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What Makes E-commerce Work in Indonesia?

From Wall Street Journal

By Resty Woro Yuniar
March 3, 2015

E-commerce companies in Indonesia have found a recipe for success by going after a growing pool of consumers with access to the Internet but not the brick and mortar shops selling what they want.

“E-commerce is growing because Indonesians are finding it increasingly easy to get online, and the offline stores have not been able to keep up with their demand,” said Susie Sugden, a co-founder of Vela Asia, a premium fashion e-commerce retailer that offers hard-to-find local and international brands, such as Lee Cooper and Jack Nicklaus.

The company recently received $1.5 million in investment funding from Singapore-based venture capital firm Majuven. The investment was one of dozens that have occurred in the Indonesian e-commerce sector over the past year, including the biggest so far in Indonesian ecommerce, a $100 million investment in Tokopedia by Japan’s Softbank and U.S.-based Sequoia Capital.

“E-commerce also offers more convenience,” said Kusumo Martanto, CEO of Blibli.com, a popular online business-to-consumer marketplace that plays on the Indonesian word for buy. Aside from the ability to shop from the comfort of home, most e-stores also offer round-the-clock customer care and various payment methods. Mr. Martanto says Blibli has partnered with 11 banks to offer more payment options for customers without credit cards. “And customers can exchange, refund, or return the purchase,” he said. Some physical stores won’t accept such transactions.

There are also plenty of opportunities for growth in Indonesia’s second- and third-tier cities, which still have few shopping malls – and thus, few brand options – when compared to the capital Jakarta, with more than 170 malls.

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