The Power of

E-commerce
Spectrums

© April 2021

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Preface
E-commerce has been the country’s primadonna since the rise of
tech startups in Indonesia for the past ten years. E-commerce has
been the driving force for the nation’s digital economy. The 2020’s
report from Google, Temasek, and Bain predicts e-commerce will
push the country’s Internet economy to reach $124 billion in 2025.

There are varieties of components that support the e-commerce

ecosystem. Logistics and payment are part of them. However,
e-commerce, similar to conventional retail, consists of two major
elements, buyers and sellers. Millions of sellers and almost hun-
dred of millions of buyers have been flocking the marketplace
platforms. While the story of the buyer’s side is well documented,
there’s not much to tell about how small and medium business-
es, the essential economic pillar of the country, benefited from the
Internet economy.

In this report, DailySocial tries to understand the importance of

e-commerce from buyers and sellers, especially from a small and
medium business perspective, to support the Internet economy.
We dig deeper into their profiles and the social impacts that the
availability of e-commerce has brought. We also try to gain insights
from players and VCs about the future of the industry.

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Contents
Preface 1
Contents 2
Research Methodology 3
01. E-commerce Overview 2020 4
A. E-commerce Ecosystem 6
B. E-commerce Growth & Trends 9
C. Investment to E-commerce 13
D. E-commerce Players Highlight 14
02. The Dynamics of Consumer Behaviors E-commerce Usage 15
A. Buyer Insight 16
B. Seller Insight 21
03. Driving Business Landscape on E-commerce Ecosystem 29
A. Business Profiles as E-commerce Players 30
B. Business Innovations in E-commerce 33
C. Economic and Social Impact from E-commerce Existence 34
D. Pandemic Issues 35
04. The Future of E-commerce 36
A. Business Plans from E-commerce Players 37
B. Business Plans from VC 38
Bibliography 41

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Research Methodology
The report draws upon various research methods to obtain its finding of the current e-commerce landscape.

The Power of E-commerce Spectrums Report using 3 types of research methodology:

Quantitative Qualitative Desk research

Conduct an online survey that Conduct online FGD with Capture and analyse data
targets buyer and seller of merchants of e-commerce and from published reports and
e-commerce online IDI with e-commerce articles
players & venture capitals

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01.
E-commerce
Overview 2020

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01.
E-commerce Overview 2020

A. E-commerce Ecosystem

Harnessing massive mobile Internet users, Indonesia Indonesia’s e-commerce landscape received an
could lead Asia’s e-commerce ecosystem. The op- investment of at least US$2.5 billion over the last
portunities remain large since rural area’s untapped three years, paving the way for businesses to list
market is showing positive sentiment about pur- and sell their products online. In 2015, there were
chasing goods online. 18 million online shoppers in Indonesia; Google and
Temasek expect this to grow to 119 million by 2025.
Various statistics have shown that the e-commerce
sector has been contributing significantly to the Underpinning the growth of Indonesia’s online
Indonesian economy over the years, most signifi- transactions are local e-commerce giants (such
cantly giving micro, small and medium enterprises as Tokopedia, Bukalapak, and Blibli) that provide
(MSMEs) a much-needed boost. businesses with a platform to set-up an online
storefront to accept transactions, warehousing,
Data recorded in 2019 by market and consumer data socio-economic, and deliver goods to customers.
firm Statista, for instance, revealed that the e-com-
merce sector had contributed additional revenue of Indonesian e-commerce companies have made
$30.2 million to the national economy. With an over- swift advances over the last five years, and their
all population of 267 million — by far the largest in sophistication and service offerings are currently
Southeast Asia — more than half of whom have access undergoing a period of dynamic evolution. All sites
to the internet, Indonesia was always going to be a listed in this report can display products, coordinate
strong candidate for e-commerce penetration. orders, and handle payments on behalf of business-
es. But sites are increasingly adding new function-
According to Google, Temasek, and Bain 2020 alities, such as in-house warehousing and logistics,
Report, over a third of 2020’s online commerce was crossborder capabilities, and new payment mech-
generated by new shoppers, of which 8 in 10 intend anisms. The industry predicts bonded warehouses
to continue shop online going forward. In addition, will be launched within the next 6-12 months, which
purchase frequency has increased, though the shift will transform the ease and reliability of imports for
towards essential goods has shrunk average basket both suppliers and customers.
sizes. Many MSMEs moved online as e-commerce
became the only available retail channel. Indonesian
e-commerce itself is forecast to reach $21 billion in
total value this year, or 52 percent of Indonesia’s cur-
rent $40 billion digital economies. By 2025, e-com-
merce is anticipated to comprise two-thirds of the
country’s digital economy.

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Most e-commerce sales take place on these websites:

Business-to-consumer (B2C) Marketplace

Online marketplaces are the online equivalent of a traditional business-to-

consumer (B2C) bricks-and-mortar retail store or shopping center. Individual
brands or multi-brand sellers set up stores within the marketplace to sell directly
to consumers. The exact business model for each marketplace varies; typically,
marketplaces require sellers to arrange their warehousing and delivery. As compe-
tition has increased, some platforms have introduced warehouse and fulfillment
services for high-performing businesses.

The parties involved in the B2C structure are business owners and customers. This
type of marketplace brings together a wide range of entrepreneurs, customers, and
products under a single umbrella platform operated by the marketplace owner.

The B2C structure offers a wide range of benefits to all parties involved: The owner
enjoys a regular revenue from each entrepreneur, the entrepreneur is exposed to a
large number of existing customers and enjoys set services provided by the owner,
and the customer is exposed to a “one-stop-shop” with a large variety of products
and competitive prices.

Online marketplaces usually charge a number of fees for activities such as basic
store setup, ongoing product listings, and commission fees based on sales volumes.
A service provider will often also be required to manage online product listings and
customer service, which will add monthly fees paid to the platform. Online market-
places may also offer a direct sales platform service to sellers.

Consumer-to-consumer (C2C) Marketplace

C2C marketplace sites do not hold or purchase inventory, and they usually re-
quire the merchant to distribute the goods when they receive an order from a
customer. Merchant margins from marketplaces tend to be lower, and aspects
such as warehousing and distribution are the merchant’s responsibility. Businesses
can set up stores on the site at low cost (even at no cost), resulting in most mar-
ketplaces host thousands of businesses extending from sole traders and MSMEs
to officially branded stores. In Indonesia, the leading direct sales stores all incorpo-
rate a marketplace component.

C2C e-commerce sites are superior compared to others because they provide a policy
that consumers buy and sell their products, leading to an increase in online transactions.

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 Business-to-business (B2B) Marketplace

The B2B marketplace paradigm involves businesses only. In this segment, one
business sells products to another in a beneficial way to both parties. In this case, a
large marketplace will sell products in bulk to suppliers, who in turn will sell the items
to their buyers. In keeping with the general marketplace concept, offerings may con-
centrate on limited merchandise in given sectors or provide a wide range of products
or services in several industries.

This structure also offers benefits to various parties:

The large marketplace is able to sell substantial volumes of products to regu-
lar bulk buyers. The supplier is saved the effort of searching for merchandise
and acquires sizable inventory for competitive rates, and the end customer
is offered a wide range of items at reasonable prices. In B2B commerce, the
webshop is normally used as a platform for placing orders, while payments
are carried out as in other B2B transactions, invoice to invoice - in other words,
via bank transfer.

In such cases, the customer usually has a contract with the seller in which they are
guaranteed certain transactional conditions (prices, discounts, amounts, delivery
deadlines, payment deferral, payment in installments, etc.), all of which depend on
the status of the customer, their previous results, i.e., volume of purchase, regularity
of payment, and years of collaboration, not to mention mutual trust. Of course, a
business can also be a one-time customer without any contract with special con-
ditions, so the system has to enable such customers to purchase or place orders.

B2B vendors are often wholesalers or distributors. They have regular clients who are
often companies that deliver to their end customers. Customers can also be gov-
ernmental institutions that might have annual contracts to supply particular types
of goods (such as office supplies). For such merchants, the B2B webshop can serve
as a platform for planning procurement, ordering scheduled deliveries, overseeing
contracts’ execution, and the like.

E-commerce and Marketplace Business Model

The marketplace business model differs from the online retail e-commerce business model. In retail
e-commerce, the platform owner doubles as the merchant as well as the owner of goods, while in the
marketplace, the platform only facilitates the transactions between sellers and buyers.

In Indonesia, there two models of marketplaces:

Cross border marketplace

This model facilitates foreign merchants to
transact directly with domestic customers. Goods are sent directly from the
merchant’s home country to Indonesia. E.g., Shopee, Lazada, and JD.ID

Domestic marketplace
This model entirely operates to facilitate merchants and buyers in Indonesia.
E.g., Tokopedia and Bukalapak.

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 E-commerce Landscape

B2B B2C C2C

E-commerce has become the social norm in At the same time, Covid-19 has reinforced the
Indonesia, where online shoppers have grown to value of e-commerce for Indonesia. For example,
85 million compared to 75 million pre-Covid-19. Singapore’s Shopee saw its sales in Indonesia in-
Indonesia’s e-commerce Gross Merchandise Value crease by more than 120% in the first three months
(GMV) grew significantly during the second quarter of the year compared with the previous year. Overall,
of 2020, which saw consumers switching to online average daily e-commerce transactions have al-
platforms to purchase healthcare, fast-moving con- most doubled during the pandemic.
sumer goods, and electronics — among several oth-
er products and services. Elsewhere in another marketplace, Blibli reported
that sales of groceries, cleaning and sanitizing prod-
The number of online sellers in Indonesia has also dou- ucts, surgical masks, and vitamins have all experi-
bled every year for the past three years and reached enced increases over recent weeks. In addition, the
a total of 4.5 million active sellers in 2017. About 99% e-commerce firm has recorded heightened demand
of these are microenterprises and half of them are on- for cooking appliances, video games, and exercise
line-only businesses with no physical store presence. equipment as Indonesians adjust to spending more
Online commerce has made it extremely easy for many time at home.
to start their own business and entrepreneurship has
seen a sharp rise in the country. It encourages a vibrant Conversely, Blibli logged noticeable demand de-
marketplace and gives its citizens a way out of their clines in segments such as smartphones, automo-
socio-economic woes. tive, shoes, formal dress, and travel, as the uncertain
economic climate and public health outlook began
According to Tokopedia’s data, the company experi- to weigh on discretionary consumption.
enced a spike in the number of merchants on-board-
ed since January 2020, from more than 7.2 million E-commerce was already gaining significant trac-
merchants to over 10 million by December 2020. tion in Indonesia prior to the Covid-19 outbreak. The
Tokopedia also experienced significant increase in sector was one of the main driving forces behind
transactions across various categories such as F&B the county’s emergence as Southeast Asia’s largest
and health category, where transactions grew more digital economy, valued at $40bn in 2019 and ex-
than threefold compared to the pre-pandemic period. pected to be worth $130bn by 2025. Now that more
retailers and consumers are being forced to explore
Even without enforced closures of brick-and-mortar e-commerce options, growth could be accelerated
retail stores selling non-essential items, shoppers even further.
have been increasingly turning to online channels
to make purchases as the Covid-19 case count has
risen. Marketplace Bukalapak, one of Indonesia’s five
unicorn start-ups valued at over $1bn, has been ex-
panding its grocery selection in recent weeks to cater
to stay-at-home consumers’ needs.

