Lippo Group representative John Riady, center, with MatahariMall.com managers, from left, product and technology head Goh Yiping, online marketing head Timothius Martin, marketing and partnership head Regan Dwinandadan and sales head Denis Raf. (B1 Photo/Ruht Semiono)

Lippo Jumps to E-Commerce, Sees $1 Billion in Sales in 2 Years

BY :MUHAMAD AL AZHARI

FEBRUARY 25, 2015

Jakarta. Lippo Group announced on Wednesday the launch of an Indonesian e-commerce venture, MatahariMall.com, solidifying its position as the largest multi-format Indonesian retail group.

Lippo has allocated $500 million in investment over the next two to three years to create an e-commerce company with an expected $1 billion in sales within one-and-a-half to two years that will become the “Alibaba of Indonesia.”

MatahariMall.com will bring Lippo’s consumer retail division to more than $25 billion in five years, 20 percent of which will come from online retail.

MatahariMall.com will offer the best deals, biggest giveaways and largest selection of goods covering fashion, beauty, electronics, home, groceries, books, entertainment and more, Lippo Group said in a statement.

In addition to offering the largest selection of goods, MatahariMall has been appointed as the exclusive online retailer for some of the most popular brands in Indonesia.

It is also the first and only online-to-offline, or O2O, e-commerce company in Southeast Asia, allowing customers to pay, collect and return their goods in all 131 Matahari Department Stores across Indonesia, when it begins operations in March.

“Online commerce is a $100 billion opportunity,” said John Riady, a representative of Lippo Group.

“MatahariMall will be the number one in e-commerce. There is nothing like it in Southeast Asia. Our vision is to build the most powerful ecosystem that brings together buyers and sellers to do business anytime and anywhere.”

The $500 million war chest will be used to assemble “a strong e-commerce management team, build a market place with the most number of items and build the best supporting infrastructure to support the online service.”

“Most importantly, this retail online service is created by a business group from Indonesia. ... We understand what Indonesian consumers want,” John said.

Additional Lippo affiliates — including Hypermart, the country’s largest chain of hypermarkets operated by Matahari Putra Prima, and Books & Beyond — will also support the e-commerce site.

Long-time suppliers of Matahari Department Stores will be given their own digital space at MatahariMall.com to offer their range of products online, John said.

“Indonesian online retail will grow 10 times over the next five years,” said Matahari Department Stores chief executive Michael Remsen.

“Together with MatahariMall, we are committed to the future of e-commerce. All of our suppliers and partners are 100 percent behind this.”

Matahari Department Store, a Lippo company, is Indonesia’s largest operator of department stores.

“E-commerce is the future of retail,” said Communications and Information Technology Minister Rudiantara.

“We are thrilled and fully supportive to see Lippo take this bold step into e-commerce. May this venture be a great success and benefit the country.”

Lippo said in a statement that it had an unparalleled track record in executing and building winning and innovative companies: Matahari in department stores, Hypermart in food retailing, First Media in cable and multimedia, Siloam Hospitals in health care, Bolt in 4G telecommunications, BigTV in pay television, and 60 Lippo Malls throughout Indonesia.

Lippo has the scale, the reach, the know-how, and innovation DNA to dominate e-commerce, it said, and MatahariMall is led by a proven team of experienced e-commerce industry experts.

“The digital revolution will transform the world,” said Ihlam Habibie, chairman of the National Information Technology and Communications Council.

“Look at Amazon in the US and Alibaba in China. I am excited to see Lippo enter in such a big way. They are very committed to technology and innovation, which is the most exciting opportunity in Indonesia today.”

Jan Metzger, the managing director and head of technology, media and telecommunications at Credit Suisse, was equally optimistic about the future of Indonesia’s e-commerce industry and Lippo’s ability to position itself as the leading player.

Credit Suisse calls Matahari Department Store “the number one department store” and “our top pick in the retail space.”

As the largest retailer in Indonesia, the Lippo Group is well positioned to be number one in e-commerce. Its consumer businesses have a combined annualized revenue of more than Rp 60 trillion ($4.7 billion) and growing consistently at more than 20 percent.

Hypermart, meanwhile, is one of the fastest-growing hypermarket chains in Asia, with market share increasing to 40 percent in 2014 from 24 percent in 2007.

Lippo’s entry into e-commerce next month seems to be well timed. While online retail accounts for just 0.7 percent of total retail sales in Indonesia, it is projected to grow 10 times over the next five years. Online retail is growing fastest outside of Jakarta, where Lippo has substantial businesses.

“Indonesia is the last remaining, large, underpenetrated e-commerce market in Asia. MatahariMall is the single-largest e-commerce opportunity today,” John said.

Indonesia’s Internet penetration last year stood at 80 million, or about 32 percent of the total population, and a significant leap from 2011’s figure of 47 million.

In a report released in September last year, global research company Nielsen confirmed the massive prospects of e-commerce in Indonesia.

A record number of consumers went online for their purchases last year, the report said. The most sought-after products include airfare and hotel bookings, e-books, clothing, accessories and shoes.

In a statement attached to the report, Nielsen Indonesia’s executive director of consumer insights, Anil Antony, said that “e-commerce retailers’ product and service offerings have evolved significantly [in Indonesia] in recent years as the popularity of online shopping has increased.”

“Consumers are [...] increasingly searching out online channels to research and purchase the products and services they need and want,” he said.

GlobeAsia is affiliated with Lippo.

GlobeAsia

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