Alibaba Pushes Into Indonesian E-Commerce Market

China's AliExpress is working with local Indonesian e-payment and logistics service providers for a major push into Southeast Asia's e-commerce market.

AliExpress – the international arm of Alibaba Group’s retail platform – has partnered with local Indonesian e-payment provider DOKU and Singapore Post to access Indonesia’s growing e-commerce sector.

The arrangement gives consumers in Indonesia access to hundreds of thousands of products in China with local payment and delivery options, while at the same time offering Indonesian brands an opportunity to sell globally.

The significance of the Alibaba move into Indonesia is massive, says Daniel Tumiwa, vice president of digital business at Garuda, and the chairman of the Indonesia E-Commerce Association. “You have the China market suddenly opened up for you. Early adaptors are already using the platform to sell to China and bring products in,” he says.

Companies, too, seem ready for the new offering, which is expected to fuel Indonesia’s e-commerce scene by expanding on existing local platforms including Tokopedia.com and Tokobagus (rebranded in 2014 to OLX.co.id).

“Brands are looking for newer channels and newer models to expand their businesses and get a bite of the e-commerce platform,” says Irfan Mulla, head of Tribal Worldwide Indonesia.

“Some multi-brand groups have ventured into their own online distribution systems, however others rely on platforms like this. The payment mechanism proposed by AliExpress also seems very lucrative, so there is definitely potential waiting to be explored.”

Despite low adoption rates of electronic payment methods and a challenging logistics environment, Indonesia’s e-commerce appeal lies in its rising consumer spending power, growing number of Internet users (expected to reach 100 million in coming years), and under-developed retail infrastructure, which makes online shopping an attractive platform for choice and affordability.

“There is large demand for e-commerce in the Indonesian market that has not yet been met,” says Joe Yan, director of global operations and expansion strategy at AliExpress.com. “By cooperating with local payment and logistics businesses, AliExpress is aiming to help local consumers with better online shopping experiences.”

The partnership with Singapore Post gives AliExpress access to Pos Indonesia, which the company claims will reduce delivery times from China to Jakarta from 35 days to two weeks. Consumers can trace their purchases via EMS.

The DOKU Wallet lets consumers pay in the local Indonesian rupiah currency, although AliExpress will also offer offline payment options through the Alfa Group convenient store chain and ATMs.

AliExpress began a soft launch on January 26 with a series of 24-hour flash sales and promotions with Bank BNI, Line Instant Messaging, and KaKao Talk to provide cash coupons for consumers shopping on the site. It has also established a bilingual English and Bahasa website and customer service line.

“Alipay is now starting on a long process of educating the market,” says Tumiwa. “I believe they have prepared the funds needed to enter the market, and they will be here to stay. It’s a long-term game.”

clickz-live-jakarta-logo-200To learn more about Indonesia’s evolving digital marketing landscape, don’t miss ClickZ Live Jakarta 2015 on March 24 and 25. Formerly known as SES Conference & Expo, ClickZ Live returns to Jakarta this March for the second year following the outstanding success in 2014. Featuring marketing experts from leading brands including PT, Mitra Adiperkasa, Singgasana Hotels & Resorts, Mercedez Benz, Reckitt Benckiser, XL Axiata, OLX Indonesia, AXA, FWD Life, Coca-Cola, eBay, and many more!

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