mint: the new emerging markets: indonesia (2015)
TRANSCRIPT
MINT- The New Emerging Markets:
IndonesiaCBS 2015 Barcelona
October 29, 2015
www.intersticeconsulting.com
Agenda
I. Prospects for e-commerce in Indonesia
II. Comparing the relative opportunity
III. Advice on entering the Indonesian e-commerce market
I. Prospects for e-commerce in Indonesia
Indonesia’s place in the world
Some key facts
Source: populationpyramid.net
World’s 4th most populous country Archipelago > 18K islands Largest Muslim country Dutch colony from 1800-1945 Median age of 28 Population growth rate of 1% annually 44% of the population already live in cities
Major population centres
9.8 million
2.8 million
2.1 million
1.5 million
1.6 million2.4 million
Bandung .
One of the largest economies
Source: IMF
Some images of Jakarta
Some images of Jakarta
Some images of Jakarta
Retail sales
Source: AT Kearney
Retail sales declined slightly from $337 billion in 2013 to $326 billion last year Total retail sales area grew 14.5% as retailers continue to be drawn to Indonesia’s large population and growing middle class The government recently announced plans to invest a record $22 billion in infrastructure projects, which will help improve retail infrastructure
$326 billion in 2014
3.5% CAGR2011-2014
Major foreign retailers have arrived
Major foreign retailers such as The Body Shop, Uniqlo and Galeries Lafayette are drawn by the immense size of the Indonesian market However, AT Kearney research ranks Indonesia only 12th out of 30 emerging markets for retail friendliness Constraining factors include inefficient import processes, weak transport infrastructure, and
Indonesian and ASEAN Internet users
Source: UBS (2014)
Calculations of Internet users and penetration
State of online retail
Sources: SingPost, idEA, UBS
Of the roughly 75 million Internet users in Indonesia last year, around 5.9 million had shopped online
UBS Research on Indonesian e-commerce (2014) E-commerce conversion rate of 0.3% Average order value of US$23.31
The Indonesia E-commerce Association (idEA) estimates that e-commerce will triple from $8 billion in 2014 to $25 billion by 2016.
Factors underpinning e-commerce
“Leapfrogging” of bricks & mortar retailers
in the regions
Youthful population
Mobile and smartphone penetration
Intensive users of social media
Growing spending power
Indonesian market characteristics
Language
Popular social media platforms
Mobile
C2C e-commerce
Investment restrictions
State of online retail
Source: MarkPlus Insight
Indonesia’s “Cyber Monday”
OLX
Kaskus
Tokopedia
Blanja
Lazada
Rakuten
Zalora
JD
II. Comparing the relative
opportunity
Indonesia within MINT
GDP per capita in US$ at PPP (2014) $16,950 $10,517 $5,911 $19,226
GDP per capita in current US$ (2014) $10,230 $3,492 $3,203 $10,530
Total GDP in current US$ (2014) $1,282.7 billion $888.5 billion $568.5 billion $799.5 billion
Average GDP growth (2011-2014) 2.9% 5.7% 5.2% 4.5%
Sources: World Bank, populationpyramid.net
Indonesia within MINT
Source: World Bank
Household final consumption expenditure (annual % growth)
Indonesia within MINT
Source: World Bank
Household final consumption expenditure per capita (constant 2005 US$)
Indonesia and the wider ASEAN region
E-commerce market size
($ billion, 2013)
Indonesia and the wider ASEAN region
Source: UBS (2014)
Estimates of ASEAN market potential
Why Indonesia?Indonesia has the most immature online market in ASEAN, with only 31% internet penetration, but also has by far the largest population, leading shopping websites achieve 121m traffic hits per month currently, the largest in the region
Some more local competitors
Source: idEA
III. Advice on entering the Indonesian e-commerce
market
Adjust expectations to an emerging market mindset
Source: Presta E-Commerce, UBS
Typical e-commerce conversion rates:USA => 3%ASEAN => 0.3% - 1.6%
Marketplaces for customer acquisition
Work with established marketplaces to build brand recognition and leverage online consumers
As business grows, additional options to improve profitability and efficiency become feasible
Optimizing local storage and fulfillment Direct marketing to existing customers
Adapt to Indonesian consumers
Risk-averse and brand-loyal: 63% of Indonesian consumers only buy products from brands they already know (McKinsey).
Acutely price sensitive, driven by promotions and discounts
Value social and personal approach
Leighton Peter Prabhu Managing Partner [email protected] Twitter: lsp_prabhu Mob +65 8447 0069 (Singapore)
Contact information
Interstice Consulting provides market entry support to foreign enterprises expanding to Southeast Asia. Typical services include: company registration and administration, search for business partners, digital marketing strategy. Through our associated co-working project in Singapore, “The OutPost”, we also offer flexible office facilities to our clients.