e-commerce indonesia complete

8/13/2019 E-Commerce Indonesia Complete

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eCommerce in Indonesia

August 2012


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Leading online paymentprocessor for theIndonesian market

Founded in 2011

www.veritrans.co.id

Tech media and researchcompany that focuses onthe Indonesian market

Founded in 2008

www.dailysocial.net

About Us

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This study was conducted as part of anindependent research project at Harvard BusinessSchool by the management of Veritrans, in joint

effort with DailySocial

First-hand interviews and transaction informationwas collected from leading eCommerce companies

in Indonesia This report is the first study solely focused on the

Indonesian eCommerce market

Research Background

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Why we conducted this study

Lack of market research & data on the Indonesian eCommerce industry

Available estimates of the Indonesian eCommerce market vary widely

with figures anywhere between $50 million to $3 billion

Current market reports do not provide a clear or consistent definition of

eCommerce, making cross-country comparisons difficult

Major market research firms have published figures on Indonesian

online shopping behavior, but only as part of a more general market

report on Internet users in South East Asia

Research Background

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Number of online shoppers surveyed: 584

Distributed through email lists owned by DailySocial,Disdus, and other cooperating parties

Research Background

Female

60%

Male

40%College/Graduate

54%

SecondarySchool

33%

Diploma

15-2453%

25-3439%

13%

Gender Age Education

35-447%

45+1%

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The sales of goods and serviceswhere an order is placed by thebuyer or price and terms of sale

are negotiated over the Internet

U.S. Department of Commerce

Defining eCommerce

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Payment does not necessarily need to bemade online

Includes classified ads sites (e.g. Kaskus,Tokobagus, Facebook)

Does not include online travel services,

financial brokers and dealers, and ticketsales agencies

Defining eCommerce

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Percentage ofeCommerce users

out of the internetpopulation

17%

$824

$11 B

28%

$799

$115 B

71%

$1,111

$193 B

WorldwideeCommerce

Market

Avg. annualeCommerce spend

per eCommerceuser

eCommercemarket size

Source: Internet World Statistics, BCG, US Departmentof Commerce, JP Morgan, Business MonitorInternational, Webshopping

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How about Indonesia?

$ 0.9 billion(2011)

Avg. annualeCommerce spend per

ecommerce user

$256

Percentage ofeCommerce users out ofthe internet population

6.5%Source:Internal estimates, Survey 9


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Its only 0.7% oftotal retail sales

$ 134 BillionSource: DataStatistik

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Top-down Analysis

Calculation of Indonesian eCommerce market

from public data & consumer survey

Estimated market size: 0.6 - 1.2 billion11


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Source:BCG, DataStatistik, Internet World Statistics, Survey

Average spend per transaction

No. of transactions per year

Low High

Rp. 500,000 Rp. 500,000

4x 5x

Population in 2011 (millions)

Internet penetration

No of Internet users (millions)

236

23%

55

eCommerce penetrationeCommerce buyers (millions) 2.8 4.4

5% 8%

Total e ommerce revenue5,500 11,000In Rupiah Billion

In US$ Million 611 1,222

% of total retail sales 0.5% 0.9%

Key Assumptions& Calculations

Assumptions 12


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Bottom-up Analysis

Calculation of Indonesian eCommerce market

from survey of leading eCommerce players inIndonesia

Estimated market size: 0.8 - 1.0 billion13


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Many eCommerce companies and investorscontributed transaction data to this analysis

However, they have requested that we do notdisclose individual company data so we can only

report in aggregate terms However, , Indonesias leading online

forum, has given us special permission to disclosetheir transaction data. Thank you Kaskus!

The following page gives you detailed calculation ofhow we were able to estimate Kaskus transactionvolume

Bottom-up Analysis

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Source:BCG, Internet World Statistics, Survey

Total monthly sales volumefrom new listings

Low High

New listings (millions)

Products per listing

New products per month (millions)

1.0

4.0

4.0

Average transaction size (US$)Close rate

$22.2m $33.3m

Assumptions

20% 30%

Total monthly salesfrom all listings $24.7m $37.0m

Key Assumptions& Calculations

+ sales from old listings

$27.8

$2.5m $3.7m

Estimated annual sales ofKaskus only$296m $444m

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Indonesia Today

Total population

248 million

Median Age

28 years

GDP per capita

$4,70016


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Internet Penetration Rate

23

67

56

3833 31

-

10

20

30

40

5060

70

80

Indonesia Singapore Vietnam Malaysia Philippines Thailand

% Total Internet users inIndonesia: 55 million

Source: Internet World Statistics, Nielsen 17


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More than two-thirds access internetby desktop & laptop in home

How & Where?