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B. E-commerce Growth & Trends

The growth of e-commerce over the last five years has Indonesia’s e-commerce sector has doubled every
been primarily driven by four structural changes in the year for the past three years and is projected to
industry. Firstly, the increase in smartphone penetra- grow eight times by 2022. A tech-savvy and grow-
tion is made possible by the availability of low-cost ing middle-class population has contributed to this
devices. Secondly, leading e-commerce companies exponential growth. More than half of Indonesians
are targeting an emerging middle class with a larger have access to mobile phones and the internet,
portion of disposable income. Thirdly, at least $2.5 bil- and this figure is expected to grow to almost 100
lion of foreign direct investment in e-commerce plat- percent in 2025.
forms leads Chinese and Western firms, specifically
via significant joint ventures or partner relationships. Indonesia’s middle-class population is expanding
Fourthly, the accelerating evolution of payments infra- with over 261.12 million population and a GDP per
structure enables customers without bank accounts capita expected to reach $5,790 by 2022. Over
(unbanked consumers) to make online purchases. 31.65 million users are shopping online. Statista
predicts the number of users to grow to 43.89 mil-
E-commerce is already benefiting from the rise in lion by 2022 and the average online spend to go up
disposable income among Indonesia’s middle class. to $375 million.
Private consumption of goods and services by house-
holds accounted for a higher proportion of Gross
Domestic Product (GDP) in Indonesia than in China
or India.

Figure 01. Number of Online Shoppers in Indonesia (in millions)

43.9
39.2 42.1

35.5
31.6
28.1
24.9

2016 2017 2018 2019 2020 2021 2022

Source: Statista, e-commerce Indonesia

Indonesians are looking at e-commerce from a new perspective with higher expectations regarding ease of
business and convenience. Apart from having a more extensive reach than traditional companies, e-com-
merce platforms have the advantage of providing consumers with various payment methods, rewards and
discounts, reduced shipping charges, and flexible delivery timings. Local staff’s availability and presence
serve as an added benefit for customer service needs, product inquiries, and technical concerns.

As Indonesia’s online consumers are active on e-commerce sites all year round, any time is an excellent time
to enter the market. In the last quarter of the year there has been several large-scale events meant for e-com-
merce merchants to drive sales by offering promotions and discounts to consumers.

The pandemic was a global full stop for doing ‘business as usual.’ Still, it became a launching pad for busi-
nesses to thrive as virtual, digital-centric, and agile companies - while maintaining the human touch in cus-
tomer interactions. Furthermore, the correct investment in tech, data, processes, and people will enable them
to make better decisions and faster course corrections, allowing them to adapt and respond quickly to ev-
er-changing customer needs.

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Because of Covid-19, Indonesians are shifting to shopping online for most discretionary categories.

Figure 02. Expected Change in Shopping Channel per Category over the Next 2 Weeks

Axes show net intent, bubble size relative to share of respondents that have purchased category in
last 6 months.

In store

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-10 Household supplies Groceries

Tobacco (e.g., cleaning,
-20 laundry)

-30 Personal-care products

Furnishings & Snacks Non-food child products
(e.g, soap, shampoo)
appliances (e.g., diapers)
-40 Books/magazines/
Consumer newspaper Skincare & makeup Entertainment
-50 Jewelry electronics at home
Food takeout & delivery (e.g, Netflix)
-60 Fitness &
Accessories wellness
Footwear Apparel
-70

-20 -15 -10 -5 0 5 10 15 20 25 30 35 40 45 50 55 Online

Household essentials Discretionary Entertainment at Home

Source : Mckinsey

The Q4 sale season sees quite a high jump in GMV for all categories due to heavy promotions (singles date
sales and Harbolnas) and increased product supply. Consumers also tend to buy electronics in this period as
new product launches happen around September-October, boosting consumer demand.

Figure 03. Indonesia E-commerce category trends in Q4 2020

E-grocery & home Beauty & personal care Electronics Fashion

Q4 demands poised to Beauty and personal care New product launches, Post lockdown effect
rise on the back higher are expected to performs typically computers, expected to drive the
trust by consumers in well on the back of laptops and mobile category up in Q4;
buying grocery from promotions and renewed phones, to anticipated the people returning to
online sources; players imports from China and sales in this quarter. Post offices and other public
also investing in fresh Korea; verticals expected lockdown effect is also space coupled with
capabilities to boost to recover well expected to be strong with sales seasons will
demand larger share of population drive growth
returning to offices

The lead-up campaigns to the sale days are already in full flow across the horizontals. The campaigns are mod-
eled in different ways across the players.

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In the last few years, Shopee and Lazada have also inviting local and international artists to perform
been heavy on gamification and using live streaming during the WIB TV Show. These programs showcase
platforms as an essential promotional tool to boost products and enable consumers to get special offers
user engagement and drive sales while at the same through omni channel strategy - offering entertain-
time tapping into the growing millennial segments. ment and shopping experience by integrating live TV
show and in-app promotions all at once.
Shopee and Lazada have a month-long teaser cam-
paign running, featuring daily live streams to drive Tokopedia also carried out various collaborations
consumer interaction and different themed promos with offline vendors during the pandemic. The com-
across days. Both Shopee and Lazada also focus on pany partnered with previously offline-only events
singles day sales and promotion, made famous and and bazaars to go online through its platform, such
monetized by Alibaba’s 11.11. as Big Bad Wolf, Jakcloth, and Jakarta Sneakers Day.
The company also focused on onboarding brands
In July 2020, Tokopedia launched its monthly shopping that initially only have offline sales channels to open
festival, Waktu Indonesia Belanja (WIB). As such, every its stores on Tokopedia such as BMW and Tesla.
end of the month, when most users receive their payday
or salaries, Tokopedia offers its users promotions while

Shopee’s campaign theme is varied, with each day serving a dif-

ferent category - the major events are on men’s fashion, electron-
ics and beauty

Lazada has been focussing daily live streams leading up to

11.11 where they have events on beauty, electronics and home
appliances planned

Tokopedia has been focusing on local habits eg. end of month

payday sale, instead of the popular 11.11/12/12

Bukalapak has been focussing on cashback schemes for this

year’s 11.11 sales with focus on computers, gaming consoles
and toys

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Similarweb’s Map of E-Commerce ranks Indonesia’s top e-commerce players based on their monthly visit
traffic. Data in early 2021 are as follows:

Figure 04. Industry leader (Mar 2021)

Domain Traffic Share Change Rating Monthly Unique

Visitor Visitor

tokopedia.com 33.07% 11.81% #222 132.0M 40.62M

shopee.co.id 29.73% 5.6% #225 118.6M 35.67M

bukalapak.com 7.79% 5.34% #1.442 31.11M 12.77M

lazada.com 7.45% 13.6% #1.256 29.75M 11.90M

blibli.com 4.86% 1.26% #3.037 19,41M 10.07M

iprice.co.id 2.28% 7.63% #7.583 9.110M 6.317M

amazon.com 2.23% 3.06% #12 8.899M 6.110M

cekresi.com 1.22% 11.83% #19 4.868M 3.304M

ralali.com 1.21% 14.22% #17 4.849M 1.354M

jd.id 0.93% 9.51% #15 3.700M 1.687M

source: Similar web

Based on Similarweb data for the first quarter (Q1) 2021, Tokopedia is the most accessed marketplace
on the internet. Tokopedia controls 33.07% of marketplace traffic in Indonesia in March 2021. Shopee is
in second place, with a traffic portion of 29.73% in March 2021. Meanwhile, the other top five ranks are
Bukalapak, Lazada, and Blibli during this period.
Figure 05. Monthly visits (Jan 2021 - Mar 2021)

lazada.co.id tokopedia.com shopee.co.od bukalapak.com blibli.com

source: Similar web
28.20M 126.4M 117.0M 31.27M 18.25M
150M

125M

100M

75M

50M

25M

0M

Jan 21 Feb 21 Mar 21

Figure 06. Traffic and engagement (Jan 2021 - Mar 2021)

lazada.co.id tokopedia.com shopee.co.od bukalapak.com blibli.com

Monthly visits 28.20M 126.4M 117M 31.27M 18.52M

Monthly unique 11.22M 38.93M 35.75M 12.83M 9.64M

visitors
source: Similar web

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C. Investment to E-commerce

E-commerce platforms help businesses, consumers, or important government stakeholders by enabling online
sales and transactions. E-commerce platforms facilitate a transaction over the web and supports the creation
and continual development of an online relationship. Common e-commerce functions such as creating and
managing web storefronts, product visualization, personalization, shopping cart management, taxation, trans-
action management, and settlement are the crux of building basic B2B, B2C, or G2C online stores.

The global internet penetration has been growing at around 10% year-on-
year. It reached a rate greater than 66% in 2018; the increased adoption
has been the key factor for the rise of e-commerce across industries and
regions globally.

