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Indonesian internet companies must dominate locally before expanding globally
Those who successfully convert challenges into opportunities can win the Indonesian market.
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Pack and send: An employee packs goods at GoTo's e-commerce unit at Tokopedia's warehouse in Jakarta on Aug. 31, 2022. (Reuters/Ajeng Dinar Ulfiana)
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ith a population of 284 million, Indonesia is one of the largest and most promising markets globally. Google's Southeast Asia economy report highlights the archipelago as Southeast Asia's most prominent digital economy, boasting a gross merchandise value (GMV) of US$82 billion in 2023. E-commerce alone is expected to grow at a compound annual growth rate (CAGR) of 15 percent, reaching $82 billion by 2025.
While many startups have risen and grown in Indonesia, making it the Southeast Asian country with the second highest venture capital investment after Singapore, international players have also been aggressively eyeing the market.
In e-commerce and ride-sharing, prominent international players like Shopee, Lazada and Grab have been competing with local heroes such as GoTo, Tokopedia and Blibli while expanding their reach.
However, with profitability as the new focus in the wake of the latest global economic changes, these tech unicorns have moved away from merely growing market shares to maintaining sustainable and profitable growth.
GoTo is a classic example. The local unicorn expanded into markets such as Vietnam and Singapore at the peak of its growth. However, it announced its exit from Vietnam in September, with reports also suggesting that the tech giant may soon exit Singapore, while other companies such as Grab and SEA have earlier undertaken their restructuring efforts.
Nonetheless, with a current internet business penetration that is still far below developed markets like the United States and China, much of the Indonesian market remains underpenetrated. Large portions of the Indonesian archipelago are still out of reach for many of these companies due to logistical challenges.
Those who successfully convert these challenges into opportunities can win this market.
