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idEA Chairman believed that local e-commerce players “stand no chance” to compete against the e-commerce giant

Indonesia E-commerce Association (idEA) Chairman Daniel Tumiwa stated that e-commerce giant Amazon is set to enter Indonesian market, as reported by Kontan.

“Amazon has announced that it will open an e-commerce [platform] in Indonesia. They will invest US$600 million for its first year here,” he said on Thursday.

Though no exact timeline and other details were mentioned, Tumiwa was certain that local e-commerce players “stand no chance to win against” the company, as they have neither the resource nor the technology to compete with Amazon.

He further explained that Amazon has a certain pattern of using the first year of its operation in a country to determine whether they are going to stay in the market –or not.

In some countries, Amazon is reported to succeed in securing top position within that first one year. In India, it competes heavily with local players such as Flipkart or Snapdeal.

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“Flipkart was once the leader [of the market], but it lost 50 per cent of its market within one year,” he explained.

Recently Amazon also invested extra US$3 billion to further strengthen its position in the market.

Though the prospect seems gloomy for Indonesia, it is important to note that it has not always been the case in every market. A great example will be China, which was already dominated by local players such as Alibaba.

Amazon failed to champion the market and ended up leaving after one year.

In Indonesia, Alibaba’s presence may grow even stronger after it purchased controlling stake in Lazada.

As part of its e-commerce roadmap, Indonesia is opening up opportunities for foreign ownership of e-commerce companies of a certain value, while still keeping a closed door for small and medium enterprises.

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Image Credit: Teddy Kelley on Unsplash

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