E-commerce startups have seen around 30% growth Most of the investments are still in the seed or ear-
in investments over the last five years. 75% of these ly stages, but late-stage investments generate the
investments have been in e-marketplaces, with only most value. In Indonesia, VC largely falls into two
25% of the investments have been in e-commerce broad categories, local investors and foreign inves-
enabling ventures. Some of the markets taking the tors, which typically originate from more developed
lead with companies adopting e-commerce include startup markets (Japan, U.S.). These investors bring
multi-product markets, fintech, transportation & logis- global expertise and networks.
tics, food & beverage, and the apparel industry. The
multi-product market accounted for almost 35% of Meanwhile, local VCs mostly invest in companies
the number of deals on an average year over year. that are already operating and generating cash flow
or profit. They tend to invest more on profit-sharing
There has been a decrease in the number of invest- models or even financing models like bank and fi-
ment deals in startups across industries in the last nance companies. Indonesia’s startup funding land-
five years. But the investment amounts have climbed scape has been dominated by foreign VCs, where
up. This scenario includes e-commerce startups the largest funding rounds are led by e-commerce
across industries as well. The new trends indicate an and related transport companies. E-commerce and
increased focus on value-based investing by investors transport categories dominate deals and invest-
rather than the option of taking a mass approach. The ment values, and the largest funding rounds have
situation could make the game tougher for early-stage been led by companies such as Gojek, Tokopedia,
entrepreneurs looking to cash in on the e-commerce and Traveloka.
wave, as they need to demonstrate a high degree of
sectoral focus from day one. VC players stated four key focus areas to be high-
lighted to speed the startup ecosystem’s growth:
While startups in Southeast Asia have witnessed a talent development, fiscal incentives, funding op-
75.84% growth in the average investment amount in tions, and startup facilitation to the capital market.
the last five years, the number of deals in this region
has fallen by 3.65%. The position pushes it to second Despite the circumstances, both local and foreign
place after East Asia, which consists of China, Japan, VCs are optimistic about the Indonesian market.
Hong Kong, and Korea, showing the most impressive The positive outlook is driven due to Indonesia is
growth in the five years from 2014. Indonesia, Malaysia, still under-tracking regional peers on investment
Myanmar, the Philippines, Singapore, Thailand, and value versus GDP and internet users, indicating
Vietnam are the countries that fall within this region. high room for growth. VCs are also confident in the
In 2018, e-commerce startups in South-East Asia par- strong macroeconomic fundamentals and favor-
ticipated in 66 rounds of funding and had raised $9.43 able demographics in Indonesia.
billion from them. This accounts for 10.2% of the global
e-commerce investments this year. Most VCs are looking to diversify from e-commerce
because of potential market consolidation, major
Venture capital (VC) increasingly shows an important new entrants, high investments, and the long lead
role in developing startup companies in Indonesia, time for profitability.
amid prospects of growth in the country’s digital
economy. Still, at its young age, investment in the
digital industry is soaring to reach nearly US$3 billion
in 2017, double than the previous year, according to
Google and A.T. Kearney’s report.

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D. E-commerce Players Highlight

Indonesia’s largest e-commerce sites are either a combination of direct sales and marketplace or pure mar-
ketplace models. Heavy investment and competition are quickly changing the market landscape, which will
improve access for foreign businesses and may yield new competitors in the coming years.

Bukalapak
Indonesia’s C2C marketplace with estimated monthly visits of 31 million. Bukalapak
was founded in 2011 and is backed by KMK, a subsidiary of Emtek, an Indonesian
media conglomerate. The site carries individual stores for businesses. Bukalapak
lists physical and digital products and has recently included functionality to allow
users to invest in mutual funds. Most categories contain imported products, but
listings typically focus on cheap local products.

Tokopedia
As the largest Indonesian-based C2C marketplace, Tokopedia claims that it has
over 100 million users monthly. Tokopedia was founded in 2009 as a marketplace
business focusing on Indonesian MSME. Today, the company has expanded its
business lines into fintech & payment, logistics and fulfillment, and new retail. The
company also provides O2O services for traditional retailers to sell digital products
through its Mitra Tokopedia app. As a domestic marketplace, Tokopedia only facili-
tates transactions within Indonesia.

Shopee
Launched in 2015, Singapore-based Shopee is the C2C shopping arm of Southeast
Asia’s most valuable internet company, Sea (formerly Garena). Shopee’s growth has
been mobile-led, incorporating tools for MSME sellers that enable them to man-
age their online stores or upload existing content from other platforms such as
Instagram or Facebook. Shopee carries an extensive range of imported products
from global sellers across most major categories.

Lazada
Online marketplace and direct sales site and part of the Lazada Group, Lazada spans
six markets in Southeast Asia. It was launched in 2012 by Rocket Internet, and in
April 2016, China’s Alibaba Group acquired a controlling stake. Lazada Indonesia
conducts direct sales and ‘partners’ with approximately 15,000 third-party sellers
in Indonesia. Lazada carries general merchandise, with electronics, fashion, and
housewares constituting the top categories.

Blibli
A direct sales site and marketplace with estimated monthly visits of 18 million.
Blibli lists general merchandise with a similar product range to its larger competitor,
Lazada. The company holds its own stock and maintains an in-house warehouse
and distribution capability. Qualified businesses can also list products on the site
and distribute them directly to customers via a drop-shipment model.

Bhinneka
Bhinneka is the first and leading O2O (online-to-offline) e-commerce in Indonesia
specializes in computers and IT products, communications goods, and consumer
electronics (3C). Starting as an offline business in 1993 then expanding online in
1999, Bhinneka has a proven track record in serving Indonesian consumers (B2C),
businesses (B2B), and the government (B2G). With more than one million monthly
active users, 70,000 unique products listed, and 61 percent year-on-year growth,
Bhinneka is one of the only profitable big e-commerce businesses in the nation.

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02
The Dynamics of
Consumer Behaviors on
E-commerce Usage

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02.
The Dynamics of Consumer
Behaviors on E-commerce
Usage

A. Buyer Insight

Although Indonesia’s e-commerce market is swiftly providing access to a wider number and array of con-
sumers, it is essential to ensure they have an appropriate market fit before taking steps to list their prod-
ucts online. The profile of the average Indonesian e-commerce customer has been relatively constant
over the last five years. However, the increase in mobile penetration and companies’ impact on logistics
and convenient payment mechanisms are slowly altering consumer demographics. Newmarket forces are
currently leading to a change in customer segments and geographies.

Survey results of online consumer studies reflect many of the structural advantages that e-commerce enjoys
over traditional brick-and-mortar retail and endorse the view that online sales penetration as a percentage
of overall retail sales is likely to grow. DSInnovate conducted surveys that targeted alle-commerce platforms
that consist of 500 buyers and 300 sellers who actively use e-commerce within the past three months.

E-commerce Role for Buyers’ Need

Due to numerous advantages and benefits, people are getting adapted to online shopping over conventional
shopping these days. The buyer’s decision-making process has changed significantly in recent years. Buyers
are conducting extensive research online before ever speaking to a salesperson. Buyers also make more direct
purchases online and via their smartphone, never stepping foot into traditional brick-and-mortar locations. The
internet makes doing business much easier and faster. The rapidly growing worldwide trend towards online
shopping or e-commerce changes the way people do business.

Many people around the world prefer to shop online and buy products from several brands and companies
that they cannot find or are not available for purchase in their home countries. Nowadays, with the help of
the new technology and the internet’s support, people worldwide started to purchase items online by simply
sitting in their homes. Purchasing items and products through the Web is an effortless task to do. It is now
playing a significant role in everybody’s life, especially older people and people with a hectic life schedule. It
provides a comfortable service for its customers by saving the item in the personal shopping bag and buying
it later on. Shopping through the Web simply works for people with a valid credit card, a debit card, or an
internet bank account.

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 The Challenge

Online shopping — that glorious invention that allows people to buy things from the comfort of their homes. There
is no more traveling to multiple stores to find the right product; no more has to deal with an over-enthusiastic
salesperson; waiting for the long queue at the checkout counter. The e-commerce boom has certainly changed
the shopping world for the better.

However, like everything else, the world of online shopping is not all roses. Despite all the efforts of e-commerce
companies to alleviate them, there are a few problems that customers still have to face while shopping online.

These are some challenges faced by customers as online shoppers:

Quality Digital payment failures

Quality issues are the biggest problem while Whether a customer is paying by credit/debit
buying products online that users have no guar- card, internet banking, or one of the several
antee of their quality. Reviews are not always digital wallets that exist today, the failure of
reliable. All the research can’t assure you of a digital payments always looms overhead while
product’s quality; fraudulent sellers who inten- making online transactions. A faltering internet
tionally mislead customers to increase sales are connection or a technical glitch often results in
the prime reason for faulty/sub-par products be- the payable amount being debited from a cus-
ing sold online. With the volume of goods e-com- tomer’s account without being credited to the
merce companies handles these days, it can be selling party. And retrieving this amount is any-
quite challenging to conduct quality checks on thing but a quick process; one must inform the
each product they’re selling. Additionally, getting site and then wait around 7-10 days before the
the correct size remains a severe drawback for amount is refunded to their bank accounts. But
buying clothing and footwear online. Sizes vary this situation is steadily improving as the sector
from brand to brand, and since you can’t try out is focusing more on cashless transactions, and
the products before buying them, selecting the customers are getting more informed about
size is always a gamble. making payments online.

Delivery and logistics

Another major challenge faced by shoppers while While all e-commerce sites have order tracking sys-
shopping online is logistics. Compared to tradi- tems for their customers, they aren’t always accu-
tional retailers’ physical store collection, e-com- rate. Delivery personnel often turn up at our homes
merce must invest in delivery to reduce this dis- when we’re at work or out somewhere as there’s no
advantage. One predicament that constantly turns way to fix a particular time slot for the delivery to
up while shopping online is when the order will be take place. This same issue exists while returning
delivered. Long delivery times are a serious prob- products. Another problem is that the vast majority
lem for B2C trade, although it can be offset by the of the Indonesian population, which lives in rural
price or volume of business-to-business products. areas and Tier-III cities, is unable to shop online
While certain e-commerce offers same-day deliv- because not all e-commerce sites provide delivery
ery, most remain stuck in deliveries in 2-3 days. services to their locations.
Consumers don’t like waiting.

Additional charges

E-commerce buyers often spotted a great deal on a product. Additionally, they will notice an additional
shipping charge. The deals are commonplace on all e-commerce sites, but the orders need to fill the
terms and conditions to qualify for free shipping. Sometimes these shipping charges are added on each
product, especially if users buy multiple products, not the collective order.

