Interview: William Tanuwijaya
How would you evaluate the performance of Indonesia’s e-commerce sector in 2018?
WILLIAM TANUWIJAYA: Indonesia’s e-commerce sector as a whole continued to grow in 2018, driven by increased internet penetration, growing consumer trust and greater popularity of technology platforms. Largely built on the trust that was developed with local communities, Tokopedia alone has increased their active monthly users, reaching 90m monthly active users in 2018. At the same time, the majority of platforms grew at a much higher scale and faster rate than in 2017. In addition, we are seeing more and more brick-and-mortar retailers leveraging e-commerce platforms to extend their channel exposure. Previously, small-scale retailers were only able to service a single city or a certain geographic region. Now, by contrast, they can have access to retailers across the nation. This is exactly why e-commerce is so pivotal in helping empower and enable brick-and-mortar retailers to achieve greater visibility and access.
Aside from Indonesia’s considerable consumer base, what are some of the principal growth drivers in the e-commerce segment?
TANUWIJAYA: The presence of technology platforms is certainly helping accelerate the development of Indonesia’s e-commerce market in terms of both supply and demand. Increasingly, Indonesian users have more options and greater financial access, further driving e-commerce growth in the country.
In terms of demographics, Indonesia is the fourth-most-populous nation in the world, with more than 260m people. It is also home to a very youthful, social and mobile-first demographic. Digital adoption and internet penetration is also spurred on by ever-cheaper smartphones and better network infrastructure through 4G and LTE.
However, the fact that Indonesia is an archipelagic nation with over 17,000 islands does pose a number of unique challenges. Ultimately, the responsibility falls on technology platforms to drive forward innovation that can overcome these obstacles and serve the market adequately. As our business ecosystem evolves and our infrastructure services improve, e-commerce platforms will introduce more innovations.
How are e-commerce players adjusting to the rise of second- and third-tier cities?
TANUWIJAYA: Some 15 Indonesian municipalities are set to be home to more than 1m inhabitants by 2025. Tokopedia’s mission to democratise commerce through technology is central to our strategy, and it is why we are excited about the growth of second and third-tier cities. Reaching these users may require a different strategy, however, as many of them are still offline or do not have bank accounts.
First, we are leveraging the fact that e-commerce is built on trust. This means having the best reach, data and technology to launch initiatives to build and extend awareness and trust. Recent initiatives include the launching of offline centres, which serve to educate the public about e-commerce platforms and online shopping in general. Second, multi-city festivals have been initiated all over Indonesia to showcase the work of local makers. This is helping them to scale to the next level and thereby boost the production and distribution of local products.
With Indonesia’s e-commerce market expected to grow to some $63bn by 2027, what is your outlook in terms of competition and consolidation?
TANUWIJAYA: The Indonesian e-commerce sector is quite competitive, with a number of players aiming to take a decisive portion of the sector. That said, we have seen both local and international competitors come and go or become irrelevant. It is crucial not to become obsessed with competition, but rather to fully focus on customers and better cater to their needs.
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