Indonesian e-commerce players crossed major milestones in 2020.
Most significantly, the Gross Merchandise Value (GMV) of major players grew 91% year-on-year to $40.1 billion last year, according to Momentum Works research recent study on Indonesian e-commerce.
E-commerce as a share of overall retail rose to 20% — a historical high. This is a major leap from 2016’s share of 2% of the $129.1 billion retail market.
Jianggan Li, founder and CEO at Momentum Works said the gap between tier 1, tier 2, and tier 3 e-commerce players is widening.
Shopee, part of NYSE-listed Sea Group, and homegrown Tokopedia comprise tier-1. With a GMV of $14.2 billion, Shopee is gaining traction and overtook local champion Tokopedia in 2020.
Local player Bukalapak and Alibaba’s Lazada form the second tier. Lazada and the IPO-bound marketplace Bukalapak recorded $4.5 billion and $3 billion of GMV respectively.
Djarum group-backed Blibli and JD.id, a joint venture between China’s JD and Indonesia’s Provident Fund, came in the third tier.
“The widening gap will potentially open a consolidation among the second tier and third tier platforms, but not the first tier platforms. However, the GMV growth will eventually slow down. Higher transaction volume is opening up opportunities to more business models around the ecosystem, including logistics, digital finance, fresh groceries, on-demand fulfilment, and new consumer brands,” Li said.
The investment in online retail, including e-commerce, grew more than 50 times between 2013 and 2020. Meanwhile, the funding to e-commerce enabled sectors, such as logistics, and payments, also started to pick up in 2018, and investment in logistics has remained steady. In 2020, investors tested new online retail models, such as social commerce and community group buying.
Alibaba, a common shareholder
One interesting point is Chinese giant Alibaba’s stake in Indonesian e-commerce players including GoTo Group.
In GoTo, the newly merged entity of Gojek and Tokopedia, Alibaba holds 12.6%.
Alibaba’s Ant Group through API (Hong Kong) Investment Limited holds 17.4% stakes in Bukalapak. Lazada is fully-owned by Alibaba. Ant Group also invested in a consumer finance loan company, Akulaku, which also has an e-commerce business.
Nevertheless, Li doesn’t see Alibaba becoming a winner in the market as the group doesn’t own the majority stakes in certain companies. “I think if Alibaba makes a consistent strategy and finds ways to bring different parts together, there could be an interesting strategy but that can be a bit difficult, as the group is in different companies with different co-shareholders,” Li said.
The merger between Tokopedia and Gojek into GoTo will create excitement, but the public is still waiting for the synergy that GoTo can create.
Meanwhile, Gojek’s arch-rival Grab might take a different focus, which is on-demand business such as food delivery and goods delivery, rather than having an e-commerce business that will burn cash. Meanwhile, Li said, Shopee can still manage to clock stable e-commerce growth.