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 Lack of security

Investment in cybersecurity is growing year on Cybersecurity, or more precisely the lack of it, is a
year due to the increasing number of threats to major problem on the internet today. E-commerce
governments, companies, and businesses inter- sites record important customer data like name,
nationally. Far from being oblivious to this prob- phone number, address, and bank details. If these
lem, e-commerce is forced to exercise extreme sites don’t implement stringent cybersecurity mea-
caution. The processing of purchases requires the sures, the user’s data is at risk of falling into the
sending of sensitive consumer information, which wrong hands, which can then wreak havoc on your
must be protected. bank account. Most of the big players in online
shopping certainly have the best-in-class securi-
Online customers are increasingly aware of the ty measures to protect their customers’ details.
importance of security, and therefore demand However, the same can’t be said about the count-
guarantees. Unfortunately, a part of e-commerce less smaller sites that may not have the expertise
fails in this sense. Sometimes they even violate to do so. Online shopping is far too convenient to
users’ rights. get hindered by these problems. But if e-commerce
sites can fix these issues, they will certainly improve
customer experience and generate more sales.

Preferences of E-commerce Usage

There are a lot of reasons today customers prefer online shopping:

Convenience Crowds free

The convenience is the biggest perk. There are no Most people hate crowds when shopping, especially
lines or shop assistants to wait on to help custom- during festivals or special events. It tends to be more
ers with their purchases, and people can do their chaotic when more groups are out, and people will
shopping in minutes. Online shops give people the experience rush or hurried. Plus, parking becomes a
opportunity to shop 24/7 and reward them with huge issue. Switching to online shopping could avoid
a ‘no pollution’ shopping experience. There is no all of these problems.
better place to buy informational products like
e-books, which are available to people instantly, as No need to travel
soon as the payment goes through. Downloadable Some people don’t usually like to travel a lot to get
items purchased online eliminate the need for any what they need, especially those who don’t live
material goods at all, which helps the environment. near the shops. Even though nothing can compete
with the experience of going to a cloth boutique
Product, price, payment comparison and buying it immediately, today, they can hit the
Comparing and researching products and their online-shop.
prices is so much more accessible online. Also,
people can share information and reviews with
other shoppers who have firsthand experience with
a product or retailer and compare the payment op-
tions according to our needs.

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Pros and Cons of E-commerce Platforms

According to statistics, worldwide e-retail sales are expected to grow to $4.8 trillion by 2021. In fact,
e-commerce is growing so quickly that it’s expected to serve a staggering 2.14 billion people. Of course,
there are many more benefits of e-commerce. Below details will discover the pros and cons of each
e-commerce platform from buyer’s perspective so that people can decide what’s their preferred platform.

Pro Cons
Impressive UI/UX with fresh green look Too frequent maintenance

Easy to find products with search keywords Lack of flash sales

Offer complete digital products needed by There are some sellers that delay response
most buyers, such as phone credits, ticket, etc to confirm buyer’s order

Has complete products category

Offer various payment methods

Pro Cons
Easy to use platforms Complicated Free Shipping Promo Terms

Offer many promotions (discount, flash sale, Limited banks as the payment method
free shipping fee)

Offer COD as the payment method Many spam messages from sellers

Price bargaining allowed

Pro Cons
Offer various products Many fraud cases

Free shipping fee Long-time process of return products

Offer COD as the payment method Long-time payment confirmation

Pro Cons
Offer various delivery services Lack of flash sale promotion

Offer various payment methods Unvaried products category and number

of sellers
Products will be sent a maximum of 2 Long-time payment confirmation
working days after payment

Pro Cons
Free shipping fee Long-time payment confirmation

Safety packing Unvaried products category and number of

sellers
Responsive customer service Lack of booster promotion

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Different Spectrums/Features Usage of E-commerce Platforms

E-commerce continues to evolve; therefore, it’s crit- digital commerce platform a merchant choose to
ical for e-commerce merchants to recognize the work with, it’s advisable to select one capable of
trends and be empowered to make better business supporting global commerce with a local approach,
decisions to drive sales. Hence, in order to explore as well as a variety of business, payment, and sub-
more revenue models, many e-commerce players scription models.
are gaining steam within the digital goods and ser-
vices industry, as companies shift from one-time In Indonesia, e-commerce players also play a signif-
purchases to recurring revenue models. icant role in getting more revenue models by build-
ing innovative features, which can be segmented
This trend is coupled with the diversity of local for people’s needs, such as billing payment, invest-
markets and buyer preferences. Thus, whatever ment, digital products, capital loan access, etc.

Investment Product
To get more Indonesian youth to invest in mutual funds, industry players are looking at tech-
based startups, such as marketplace unicorns Tokopedia and Bukalapak, which have a far
greater reach than brick and mortar stores.

Tokopedia also offers mutual funds and digital gold investment products on its platform;
both has been growing robustly since they were launched. Tokopedia’s mutual fund investors
have multiplied 57 times and gold investors 20 times in the last two years. The total number
of transactions multiplied by 27 times and 20 times, respectively.

With BukaReksa, Bukalapak allows its users to buy and sell mutual fund products according
to users’ needs and financial capabilities, e.g. Money Market Mutual Funds, Fixed Income
Mutual Funds, etc.

Digital Product
In addition to allowing people to purchase goods and services, e-commerce platforms nowa-
days have enabled people to pay bills from electricity, water, taxes, insurance, credit card, etc.

Personal Cash Loan Product

Personal loans were traditionally offered by banks/credit unions. Along with the transforma-
tion of products and services offered by e-commerce platforms, people have been able to
access personal loans through these platforms.

There are some reasons why personal cash loans in e-commerce are interesting to observe,
such as:

1. Tokopedia, Bukalapak, and Shopee have developed into not only e-commerce platforms but non-
bank institutions that offer access to fast cash credit. It’s obvious that Tokopedia, Bukalapak,
and Shopee users need credit/loans, either as consumers or sellers. One of them needs a type of
express credit that is liquid and without collateral.

2. Fast process of cash loans. It’s admitted that applying for a loan is different from shopping online.
All of this application process is managed in the platform itself. One of them is the light require-
ments, where credit cards and BI checking are not required to apply for credit on the platform.

3. Quick process of loan disbursement in 24 hours. It’s also reliable which was approved by the
DSInnovate survey in December 2020.

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 Expectation

Commodities are answering key customer’s val- platform. Especially due to the ‘new normal’, people
ues: Availability, Robustness and Quality, Price/ are shopping online more than ever. For example,
Performances ratio; but even more, their presence on Tokopedia added specialty food and beverages
e-commerce brings many more features and informa- (F&B) product curation due to the pandemic called
tion. The proliferation of information consumes the “Tokopedia Nyam”. This F&B section includes a vari-
attention of the web users, then one of the customers. ety of frozen food, snacks, etc. Due to the pandemic,
Therefore, to be able to capture the attention of the many businesses shifted from offline to online. This
users is a real value. As a result, information for com- added feature on Tokopedia makes it easier for sell-
modities must be perfect, understandable, and mem- ers to meet potential buyers, and buyers don’t have to
orize-able in a blink of an eye. The catching messages go out to buy groceries. Another example is Shopee’s
must solve customer’s problems and difficulties. ShopeePayLater, a new feature in the app that allows
users to loan credit to purchase items on the plat-
When using e-commerce platforms, buyers have cer- form. Buyers can pay back the credit within the next
tain expectations regarding the platform/app. Buyers several months, within 2-3x installments.
would expect constant innovation on the e-commerce

B. Seller Insights
The seller contribution cannot separate the growth of This report additionally aims to explore the experi-
e-commerce as a major element of business process- ences of sellers who have been actively involved in
es. Some platforms even rely on the number of sellers selling on e-commerce platforms. DSInnovate con-
as indicator of their business progress or growth. No ducted FGD, which was divided into four sessions
wonder these e-commerce players are competing to with 5 participants in each session. Each participant
help sellers take advantage of digitization on their plat- is at least actively selling on one of the e-commerce
forms. Usually, the platform will provide seller informa- platforms in Indonesia.
tion centers, seller communities, even popular promos
or bonuses that sellers can use to attract buyers.

E-commerce Contribution for Sellers

Supporting MSMEs in digital shifting

Figure 07. Indonesia’s Online Commerce Journey

Financial benefits
A growing market will unleash
significant socioeconomic
impact across the archipelago. Impact of online Impact of online
commerce in 2017 commerce in 2022
The online commerce market in
Indonesia will grow eightfold over Online sales growth
More than $20 billion in
the next five years (2017–2022), in 24 out of 34 provinces
new retail revenue
which will have socioeconomic is outpacing online
impact in four major areas: sales growth in Jakarta
2–3% of GDP
supported—equal
to Bali’s GDP in 2018
At least 30% of online
commerce spending is new 1.6 billion parcels
shipped
consumption, capturing
previously untapped needs. 30%
Online Consumption

“ “McKinsey estimates that by 2022, online commerce will directly or indirectly support
about 26 million jobs, compared with four million today. “

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Access to the internet and participation in online buy- The government noted that 2.7 million Micro, Small,
ing and selling activities are keys to a wholesome eco- and Medium Enterprises (MSMEs) digitized their
system to boost Indonesia’s digital economy. Based businesses between May 14 to October 15 or during
on McKinsey’s report, Unlocking Indonesia’s digital the pandemic. Thus, the number of MSMEs pene-
opportunity, more than 60 percent of Indonesian trating the digital ecosystem is almost 11 million,
MSMEs are already online, but only about 15 percent with a total of around 16% compared to the total
have online ordering and payment systems. MSME players in Indonesia.

Indonesian MSMEs face various obstacles in pursuing Research from Lembaga Penyelidikan Ekonomi dan
online business. Starting from infrastructure and lo- Masyarakat Fakultas Ekonomi dan Bisnis Universitas
gistical constraints, access to finance, to talent needs. Indonesia (LPEM FEB UI) in 2020 noted that 7 out
Based on the research results through FGDs, all online of 10 business actors in Tokopedia experienced an
sellers who have used e-commerce platforms admit increase in sales with a median of 133%. Tokopedia’s
that e-commerce is beneficial and facilitates their Director of Public Policy and Government Relations,
business processes. Astri Wahyuni, said, “The pandemic has accel-
erated digital transformation in various sectors.
The fact that e-commerce helps digitize MSME busi- Digitalization and technology are no longer just add-
nesses is recognized by every seller. For example, ed values but have rapidly developed into a necessity
they can receive payments from various types of to answer a pandemic’s challenges.”
payments methods, and the e-commerce platform
will automatically check the transaction. Sellers also
benefited from the courier options provides by e-com-
merce. So the buyers can choose.

