E - Commerce: A Rapidly Growing Baby  

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  • TEMPO.CO, Jakarta - Online market sites often drive Savitri Amir crazy in her search for bargains, especially on occasions like the National Online Shopping Day. On Tuesday two weeks ago, she shopped on Lazada and Shopee because of the promotions they were offering. Both e-commerce platforms offer more than just free delivery: Lazada, for instance, gave additional 20 percent-discounts on particular brands. "Shopee had flash sales 11 times a day," said Savitri, who has two accounts there. A flash sale is a brief discount or promotion on items.

    As with Savitri, Irvindya Irawan also did not let the National Online Shopping Day pass her by. The employee of a South Jakarta agency bought an eyeliner gel City Color brand pencil for Rp60,000 at Lazada. "I wanted to buy it while they had free delivery, even though I got no discount," she said two weeks ago. Out of the dozens of applications and online market sites available, Irvindya prefers to browse at Lazada, Sociolla, and Tokopedia.

    The 25-year-old admitted she often shops online. "At least twice a month," she revealed. Apart from getting lazier about physically going to a shop, she gets more pleasure from the packages arriving at her home or office. "From buying make-up and skin care products, to earphones to other random things, like curry leaves to make salted egg sauce."

    Flooding consumers with discount and promotion offers are often-used tools of e-commerce businesses to increase the number of online transactions. The National Development Planning Agency (Bappenas) noted that almost 25 million people shopped online last year, achieving a market penetration of nine percent. The total value of these transactions was US$5.6 billion, or around Rp75 trillion. "The e-commerce business is growing rapidly, although it is still quite small," Bappenas Head Bambang Brodjonegoro said recently.

    Slowly but surely the digital industry is continuing to crawl forward. According to Google, investment in this field has increased significantly. In 2012, new investments amounted to US$40 million (around Rp500 billion). That number jumped to US$3 billion (around Rp40 trillion) by August this year. "The largest e-commerce growth is in Indonesia," Google sales & product operations and strategy manager for Southeast Asia, Mifza Muzayan, noted.

    Mifza says the e-commerce sector made up 58 percent of all investment in the digital industry. "This was followed by that in transportation, finance, payment, and other sectors," said Mifza, referring to the results of Google's survey of 25 foreign and local investors. He says Lazada, Blibli, Tokopedia, Bukalapak, and Shopee are the five largest players in this market segment. "A lot of money is needed in order to be in the big five."

    For players in the digital business, the e-commerce sector still leaves plenty of room for competition. "Just like a pie, warfare has yet to break out as the pie is still quite large," said A. T. Kearney consultancy manager Emmanuel Jefferson Kuesar. 

    Mifza says e-commerce is still far below saturation point as Indonesia now only has 11 million online retail consumers. "I predict that it will quadruple in the next five years."

    Read the full article in last week's edition of Tempo English Magazine