I

magine you wanted to buy a new gadget or dress online but had neither the means nor knowledge on how to shop via an e-commerce platform, perhaps you would ask someone you trust to buy the product for you in return for a small commission.

Now, multiply the commission by a million transactions, and hey presto, assisted online shopping turns out to be a highly profitable business.

Not many people realize such opportunities exist in Indonesia, home to over 250 million people. Among those who do, entrepreneurs Albert Lucius, 30, and Agung Nugroho, 31, are indisputably exemplary role models for the business.

After spending years on different career paths, the two high school buddies met again a few years ago when pursuing master’s degrees in the US. Enchanted with the rapid growth of e-commerce in their home country, Albert and Agung came up with a fresh idea to develop a new technology platform that could connect online merchants with offline customers nationwide. They later named it Kudo, an acronym of the Indonesian words kios untuk dagang online (online shopping kiosk).

While many e-commerce platforms have been focusing on attracting end users making online purchases, Kudo has come up with a different idea, targeting those who don’t have credit cards, or even bank accounts, to make transactions through so-called “agents”.

“In Indonesia, only 5 million people have credit cards and therefore access to e-commerce. This is a tiny fraction of the 125 million people of productive age” said Agung, the company’s chief operating officer, in a recent interview with The Jakarta Post. “Thus, the app has been introduced to enable all people to access e-commerce and help them become entrepreneurs.”

After launching its mobile application early this year, as of July Kudo, a sister company of online marketplace Bukalapak, claimed to have recruited more than 100,000 agents to market products
offered by its partners, including Bukalapak, online shop Lazada and various airlines.

Therefore, by just downloading the Kudo application on an Android phone, someone can instantly own an online store offering millions of products to customers.

The agent, meanwhile, receives a commission for every product he or she manages to sell. The agent typically receives cash from buyers and might arrange the payment to be made in installments schemes.

“Such transactions can only happen if the agent and buyers trust each other,” Agung said, adding that some Kudo agents earned commission of up to Rp 15 million (US$1,140) a month.

Agung said the company expected to have 200,000 agents by the end of this year and increase this number fivefold by 2018.

Currently, around 50 percent of Kudo agents are based in Java, 30 percent in Sumatra and 20 percent in Kalimantan and other parts of the country.

Although Kudo has seen rapid growth in the number of agents in Indonesian major cities, Agung said the long-term future of the business would lie in its expansion in suburban areas and smaller cities.

Indonesia’s e-commerce market was estimated at Rp 18 trillion last year, with 37 million consumers, according to World Economic Outlook data compiled by the Internet Service Providers Association.

The association also predicted that the e-commerce market would reach Rp 25 trillion by 2016, with 49 million consumers.

The vast potential of e-commerce in the country has led equity firms KKR & Co. and Warburg Pincus LLC to recently inject $550 million into Indonesian start-up darling and online transportation app Go-Jek last week.

Considering the recent trend, University of Indonesia economist Fithra Faisal Hastiadi says it is possible another massive capital inflow from foreign investors is likely in the near future as there are lots of sectors that had yet to be technologically developed here.

The government is committed to strengthening interconnectivity by boosting the development of internet infrastructure across the country.

“This is an era of disruptive innovation, in which a start-up company can come out of nowhere and suddenly disrupt established business models,” he said. “Hence, we should prepare ourselves, as big things are on the way.” (vps/hwa)