Based on an internal survey by Innovate, Tokopedia was in the top rank of 49.0% as e-commerce that is most
often used as a medium for selling online.

Figure 08. Use of e-commerce to sell online

49.0%
45.0%

3.0% 2.3%
0.0% 0.0% 0.7% 0.0%

Other

Source: DSInnovate

Cut operational costs

The development of e-commerce websites has rapidly changed people’s behavior in buying and selling trans-
actions. E-commerce growth is an example of implementing digital transformation. The presence of e-com-
merce websites will attract more players in the market.

E-commerce helps cut operational costs, including store rental, product storefronts, marketing strategies, and
logistics or supply chain. Sellers no longer need marketing costs, which tend to be expensive and prone to
failure. They only need to be active on social media and campaign for free via the platform and the internet.

For beginner SME owners, operating costs are among the entry barriers for business people to enter the market.
More SMEs will emerge if these barriers can be resolved, especially on online or e-commerce platforms.

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Help attract customers
Every e-commerce company has a strategy to increase traffic and conversion, one of which is through pro-
motion. E-commerce marketing uses advertisements to improve traffic to online stores by converting them
into purchase transactions by consumers. This strategy is also formulated to keep consumers from returning
to shopping.

An e-commerce marketing strategy consists of marketing tactics, which are either on or off the website. A
healthy marketing strategy will drive and build brand awareness, encourage customer loyalty, and ultimately
increase online sales.

The strategy outside the platform is mostly carried out by big e-commerce by attracting brand ambassa-
dors from well-known celebrities. Then, put advertisements on television to reach more potential customers.
Meanwhile, in the e-commerce platform, install various types of promotions and install exciting features.

The Challenges

Unclear cutting admin fees Potential price war

One of the challenges online sellers encoun-

ter is getting a cutting of admin fees without Along with e-commerce platforms’ role in cut-
sufficient information. When disbursing from ting operational costs, the number of MSMEs
transaction history and account history, the also continues to grow. Especially if the players
seller did not previously inform some pieces. in the e-commerce market offer products with
The sellers often have to contact customer relatively the same function and price.
service from the related marketplace to con-
firm the reason. These sellers often think of reducing their
profit margins by slamming prices or “return
One of the FGD members who sell watch-strap on investment”. If the sellers conceive the
confirmed this. He received a cutting admin fee same situation, the potential for a price war
due to excessive dimensions from the courier. to occur will be higher. Potential customers
There were contradictory arises. The items he can compare similar products with the prices
sells are small, which are not strong enough to offered. The strategy will affect potential cus-
be considered as exceeding dimensions. tomers who are price-sensitive (price-sensi-
tive customers).

This condition is unsettling for some sell-

Long disbursement of funds ers who claim to have a higher selling value.
For example, their products are curated and
Each platform has its own policy, including the through adequate quality control. At the same
period for the disbursement of funds for sellers. time, they are losing to other sellers who do
In the discussion session, the seller admitted to not do quality control because of the small
being constrained by the period of disbursing difference in price.
funds once a week. Through this scheme, they
cannot directly use the proceeds from sales, for
example, to buy supply products again.

The courier option is not automatically available for all stores

One promising feature of e-commerce is its strength to provide courier options. However, not all automatic
courier services are available to sellers. Some sellers claim that they have to get certain recommendations
to activate the instant courier feature. One of the conditions for recommendations is to increase sales. As
a result, they could only use regular couriers.

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 Features for custom made-products

SME products vary widely, requiring different features between products, especially for personal or cus-
tom products. Personal product business owners admit that they still have problems following up on
custom-made e-commerce platforms.

For example, a custom made product that requires a photo or image from the buyer. Buyers usually do
not automatically send photos as material for the production process, whereas the production duration
or delivery period provided from the platform is limited. The seller must return to repeat follow-up to the
buyer. Sometimes communication must be done outside the platform.

Preferences of E-commerce Usage

Free Shipping Promos

Most sellers consider using e-commerce based on strategies to get buyers, a free shipping promo. One of
the attractions offered by the online business is offering free shipping. Almost all e-commerce have used
this method to attract buyers. Indirectly, this proves that free postage promos are very effective in increas-
ing business sales. Sometimes, the shipping cost can be higher than the price of the item purchased.
By eliminating shipping costs, buyers automatically only need to pay the price of the goods they buy.
Eliminating shipping costs is the reason free postage promos are in great demand and can win the market.

Usually, online sellers will join a marketplace that offers free shipping. Even though this policy benefits
buyers and sellers, it does not mean that the promo is given away. Usually, free postage promos are given
with specific conditions, such as a minimum purchase.

Promo-advertorial feature
Each e-commerce platform has a strategy to attract consumers. Many sellers have benefited from the promo
features of this platform. The most obvious impact is the increase in transactions several times over. The
following are popular promos that are often used by sellers to attract consumers.

Regular Discounts
Regular discounts are the most common types of promos applied by online shops, marketplaces, and oth-
er e-commerce sites. Usually, this type of promo is marked by the initial price and final price (the price after
the discount) and a percentage of the deal. To get this promo, consumers don’t need to require specific
terms and conditions.

Thematic Discounts
Like regular discounts, thematic discount promos also offer discounts in the form of a percentage or deal
with a fixed value. The difference is, to get this discount, consumers must enter a unique code that usually
requests a voucher code, promo code, discount code, coupon, and others. Usually, consumers must input
this unique code when they are at the checkout or payment stage.

This promo requires terms and conditions in the form of customer status (new/old customers), minimum
price, minimum/maximum quantity, maximum discount, transaction time, etc.

Bank Promo/Payment Methods

Bank Promo/Payment Method Promo is a type of discount that only applies to customers who make
transactions through banks or specific payment methods. This type of deal is held by particular banks that
collaborate with the marketplace.

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 The 0% installments for Credit Cards
All credit cards do provide installment facilities for their customers or consumers. When a consumer makes
a purchase in a marketplace and chooses a payment method in the form of credit card installments, each
month, the consumer will receive a credit card bill equal to the price of the product purchased divided by
the tenor, plus the monthly installment interest. The 0% installment promo will allow consumers to not pay
installment interest. This promo is useful, especially for purchasing products at relatively high prices.

Cashback
Cashback is a type of promo in the form of a discount that will usually be given through a virtual account
or e-payment from each e-commerce. This cashback can be used as a means of payment or a discount for
further purchases.

Free Shipping
Here are the types of promos that are being intensively implemented by several marketplaces in Indonesia.
Promo free shipping or free shipping does provide a unique attraction for consumers.

However, consumers usually must meet the terms and conditions applied by several marketplaces. The
terms and conditions are generally in the form of minimum purchase, the maximum area covered for free
shipping, maximum free shipping nominal, and others.

Point Reward
Point Reward is one way to bind consumers. By giving points, the purpose is so that consumers will be
enthusiastic about carrying out activities on specific e-commerce sites. Consumers can collect points that
can later be exchanged for discount coupons, shopping vouchers, and other bonuses.

Product Bonus
Product bonuses are a type of promo that allows consumers to get rewards in the form of free goods when
buying certain products.

Usually, this bonus is in the form of items related to the main product purchased. For example, free soft
cases for purchasing certain smartphones, free monopods for purchasing certain branded cameras, and
other accessories.

Attractive interface
User interface design is one consideration for sellers to choose a platform as an online business line. The
ease of interface determines the convenient interaction between a person with the website or application.
The user interface also defines whether website visitors or application users can navigate the website or
application easily.

A seller admitted to choosing a more straightforward appearance platform than the one with many features
but challenging to navigate. Sellers also consider the user interface appearance, display of advertising fea-
tures, seller and buyer notes, and ease of access to features.
Side accounts for employees
Some online sellers who have many transactions cannot rely on one person to operate the account. These
sellers also consider the side account feature for employees. For example, the owner’s main account is
used for operations and withdrawal of funds, while the side account is for employees specifically for ad-
ministration and operations.

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 Pro and Cons of E-commerce Platforms

Categories Tokopedia Shopee Bhinneka Bukalapak Lazada Blibli

Free Shipping Promo

COD services

Gamification

Merchant
levelling

Multi Payment

Product protection
(insurance)

Live shopping

B2B models

Cross border seller

1. Free shipping
Free shipping is one of the primary considerations for consumers to shop online today. Almost all e-com-
merce platforms have this promo. But, the system or conditions imposed are different on each platform.

Usually, this free shipping factor will take into account the weight of the goods, the buyer’s location, the
shipping service used to the minimum transaction value. Apart from weight, another parameter that is
often used is the dimensions of the goods. This parameter makes shipping costs usually more expensive.

2. Merchant levelling

• Seller
• Super Seller
• Regular Merchant
• Buka Mall
• Power Merchant
• Official Store
• Seller
• LazMall
• LazGlobal
• Seller
• Star Seller
• Seller • Star Seller+
• Top-rated Seller • Shopee Mall
• Official Store

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3. Product Keywords
One of the main features of online stores is product keywords. Some platforms allow sellers to redeem
product keywords, while other platforms cannot. The platform tends to give keyword restrictions following
the recommended keyword suggestions, so the seller cannot add anything else.

4. Product specialization for segments

It is undeniable that each e-commerce has its market segment over time. According to the seller’s ex-
planation, some e-commerce has its specialties and segments. It is starting from the type of product
for gender, age, to hobbies. Sellers can use this specialty to promote products, for example, by adjusting
product keywords that are often searched. Also, customize product store fronts in each e-commerce.

The Importance of Sellers’ Education Center

1. Sales insight for seller

The sellers’ education center service or feature already exists in almost every e-commerce. Each e-com-
merce has different content depending on what problem it is trying to solve.

In fact, not all sellers take benefit of this service. Interestingly, sellers who have used this service claim
to have benefited from several aspects. One of the e-commerce regularities provides a monthly sales
summary. The usual information given is total orders, income from the promos presented, the best-selling
products in the last few months.

Records from automated e-commerce are often more accurate and show a lot of sales insights. The seller
also uses these recapitulations for evaluation materials and to create sales strategies. For example, in a
particular season, some products experience an increase in demand. In the future, the store or seller will
prepare more products for such a season.

2. Valid information
The seller’s information and education center is the most important reference for sellers to get valid infor-
mation. For example, for feature launching, the seller can be the one who benefits the most or loses the
most when there are new features. E-commerce uses this information center to receive feedback from
sellers and anticipate unwanted things.

