JD.id to Expand Locally Despite Challenges in Indonesia's Digital Sector

Online sales of physical goods in Indonesia are projected to increase more than eightfold to $65 billion annually by 2020, a study by global business consultancy McKinsey & Company shows. (Reuters Photo/Aly Song)

By : Sarah Yuniarni | on 12:25 PM September 08, 2017
Category : Business, Tech

Jakarta. JD.id, the local affiliate of China's e-commerce platform JD.com, plans to expand its business in Indonesia as the company looks to take advantage of a budding digital market, a company executive said on Thursday (07/09).

"Indonesia has a tremendous amount of potential and a large young population. With the numerous rival players in the e-commerce market, Indonesia is still big enough for all of us," Zhang Hong Mei, head of JD.com's cross border business department, told guest participants at the Asean Marketing Summit at the Raffles Hotel in South Jakarta.

According to collaborative research conducted by tech giant Google and Singaporean wealth-based fund manager Temasek, Indonesia's regular Internet users are projected to reach 215 million by 2020 from just 92 million in 2015.

Indonesia's e-commerce market is also projected to generate $46 billion in revenue by 2025 from $1.7 billion in 2015. The study also noted that the country is set to become a major contributor to Southeast Asia's e-commerce sector, as the local market is expected to account for 52 percent of the region's sector by 2025, up from 31 percent in 2015.

However, Zhang also highlighted several challenges still hampering Indonesia's e-commerce market from growing significantly, including low numbers of high-skilled workers, poor Internet service providers, weak logistics and infrastructure development and a lack of cashless payment systems.

To overcome some of those issues, JD.id will look to heavily invest in building warehouses and hiring and educating local talent to become market leaders.

"However, there is a cultural difference [between the two countries], we are fast, we are okay to work late, but here [in Indonesia] the culture is quite different," said Zhang, without elaborating further on the issue.

She said it is still possible to bring skilled talent from China to educate young, local talent.

JD.com, the second largest e-commerce company in China after Alibaba, started operations of its Indonesian unit, JD.id, in November 2015. Now, the portal offers 14 categories to choose from, ranging from branded clothing to electronic goods.

As of last year, JD.id had more than 100,000 stock keeping units (SKU), with the products manufactured in both China and Indonesia, and a growth of cross border trade orders to over 500 percent.

In Indonesia, the company has warehouses in Jakarta, Pontianak (West Kalimantan) and Surabaya (East Java), which employ more than 1,000 workers. The company is currently building five new warehouses to be located on Java island and in Papua.

Zhang said the company expects its number of employees to double by next year.

JD.id also operates its own logistics firm, named Jaya Ekspres Transindo.

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