IN a warehouse on the outskirts of Indonesia’s capital, supervisors at e-commerce company Lazada use bikes or electric scooters to zip around a floor the size of four soccer fields, where up to 3,000 staff pack and dispatch goods around the clock. The warehouse is one of five that Lazada has opened across Indonesia to cut costs and expand its reach in an archipelago whose 17,000 islands are sprinkled across an area bigger than the European Union. Chinese tech firms, including Lazada’s top investor, Alibaba Group Holding, have poured at least US$6 billion into nearly every aspect of Indonesian e-commerce. Lazada uses Alibaba’s inventory management systems and has tied up with ride-hailing companies, often using their motorbikes to deliver goods in a country with creaking infrastructure and traffic-clogged cities. The payoff could be huge. It is a market forecast to grow from about US$7 billion last year to US$63 billion by 2027, according to Morgan Stanley. “Indonesia, both in terms of the customers and behavior, is a very unique challenge and we need to adapt,” said Florian Holm, co-chief executive at Lazada Indonesia. Lazada and Tokopedia, in which Alibaba is also an investor, dominate Indonesia in customer traffic, with more than 117 million monthly website visits each, according to data from e-commerce aggregator iPrice. Alibaba doubled its investment in loss-making Lazada to US$4 billion in April, underscoring its global ambition to secure a bigger share of the e-commerce market. Indonesia’s e-commerce sales are set to rise from 3 percent of retail activity now to 19 percent by 2027, Morgan Stanley estimates. The same report said there were 159 million smartphones in Indonesia at the end of 2016, a number that could rise to 275 million by 2021. That has attracted other Chinese companies. Tencent Holdings, which owns regional e-commerce player SEA, has entered the fray. Tencent and JD.com have stakes in Indonesia’s ride-hailing firm Go-Jek, while JD.com has invested in online travel company Traveloka.(SD-Agencies) |