3. Seller guide
New e-commerce users are often confused about how to look or activate features to support buying and
selling. These sellers find it helpful if the e-commerce platform provides assistance to use the feature.
Both in the form of articles to video tutorials.

Expectation

1. Collaboration with more expeditions

Indonesia’s geographic condition is one of the challenges faced by business owners, as well as on-
line-based business owners. Their business depends entirely on logistical roles, including expedition.
Frequently, the sellers get bad ratings because of expedition mistakes.

Some food products often do not arrive on time. The ordered food will be wasted. Electronic goods are
damaged apart from not being adequately packaged as well as not being appropriately treated according
to the type of goods by the expedition or courier. Both sellers and buyers consider delays, damage to
goods, courier behavior, and product safety.

Sellers also expect e-commerce to do more collaboration with expeditions. Given that currently, buyers
can choose shipping services in e-commerce, they can have more expediting options. The option is also
beneficial for the seller because the more competition, each expedition will improve their service.

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2. Specific promo for specific products
E-commerce often presents great promos at certain moments. The strategy indirectly opens opportuni-
ties for potential buyers to visit stores that use these promos. E-commerce needs to develop advanced
marketing strategies to retain buyers or attract potential buyers who are already aware of certain products.

An example is a campaign to shop for local products. E-commerce parties can recommend sellers with
a variety of products that have the potential to attract customers. This event can be done regularly with
different seller recommendations in each period of the campaign.

3. Implementation of store statistics

As online sellers are familiar with the digital environment, they often begin to understand sales statistics.
E-commerce sellers claim that they often use their sales statistics for further sales insights. In the future,
they want more advanced sales statistics that can be processed automatically by the platform and direct-
ly implemented in their store displays.

For example, Store A is getting 5x sales this month for product A, while Store B is getting 5x sales this
month for product B. They hope this insight can be shown in their online storefront as part of marketing
based statistical results.

4. Collaboration recommendations with fellow sellers

Along with the increasing number of local SMEs that create their products, the potential for collaboration
between business players becomes possible. In the discussion session, online sellers admitted that they
were very open to collaborating with fellow sellers. They expect that the e-commerce platform can provide
a collaborative space or bring together these sellers.

For example, a seller who opens a design service collaborates with a seller who produces fashion such
as clothes or other accessories. Furthermore, e-commerce parties can place an impressive storefront for
these collaboration products. This scheme can be an effective way of acquiring one another’s customers.

5. “Seller-transfer” feature to replace products sold

This case can happen when a popular product in a store is sold while still having enthusiasts. For exam-
ple, seller A has run out of goods. The platform will automatically transfer to seller B, who has the same
product. If there is a price difference, it will be charged to the relevant platform. The scheme is profitable
for all parties, consumer and seller A do not experience canceling the product, and seller B gets orders.

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03
Driving Business
Landscape on
E-commerce Ecosystem

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03.
Driving Business Landscape
on E-commerce Ecosystem
This section will explore e-commerce players starting from their business profiles, their innovation to drive
business landscape, to know the economic and social impact of e-commerce, and pandemic issues from
e-commerce players’ viewpoint.

A. Business Profiles as E-commerce Players

Blibli was founded in 2011 under the auspices of access to the internet, and those who want to shop
PT Global Digital Niaga, a member of Djarum. Blibli online and pay online.
services started with a focus on providing the best
service to sellers and customers. This year Blibli Until now, the market is in Java Island, especially
will focus on getting more inventory to blibli.com. Jakarta and its surroundings. The center is the city
of Jakarta, that’s where the density of our custom-
Blibli’s target market is anyone who has a gad- ers and sellers. However, there are second-tier ur-
get, access to the internet, and willingness to ban pockets, big cities outside Java. About 80% of
purchase online. There are slightly more male businesses originate from Java, and 20% of other
customers than females, around 52-53%, and the businesses come from outside Java. Outside Java,
target market is about 25 to 45 years. So, those Blibli has 20 warehouses spread across the country
who have jobs, plan income, are tech-savvy have to reach more than 90 percent of the population.

Tokopedia was founded by William Tanuwijaya and Tokopedia now has four business lines: (1)
Leontinus Alpha Edison in 2009. Both William and Marketplaces and digital products - a free C2C busi-
Leon acknowledged the vicious cycle of urbaniza- ness platform for merchants and buyers as well as
tion. People in smaller cities have limited access official stores of national and international brands
to product selection and need to pay a higher price that opened their online channels. The company
than people in big cities. Hence, they tend to move also has 42 digital products ranging from phone
to bigger cities to look for better economic oppor- credit, bills, tax payment, etc; (2) Financial technol-
tunities. Without realizing it, urbanization brings ogy and payment - digital wallet, investments, mer-
execrable impacts on the destination city. Jakarta, chant loans, virtual credit card, insurance and pro-
for example, is one of the cities in the world that tection products, etc; (3) Logistics and fulfillment
has the highest level of pollution in recent years. - an integrated fulfillment and logistics system for
Tokopedia believes that development must begin users to choose from, and (4) Mitra Tokopedia - an
in villages that offer tremendous space for growth. O2O shopping platform for mom-and-pop stores
Therefore, Tokopedia has committed to putting that provide technology for reselling digital goods
Indonesia as its first and principal market due to the and for sourcing inventories. Mitra Tokopedia has
country’s enormous potential. served millions of Indonesians and spread across
500 cities and districts in Indonesia.

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Blibli’s business model consists of B2B, B2C, and B2B2C. The scheme is via O2O, offline to online, online
to offline. Blibli.com website generally for B2C schemes. Most sellers are professionals, and some are
C2C sellers, whom we consider to be casual sellers. Blibli’s B2B2C system provides third-party logistics,
warehouse pick-up, and packaging services, and delivery to any seller.

Blibli charges B2B, B2C, and C2C sellers to serve these logistical needs, between 2-8% of the transaction
value. However, new sellers who join are given special offers with no or 0% commission for up to six months.

Lazada Group is a Southeast Asian e-commerce In 2018 Lazada launched LazMall. Lazada custom-
company founded by Rocket Internet and Pierre ers consist of 2 primary groups: brands and sellers,
Poignant in 2012 and is owned by the Alibaba the brand referred to here is corporate in the form of
Group. In 2014, the Lazada Group operated sites local brands and international brands, and the seller
in Indonesia, Malaysia, the Philippines, Singapore, is MSMEs.
Thailand, and Vietnam.
Lazada customers are currently in all tiers from
In 2012, by adopting Alibaba’s 11.11, Lazada Sabang to Merauke. Only, the majority are in cities
became the pioneer and initiator of Harbolnas, with high-quality internet support. The business
which other e-commerce companies followed. model is LazMall from big brands with official
Then, other e-commerce created a Harbolnas stores. Next is the marketplace consisting of sellers
campaign in 2012. In 2013 Lazada activated mo- or MSMEs. Also, LazGlobal is a cross-border busi-
bile apps. Most of the business capital was still ness assortment from Alibaba Network. And there
retail, especially in the electronics sector. Then is Lazada Logistic, end-to-end services from fulfill-
Lazada launched the marketplace in 2014. The ment to delivery, Lazada Express.
logistics operation is Lazada Logistik and Lazada
Express, which was established in 2015. In 2016
Lazada became part of the Alibaba group. Since
then, its development became very fast because
there was technical support.

PT Bhinneka Mentari Dimensi or Bhinneka was Digital products began in 2020 as basic IT solutions.
launched in 1993 and chose information technolo- The products are more or less like digital products,
gy as its core business. Their main focus is the dis- training, education, online-based, then products to
tribution of IT products such as PC Build Up and PC automate work processes repeated continuously
Compatible, Peripherals, network service software with robots’ help.
design, video editing solutions to service centers,
part of the distribution and retail category. Market customers are in their productive age at
25 to 45; most of the purchasing is made by near-
For the past two decades, Bhinneka has been ly 70% male. So far, the bucket size at Bhinneka is
known to be in this vertical mall with B2C and B2B also quite large, around 700 thousand rupiahs to 1
schemes. The majority has entered B2B. At the million rupiahs. The majority of area coverage is still
end of 2019, the Bhinneka B2B platform became in Java and Bali, and several big cities outside Java.
a marketplace. Initially, they served as product dis- Bhinneka also serves the government, at least in 34
tribution services and selling retail products. Now provinces in Indonesia.
they also provide digital products.

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Bukalapak was founded on January 10, 2010, with want to pay taxes, previously they had to go to the
the initial mission of providing opportunities for tax office to purchase it in Bukalapak. Many ser-
MSMEs to trade well. In more detail, we have a vices are also available such as paying electricity,
mission, namely a fair economy for all. There are pulses, taxes, BPJS, loans money, mutual funds,
many barriers that Bukalapak is trying to handle. and gold investment. Users can do everything
First, people who have more capital are usually through the application.
more likely than those with small capital. They
have an early chance to build a business. A relatively large and quite successful innovation
was to create a Bukalapak partner application in
Second, Bukalapak sees that Indonesia is a vast 2017. In this application seller, users can order vari-
country. There is an issue of access for people ous things such as product supplies. They have the
who do not live in commercial centers. Third, in opportunity to run the business flexibly.
terms of technology and infrastructure, primarily
finance. People with access to financial services From the start, Bukalapak’s mindset was that they
likely have more advantages than those who ha- wanted to serve MSMEs to serve underserved peo-
ven’t. For example, accounts and digital money ple. Mass market with a focus so that MSMEs can
are more profitable than people who only have compete, and advance in class and automatic buy-
physical money. ers are people who shop at MSMEs.

