesian market now. With a rapidly growing middle class which is slowly becoming more comfortable with online shopping, the potential market here is huge.

However, Amazon will face the same major hurdles that other e-commerce companies in Indonesia are facing – namely the logistical nightmare of delivering products to all of the archipelago’s far flung corners, as well as a general consumer distrust of credit cards and e-payments in general.

But if any company can jump those hurdles, it would likely be Amazon. With an estimated worth of around $300 billion, they can burn through plenty of money to find solutions to Indonesia’s e-commerce problems.

Other online shopping sites here had better get ready for a fight. Meanwhile, we’ll be dreaming of an insanely huge online catalog of books and other consumer goods that can be sent to our door with free 2-day shipping.

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