Desktop&

Laptop

Smartphone

TabletOther

71%

24%

3%2% School &

InternetCaf

Office

Home

Other

63%

25%

8%4%

device used access locationSource: Survey Source: Survey 18


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Time Spent

30

More than a quarter

of users spend over

30 hours per week

online

Compared to other

Southeast Asian

countries, itson par

with Malaysia and

Philippines but less

than Singapore and

Vietnam

hours spent online weekly

Source: Survey 19


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4

22

24

30

34

41

56

65

78

89

91

Other

Blog

Games

Career/Education

Travel

Online Banking

Music/Video

News

Email

Social Network

Search

Internet Usage

Search & social network are the

most popular internet uses

Many Indonesian entrepreneurs

and businesses are connecting

online through online advertising

and social commerce to profit

from these activities

Source: Survey 20


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9

8

30

47

55

59

69

Other

Blog

Games

Music

Search

Email

Chat

Mobile Usage

Chat is the primary use ofmobile phone service among

Indonesians

The top three most used

mobile functions require

mobile data connection

Source: Survey 21


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18

8

13

20

20

37

Other

Books

Electronics

Music/Video/Games

Travel booking

Fashion

Online Shopping

Fashion goods are the most

popular things bought,followed by online travel

bookingswhich nowadays are

easily booked over the

Internet

Some of the more popular

categories found in developed

market (e.g. online groceries)

are virtually nonexistentSource: Survey 22


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22.5

3.8

4.7

4.7

5.5

8.5

8.9

11.9

13.6

19.5

49.2

50

Other

Tokopedia

Blibli.com

Multiply

Bhinneka

eBay

Amazon

Dealkeren

Tokobagus

Disdus

Kaskus

Facebook

Where to Shop

Half of online shoppers uses

Facebook or Kaskus to buy

goods

In addition to facilitating trust

building for consumers with lackof trust in making purchases

online, social networks are also

able to more accurately screen

user behavior for ad placementsSource: Survey* We partnered with Disdus to distribute the survey through their social media mailing list. Therefore, penetration rates for Disdus and DealKeren (another group buying site) are likely to be exaggerated.

*

*

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70%

41%

30%

24%

15%

Bank

Transfer

Klik BCA Credit

Card

CoD Mandiri

Internet

Payment Method

Note:Bank Transfer means ATM payments, cashier payments ortransfer of funds electronically to a specified bank account

KlikBCA and Mandiri Internet is the transfer of money usingthe respective banks proprietary electronic payment network

Bank transfer is the most widely used

method of payment for eCommerce

Online payment solutions are fragmented

and still not widely used

eWallet solutions have less than 5%

penetration

Source: Survey 24


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Bank Transfer Problem

9

8

7

4

Bank Transfer

Klik BCA

Mandiri Internet

Credit Card

Despite high usage, the bank transferprocess is highly tedious and involves

many more stepsthan credit card

number of steps

needed to completea transaction

Source: Veritrans and DailySocial estimates by testing on 5 major e-commerce websites in Indonesia 25


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Online Spend

100k-500k

500k-1m

1m-2m

2m-5m

5m-10m

>10m


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By 2015

2011 2015

GrowthOpportunity

Internet Users(millions)

Middle classpopulation (millions)

Broadbandpenetration

55 149

110 150

2% 30%

Internet usage will risethreefold over the

next 4-5 years

eCommerce Market

Size

$0.9bn $10bnSource: Nomura Research Institute, Economist, Indonesia Statistics Bureau, Euromonitor International, Indonesia Broadband DeclarationNote: Middle class defined as those with household disposable income above $5,000/year

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Growth Opportunity

Supported by robust economic growth &increase of purchasing power

Mobilepenetration

GDPgrowth rate

Credit Cardusage

30%6.4%77%

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Growth Opportunity

Facebook and Twitter are heavily usedand present great opportunities to reachpotential eCommerce customers

43 million users(4thlargest globally)

90% under age of 35

11.5 million users

(4thlargest globally)

12% of total tweets

globally 29


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Challenges

BetterInfrastructure

BetterProducts

& Services

BetterPaymentSystem

Price, quality, variety,

and customersupport are not

competitive vs.

offline channels

Slow internet and

unreliable delivery

time

Indonesias banksand conventions are

slow to adapt to

online transactions

Explosive growth in eCommerce30


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2012 DailySocial & Veritrans

Designed by Naning Utoyo & Ramda Y

e-commerce indonesia complete

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