So, the solution offered for this problem is the on- In terms of geography, around 70% of transactions
line market. This online market does not have a occur in big cities, Jakarta, Surabaya, Bandung,
dichotomy of the fundamental difference between Semarang, and Medan. From the partner side,
people who have the capital or not, official events Bukalapak has covered all of Indonesia. Most of
or non-official stores to access the same traffic. them are in Java, about two-thirds.
The difference is seen by organizing their stalls in
photos, descriptions, administration, and reason- In general, almost all Bukalapak sellers are MSMEs.
able responses. They were divided into Buka Mall and a regular
merchant. Open a mall for more established busi-
Second, in terms of location, merchants in villag- nesses, of very minority, most of which are micro or
es or cities have the same market access. From small business owners.
a geographical point of view, for example, people

PT Shopee International Indonesia (Shopee) is Shopee has programs for Shopee’s sellers. One of
managed by the Garena Group, which has now these programs is Shopee University, which held its
changed its name to SEA Group. It has reached first session in Taiwan, in December 2015. Around
Southeast Asia and Taiwan. In 2015, Shopee 70,000 sellers across all markets have benefited
was launched in Singapore, Indonesia, Malaysia, from these sessions. IIn June 2017, they launched
Thailand, Taiwan, Vietnam, and the Philippines. Shopee Mall, a specific platform that displays thou-
sands of products from top brands and retailers
Shopee believes in the transformative power of exclusively. It was launched in Taiwan. At present,
technology and wants to change the world for the Shopee has more than 11,000 sellers in 7 markets.
better by providing a platform to connect buyers
and sellers within one community. To internet us-
ers across the region, Shopee offers a one-stop
online shopping experience that provides a wide
selection of products, a social community for ex-
ploration, and seamless fulfillment services.

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B. Business Innovations in E-commerce

Robert Luo, CCO of Blibli, said Blibli already has many during campaign/flash sale, and many more. There is
innovations. First, an end to end supply chain, which in- also specific training conducted by Alibaba (such as
cludes warehouses, inventory management, and own Taobao’s sellers). By curated sellers (who are ready
delivery service. The goal is to ensure buyers get the to level up the business), Lazada sends its sellers
product quickly. It also has a reverse logistic, which to spend 1-2 weeks training at Alibaba Campus.
means if customers purchase something on Blibli and Moreover, Lazada also provides seller center apps.
they are not happy with the product, they can return it. It includes many features to promote seller stores
Then Blibli’s own courier will pick it up the next day, and to buyers (such as ads) and data analytics.
buyers do not have to pay for shipping. Second, to facil-
itate communication between buyers and sellers, Blibli Lazada introduced the “shoppertainment” concept,
provides an online chat feature. The purpose is to help which combines online retail and entertainment
buyers get more information about the product (apart through live streaming capabilities within the ap-
from inventory availability), such as products, weights, plication (in-app). It also developed various gamifi-
colors, etc. cation wrapped in marketing promos to encourage
consumers to feel at home for a long time on the
Third, Click & Collect, an O2O service, which has con- application. Then there is also a product search with
cepts such as customers order the products from photos to make it easier to purchase goods. From
Blibli’s platform then they pick up the products from the fintech side, Lazada released the e-wallet “Lazada
a store (such as the convenience store, coffee shops, Credit” in collaboration with Dana as an alternative
and restaurant), so customers no need to pay for the payment method. Lazada Credit can be topped up
shipping fee. Lastly, Blibli has a free shipping policy in with a maximum nominal value of Rp 2 million.
Indonesia, which means if customers buy Rp 50,000
worth of items, they will get a Rp 20,000 discount on Vensia Tjhin, Bhinneka’s Chief of Commercial &
the shipping fee, and sometimes when the shipping fee Omnichannel, said Bhinneka succeeded in creating
is so cheap, buyers get the shipping for free. a procurement process for all businesses, which
normally only large companies can experience, be-
Anthony, Tokopedia’s Chief of Staff, shared that cause e-Procurement spending such as spending
Tokopedia provides features to support sellers to on applications, spending billions for software, so
manage and develop their business, seller dash- sometimes business people still have to think to
board which includes comprehensive information re- do it. In general, the most common businesses pur-
garding sales insights, the current market condition, chasing accounting software. Through Bhinneka,
trending items in the market, the pricing strategy, the they are able to do procurement for free. Bhinneka
recommendations from Tokopedia to improve sell- has intangible products and has a real transaction
er’s sales. In addition, Tokopedia developed a feature business. For example, Bhinneka sells professional
called TokoCabang. services products (such as training classes), where
transactions are carried out in real terms, not only in
Logistics and distribution are some of e-commerce’s the form of vouchers.
most significant challenges in Indonesia as an ar-
chipelago country. Tokopedia set up fulfillment cen- One of Bukalapak’s significant innovations is the
ters across the country to respond to this challenge, Mitra Bukalapak, launched in 2017. The principle of
enabling sellers to expand their market reach by this application is an application for stalls, so it is
consigning their products in the fulfillment centers an application for sellers who can do various things
in areas where demand is high. TokoCabang is now such as being able to order goods, so there is no
available in 6 cities, which are Jakarta, Bandung, need to close the shop if the goods run out, to give
Surabaya, Medan, Palembang, and Makassar. Beside time and distribution. Then able to do all the virtu-
that, Tokopedia facilitates financial technology ser- al product capabilities, which Bukalapak facilitates
vices for its sellers allowing starting sellers to have sellers to help their neighbors who previously may
capital access to grow their businesses. not have a digital currency, so now they can connect
through stalls. So their neighbors do not need to go
Chief Marketing Officer of Lazada Indonesia, Monika to the post office and just come to the nearest Mitra
Rudijono, shared one of Lazada’s innovations is Lazada Bukalapak. In addition, Bukalapak also provides a
University and Lazada Club. The purpose is to accom- feature to send money, so Bukalapak partners can
modate the seller community to share knowledge and do basic banking, which people who want simple
get free training about maximizing social media in-store banking transactions can do in a shop.
sales at Lazada, financial management, sales strategy

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To increase the number of sellers, Bukalapak developed several innovations, said Rachmat Kaimuddin, CEO of
Bukalapak. First, Bukalapak as a market manager, ensures its platform is reliable and reputable by managing
transactions to occur safely. Second, Bukalapak must have a good logistics infrastructure by partnerships with
dozens of logistics providers, so sellers can choose logistics that are considered good.

Third, in terms of payment capabilities, sellers at Bukalapak can receive reliably. In addition, Bukalapak also pro-
vides training and advanced classes for newbie sellers. They are taught how to use the platform in the classes.
Bukalapak also created a seller community, which has currently reached 142 seller communities. Bukalapak
tries to create activities for them, so sellers can exchange knowledge. Bukalapak considers the sellers as a
family where they are Bukalapak’s ambassadors and Bukalapak’s biggest critics because sometimes they know
Bukalapak better than themselves.

C. Economic and Social Impact from E-commerce Existence

Research from LPEM FEB UI in 2020 noted that 7 to pay, such as bank transfer, credit card, cash on
out of 10 business actors in Tokopedia experienced delivery (COD), they could even do cash and do
an increase in sales volume with a median of 133%. click and collect pickup. So, Blibli made it much
The study revealed three provinces with the highest easier for customers to shop, compare and edu-
increase in sales of business actors in Tokopedia, cate themselves about things before buying. Blibli
NTB (144.6%), Central Sulawesi (73.4%), and South makes customers smarter and savvier.
Sulawesi (73.3%). Meanwhile, the three provinces with
the highest increase in the number of business actors “The existence of e-commerce shows the improve-
in Tokopedia during the pandemic were Bali (66.2%), ment of digital businesses. Besides, by doing on-
Yogyakarta (42.2%), and DKI Jakarta (28.3%). line shopping in e-commerce, it gives efficiency
both for cost and time. And it also opens new jobs
Head of LPEM FEB UI, Riatu Mariatul Qibthiyyah, for more people,” Vensia Tjhin, Chief of Commercial
explained, “As much as 68.6% of sellers who joined Omni Channel of Bhinneka, said.
Tokopedia during the pandemic were the sole bread-
winners in the family.” 76.4% of sellers said that the The economic impact from Bukalapak sellers is
ease of managing their business was the main rea- the existence of Mitra Bukalapak (stall owner),
son for joining Tokopedia. During the pandemic, 90% which indirectly became Bukalapak’s agent. Mitra
of micro-scale sellers were on Tokopedia. Tokopedia’s Bukalapak who previously had distributors such
Director of Public Policy and Government Relations, as aqua, shampoo, etc, are now able to start sell-
Astri Wahyuni, said, “Tokopedia’s internal data re- ing goods at the Bukalapak marketplace. They are
vealed there is an increase in the number of sellers able to start selling clothes, accessories to their
from 7.2 million before the January 2020 pandemic neighbors too. Even though they do not have a dig-
to more than 10 million sellers today.” ital currency, people can connect to e-commerce.
Bukalapak has a quite different mindset, if usually
“The economic and social impact of e-commerce is other e-commerces do promos, but Bukalapak re-
phenomenal”, Robert Luo, CCO of Blibli, said. From alizes that many people do not have digital curren-
the seller side, e-commerce has created millions of cy yet. Hence, Bukalapak gives the opportunity to
entrepreneurs, so when people do not have enough connect shops to applications.
money to rent a storefront, pay the landlord the rent
deposit, and put inventory in the store, renovate the The socioeconomic side of e-commerce existence
store, and do offline advertising to pull traffic into the is feasible. Bukalapak sees that it’s growing but
store, people almost always have enough money to cannot measure it precisely, and any people need
open up a digital store. Anyone can do online sell- the service. Previously, e-commerce may have
ing as long as they have entrepreneurial ambition. been viewed as complex and skeptical. But during
People just need to have an eye for products, have the pandemic, Indonesia needs e-commerce.
a good sense of price, care about customers and Bukalapak almost reached 13 million MSMEs.
get items shipped and packed right away and pro- Last year there were still 9 million MSMEs online
vide good post-sale service. In Indonesia, millions of and offline. So there is a surge of people wanting
people have been doing this as a full-time job. From to become sellers and partners of Bukalapak for
the buyer side, customers are able to find everything many reasons.
they want to buy at a good price, so Blibli brings
e-commerce platform, bring information at the tip
of the fingertips, to compare quality features and
prices, and Blibli give them so many different ways

