Amazon to enter Indonesian market, gets US$600M ready for its first year
idEA Chairman believes that local e-commerce players “stand no chance” to compete against the e-commerce giant
Indonesia E-commerce Association (idEA) Chairman Daniel Tumiwa said last Thursday that e-commerce giant Amazon is set to enter Indonesian market, as reported by Kontan.
“Amazon has announced that it will open an e-commerce [platform] in Indonesia. They will invest US$600 million for its first year here,” he said.
Though no other details, like an exact timeline, were mentioned, Tumiwa was certain that local e-commerce players, “stand no chance to win against” the company, as they have neither the resource nor the technology to compete with Amazon.
He further explained that Amazon has a certain pattern of using the first year of its operation in a country to determine whether or not they are going to stay in the market.
In some countries, Amazon is reported have succeeded in securing the top market position within that first one year. In India, it competes heavily with local players such as Flipkart and Snapdeal.
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“Flipkart was once the leader [of the market], but it lost 50 per cent of its market within one year,” Tumiwa explained.
Recently Amazon also invested extra US$3 billion to further strengthen its position in the Indian market.
Though the prospect seems gloomy for Indonesian competitors, it is important to note that it has not always been the case in every market. A great example would be China, which is dominated by local players such as Alibaba.
Amazon failed to champion the market and ended up leaving after one year.
As part of its e-commerce roadmap, Indonesia is opening up opportunities for foreign ownership of e-commerce companies of a certain value, while still keeping a closed door for small and medium enterprises.
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Image Credit: Teddy Kelley on Unsplash
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