5 reasons Indonesia should use China as an ecommerce blueprint

One of our discussions at Startup Asia Jakarta 2014 explored how Indonesia can learn from developed startup ecosystems overseas. During the panel, Tech in Asia had the opportunity to compare three very different ecommerce markets to the world’s largest archipelago: Japan, Silicon Valley, and China. The session featured Sonita Lontoh, founder of the Silicon Valley Asia Technology Alliance, Takeshi Ebihara, founding general partner at Japan-based Rebright Partners, and James Tan, managing partner at China’s Quest VC.

Tan said that Indonesia is only about five years behind China in terms of the strength of its startups, which could mean that more tech giants, IPOs, and maybe even a “unicorn” or two could emerge in the archipelago’s near future.

Perhaps Indonesia could learn from China during this period of early growth. While the US is the most developed tech startup ecosystem in the world, China is still considered to be an emerging market, according to Bloomberg. Only separated by India in terms of market size, Indonesia and China have striking similarities.

In no particular order, here are five reasons Indonesian ecommerce investors and entrepreneurs should be taking their cues from China’s blueprint.

1. The online retail space is still small, but showing signs of maturity

In 2007, China’s total spending for online retail was around US$8.25 billion. Fast forward to today, China’s online spending is projected to reach nearly US$360 billion next year. Experts predict that by next year Indonesian ecommerce will become nearly an US$11 billion industry, similar to the early eshopping days of China.

The Indonesia Ecommerce Association (idEA) believes that in the next five years, the number of online shoppers will grow from 15 million to about 75 million in Indonesia, which is about 30 percent of the entire population.

See: How Indonesia’s Tokopedia can learn from Alibaba

2. Telcos are getting in the ring

According to Gordon Orr, Asia chairman at McKinsey and Company, China’s state-owned telcos brought broadband internet to tens of millions of new homes each year, which quickly grew the nation’s internet coverage and allowed the middle class to browse online from their homes rather than having to go to internet cafes.

That’s now happening in Indonesia too. A recent report states that the Indonesian telecom sector has settled into what looks like a healthy development phase. Their broadband subscriptions are growing, and telcos themselves are taking a vested interest in the nation’s startup scene. But unlike the China of the past, Indonesia’s broadband renaissance is taking place on mobile devices and data plans as well as home internet connections.