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D. Pandemic Issues
Robert Luo, CCO of Blibli, stated it saw three product In Lazada, they also see an acceleration in this pan-
categories that had increased demand in this pan- demic era. Lazada focuses on corporations’ foun-
demic period. Health and beauty products, grocery dation, including optimizing technology, ensuring its
items, fast-moving consumer goods have increased platform and logistic systems’ safety.
significantly. Besides that, Blibli also saw sports
products, especially indoor exercise equipment, yoga “It is proven that at the time of the pandemic, where
mats, exercise clothing, yoga outfits sales take off. For there was a surge in terms of sellers and customers,
example, for about 2-3 months stores were frequently Lazada had a distraction and then came up with a
out of stock on masks, because people had to start strong foundation. It was advantageous,” Monika
wearing masks to prevent the spread of Covid-19. Rudijono, CMO of Lazada Indonesia, said.
So, that’s a big part of what Blibli sells because of the
pandemic situation. Besides that, Blibli also controls Vensia Tjhin, Bhinneka’s Chief of Commercial &
the unreasonably high price for the products (such Omnichannel, shared, because of this pandemic
as masks, hand sanitizer, hand wash, etc) issues the period, as long as the increase of shopping online,
seller’s warning to not do that. Bhinneka as a place to purchase the corporate
needs also had increased sales. So people are more
Anthony, Tokopedia’s Chief of Staff, said, “Despite the aware of where to buy online for e-procurement of
challenges, the pandemic has brought ample opportu- their company.
nities, shaped a generation of transformation, and ac-
celerated digital adoption faster than ever.” According “Bukalapak is trying to continue operations in this
to Tokopedia, several categories experience a spike in pandemic period.” Rachmat Kaimuddin, Bukalapak’s
demand during the Covid-19, such as food & bever- CEO, said. Bukalapak is upgrading its platform,
age, health, home & living, and electronics & gadgets. because there will be many new customers, so it
needs to be improved. Then from the merchant
Anthony said that the company’s role in providing a side, there are more merchants selling health-relat-
digital platform for businesses has been crucial in ed. Buyers are looking cheaper products due to the
this difficult time, and it is committed to ensuring that economic recession. Bukalapak is trying to educate
Indonesians can meet their needs without leaving merchants too. In addition, Bukalapak also edu-
their houses, maintaining the business continuity of cates merchants about trending items. Bukalapak
our sellers, while also contributing to the recovery of strengthens the operation so that it can be more ef-
the Indonesian economy. fective. They focuses on products that most people
are looking for so that customers can get what they
are looking for.

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04 The Future
of E-commerce

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04.
The Future of E-commerce
A. Business Plans from E-commerce Players

Technology improvisation
In 2021, Blibli plans to use AI big data and machine derstand seller and customer needs, as well as
learning to personalize the shopping experience bet- technology by creating a smart algorithm, Artificial
ter. If people were to come to the Blibli platform, it Intelligence, to improve Lazada’s customer experi-
would show the products on the first page that people ence by delivering products to customers.
will be interested in personally, stated by the CCO of
Blibli, Robert Luo. CEO of Bukalapak, Rachmat Kaimuddin, shared
Bukalapak will continue to improve the platform’s
Anthony, Chief of Staff at Tokopedia, added that the quality as one of their future strategies. Bukalapak
company would be beneficial for everyone and every is also focused on the increasing number of new
business owner to become a ‘technology enterprise’ products and services that are people need. In ad-
to be relevant as time progresses. In terms of innova- dition, Bukalapak is also focused on streamlining
tions, data analytics, machine learning, and artificial its operations. Currently, Bukalapak is in discussion
intelligence will continue to become some of the tech- with Microsoft to update the technology required
nologies that the company will be highlighting, en- by Bukalapak.
abling Tokopedia as an AI-first technology company.
Bhinneka plans to add more features to the platform.
As a company that stands in the vision of innovation, Bhinneka also intends to launch more products
technological improvisation is an absolute projection that are suitable to people’s habits or behavior. In
for all e-commerce players. CMO Lazada Indonesia, 2020, Bhinneka launched Thermonex, an automatic
Monika Rudijono, shared that Lazada will focus on a body temperature gauge needed in this pandemic
few things in the future. First, LazMall is a shopping period, said Vensia Tjhin, Chief of Commercial &
mall destination. Second, invest more in data to un- Omnichannel of Bhinneka.

Broadening the Indonesian digital economic ecosystem

The vast geographical condition of Indonesia is still Anthony, Chief of Staff at Tokopedia, said that
one of the considerations for market expansion. Tokopedia will stay focused on serving the
Blibli’s O2O services have two ways to reach people Indonesian market in the coming years. The com-
outside Java island. First, open up a warehouse at the pany will continue to build bridges through their
next population density or the next target market to Super Ecosystem vision, by utilizing collaboration
service within 25 km of the city center. Second, recruit and synergy with strategic partners, as well as stay-
a local seller in that 2nd tier or 3rd tier city that can ship ing consistent with their vision to help more people
directly to the customer without going through Blibli’s in Indonesia.
warehouse. Blibli also provides an affordable delivery
fee for customers who want to purchase products Lazada plans to invest in logistic solutions. Lazada
from international sellers who sell unique or branded ensures customers and continuously gives the
products not available in Indonesia. Blibli plans to take power to grow local businesses, significantly to
the millions of Mitra’s offline and mom-and-pop stores help them achieve a new digital transformation lev-
(such as Grab Kios) and digitize them by opening up el to be in the domestic, regional, and global market.
a virtual store and delivering the products within 25
kilometers of where they operate.

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B. Business Plans from VC
According to the startup funding records throughout 2019, e-commerce was ranked 3rd, in attracting in-
vestors. As of December 18, 2019, the DSResearch team recorded 110 funding transactions announced by
Indonesian startups and investors. The financial sector gets the most extensive portion with 23 transactions,
SaaS (9), e-commerce (8), and logistics (6).

Figure 09. Indonesian Startup Funding in 2019 Based on Business vertical Funding

Transaction 0 5 10 15 20

Advertising 1

Agribusiness 3

Artificial Intelligence 5

Car Market Place 4

Coworking Space 2

E-commerce 8
Education 4

Financial 23

Food 1

Game Studio 2

Health 2

Hospitalithy 5

Insurance 1

Investment 3

Job Market Place 3

Lawtech 1

Logistic 6

Loyalty 2

Neew Retail 5

On-Demand 5

Online Media 5

Property 1

Rental Market Place 2

Ride-Hailing 1

SaaS 9

Smart City 2

Travel 1

Wellness 3

Total : 111 Source: Dailysocial

According to Statista cited from 99firms, India and During the interview with McKinsey, Draper Fisher
Indonesia are expected to be the fastest growing Jurvetson partner Steve Jurvetson reveals Venture
countries in retail e-commerce between 2018 and Capital minds while looking for investment. As a ven-
2022. Several factors like cheaper smartphones and ture capitalist, he stated that he likes to invest in en-
Internet subscription plans, improvement in infra- trepreneurs with this infectious enthusiasm. Usually,
structure, increasing spending power, and growing this has to be in some sector of the economy that we
comfort with online payments are playing role for this feel will experience rapid growth, that’s in a period of
tremendous growth. Indonesia will come a close sec- massive disruptive change.
ond with a CAGR of 17.7%, followed by South Africa,
Mexico, Turkey, and China.
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Broad market potential
The growing e-commerce industry has produced several startup unicorns with a valuation above $1 bil-
lion (Rp15 trillion). Local digital or e-commerce businesses, including Tokopedia and Bukalapak. Foreign
e-commerce players also pave their way in the Indonesian market.

The growth of e-commerce still potentially increases, given these trends below. The higher the internet
penetration in an area, the more e-commerce accesses will be. Java and Sumatra have better internet
infrastructure and services as well as larger populations. This factor is a significant contributor to traffic to
e-commerce sites.

Figure 10. Comparison of internet and e-commerce penetration

Internet Penetration
E-commerce Penetration
Source: Katadata

60.0%

40.0%

20.0%

Jawa Sumatera Bali and Nusa Kalimantan Sulawesi Maluku and

Tenggara Papua

With great potential, e-commerce becomes one of the sectors that the government relies on to sustain eco-
nomic growth and promote equity. In 2019, the government issued Presidential Decree No. 74/2017 regard-
ing the Roadmap for the Electronic-Based National Trade System for 2017-2019, the e-commerce roadmap.
The regulation will enhance a legal basis for accelerating and developing an electronic-based national trading
system: internet infrastructure and networks, mobile applications, and logistics systems. It will drive VCs to
invest in the e-commerce industry

Investing in startups in the e-commerce ecosystem

E-commerce transactions are currently centered in Logistic players and other e-commerce ecosys-
Java and Sumatra. The seller’s existence is heavily con- tems are one of the investment targets in the fu-
centrated in Java, specifically Jabodetabek and several ture. The concern is, along with the growth of this
big tier 1 cities. With the target market all over Indonesia, sector. It will increase efficiency and reduce logis-
this will be a significant challenge for sellers or even the tics costs. Pressing cost logistics will open new
broader e-commerce ecosystem. Especially in logistics market potentials, especially in areas that are still
or delivery, customers tend to receive products for a not optimally reached.
long time and are relatively expensive.
One of the targeted logistics sectors is a fulfillment
Alvin Evander, MDI Ventures’ GM of Corporate center. The fulfillment services could open ware-
Development, admitted that the company aspired to houses in Eastern Indonesia to set stock of products.
explore this potential. MDI Ventures, which is still part Indirectly, the logistics costs will be cheaper. Then,
of Telkom’s Corporate Venture Capital, also plays a the other startup potentially targeted are warehous-
role in advancing SMEs through the digital economy. ing and tracking to integrate shipments.

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Consideration of omnichannel strategy: combining online and offline
Technology is one of the main factors driving the digital economy. However, e-commerce players cannot over-
come the geographical constraints of an archipelago country like Indonesia instantly by relying on technology
and the internet. The combination of online roles and offline potential is still one of the strategies are looked at
by venture capitalists.

Raditya conveyed this as a Partner of Ventura Discovery. In his observation, e-commerce currently still has a
different shopping experience dichotomy. Sometimes online and offline services have significant differences.

“So I think there should be a lot more product development to offer seamless whole two experiences in the form
of store digitalization and AR technology tools to help the solution channel sell better.”

David Gowdey, as Managing Partner Jungle Ventures, also conveyed the same thing. The omnichannel
strategy will benefit as a physical location for a direct-to-consumer brand. Big brand e-commerce such as
Shopee, Lazada, and Tokopedia, might not need those kinds of physical stores. The physical location adds
credibility to the brand, especially for the direct-to-consumer brand whose still trying to build the brand out.

It allows the products to have some physical touchpoints with consumers, which is also really important. An
example is Pomelo as a fashion company in Bangkok. They’ve done it effectively.

They’ve created small concept stores, and so the customer can buy something online and then have it de-
livered to another small store, which is probably close to the customer’s office or home. They allowed the
customer to stop and try it on the products. If they like the products, they can take them away. If they don’t
like it, they could leave it behind. They could try it the first time and not deliver something to their house has
been a very effective strategy.

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