Will Amazon's Entry into Indonesia Change the E-commerce Landscape?
The e-commerce giant Amazon is reportedly entering the Indonesian market after its expansion in Singapore last year. The company’s focus is currently on the Southeast Asia market to enhance the brand’s presence in the Asia Pacific region.
The company was already in talks with the Government of Indonesia about the terms related to its planned investment, including tax and other regulations for about two years, which has finally reached to an execution stage.
In an interview with Indonesia’s online research company, KataData, Finance Minister Sri Mulyani Indrawati says, “I’m now in discussion with Amazon, who is planning to enter Indonesia. I will make sure they comply with our country’s regulation, especially their readiness to pay the taxes.”
Is it going to be Amazon v/s Alibaba?
Bezos’ company will face the competition from the Chinese behemoth Alibaba and Bhinneka in Indonesia. A 2016 report by Kompass.com says that the global e-commerce giant will be bringing a whopping $600 million investment for its first year of operations in Indonesia. On the other hand, its global rival Alibaba has already made its mark in Indonesian market by leading $1.1 billion funding round into e-commerce unicorn Tokopedia.
Although the e-commerce market of Indonesia has active players betting high on it, the entry of global e-commerce company Amazon in Indonesia is expected to disrupt the e-commerce landscape of the country. Both the global rivals are trying to capture the Asia Pacific market.
Amazon currently dominates markets of the UK and North America, while Alibaba sways the market of China and has made a web of strategic partnerships and investments in other regions of Southeast Asia, including Australia, Singapore, India and Indonesia. Both the companies are making large bets in India and moving to Australia as they capitalize on three trends - the digitization of global financial systems, growing wealth around the globe, and increased internet penetration.
Both the global companies are actively exploring the Asia Pacific market with the interest of tapping the opportunities. In the Indonesian market, Amazon would be against Alibaba-owned Lazada and Tokopedia.
In the race to capture the e-commerce market, how Indonesia welcomes this global giant is yet to see for market holders.