A.T. Kearney’s Lifting the Barrier to e-Commerce in ASEAN Report predicted that the valuation of e-commerce in Indonesia will reach USD 25 to 30 billion or about IDR 320,8 to 385 trillion in the next few years. This is a highly seductive number to many. However, with great result, comes great challenges. In fact, huge population, vast coverage, and tax issues in Indonesia may serve as the most problematic ones.
Many have predicted that 2015 will be the year for e-commerce in Indonesia. The Vice Minister of Trade, Bayu Krisnamurthi, claimed that Indonesian e-commerce market would be reaching USD 10 billion of valuation in 2015 and its growth would touch 40% in the next 3-4 years. While Achmad Zaky, Co-Founder and CEO of Bukalapak.com, stated that 2015 would be the year for Indonesian e-commerce.
One thing to consider is that Indonesia is a unique market. There are tons of challenges exist for e-commerce to grow. Growth driven by middle class spending, cheap and affordable smartphone for internet connection.
Payment and Delivery is the biggest challenge
Even though Indonesians have been more and more convenient in doing online transaction, part of them is still prefer offline payment method, e.g Cash on Delivery (CoD).
According to A.T Kearney’s report, Indonesia has the most unbanked population (70 to 80%) in the world. This leads business transaction to the poor application of e-payment by consumers. The condition reflects that Indonesians’ trust level towards online services is still on the table, although there are less and less online fraud occurred nowadays.
The challenge would be to educate the market.
Delivery is also an issue that drives Indonesians reluctant to shop online, even though the logistic providers admitted that e-commerce is the biggest contributor to their revenue. Regarding this condition, a number of new concepts may serve as the problem solver, while an upgrade on logistic services is a must.
Some of those include the establishment of in-house delivery service by e-commerce players, Online to Offline (O2O) concept and the construction of distribution center in various parts of Indonesia.
At the moment, the e-commerce players in Indonesia are getting confused by the uncertainty of regulation applied upon them by the government. The unsocialized taxation scheme and uncertain new regulation, added with the certification system that will be implemented upon all online merchants, make everything so problematic for the e-commerce players. Moreover, Indonesia has yet had any clear law which regulates about privacy and consumer protection, compared to several neighboring countries.
Indonesia has limitless potential in the future and what described above are just a little insight of the industry. It can be great if we can provide solution to answer those challenge, so that we know what are the actual challenges for e-commerce players in Indonesia or whether Indonesia can produce world-class e-commerce players or how massive is Indonesia’s market potential.