The Kejora Series: Fall 2016 Startup Trends Pt. 2

In the first part of the Kejora Fall 2016 Startup Trend list, we mentioned that the fintech industry is one of the five different industries that are in the Indonesian investors' funding radar. Two of the fintech startup models we mentioned was the online lending models and the digital banking models. This week we will talk about the next industry in Indonesian investors' funding radar, the e-commerce and logistic industry.

In this article, we will talk about the startups models that we believe to be popular among Indonesian investors this coming year in the e-commerce and logistic industry. The first one being startups that create e-commerce tools for merchants. The second being startups that provide tools for e-commerce users. Third in our list are social commerce startups. Lastly, we believe logistic startups specializing in remote deliveries will be very popular among Indonesian startups. Our team believes that if someone makes a successful logistic startup that successfully provide affordable services for remote deliveries in Indonesia, it will become a game-changer of the Indonesian economy.

The E-Commerce and Logistic Startups

"ASEAN's Market Potential" by Ardent & A. T. Kearney Analysis

As the graph above had showed us, when looking at the estimated e-commerce growth rate from 2013 to 2017, we can see that the ASEAN 6 market is estimated to be bigger than US and EU 5 combined at 25%. These 6 countries of ASEAN 6 consists of Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam. When zooming in to the ASEAN 6 analysis, we can see that at 2013 levels, Indonesia's actual market size was approximate similar with the other ASEAN 6 countries. However, when looking at the theoretical potential of Indonesia we can see that it can reach approximately 25 to 30 billion US dollars which is double the theoretical potential of the other ASEAN 6 countries. This tells us that investing in the Indonesian e-commerce market is a great decision. Of course, if the Indonesian e-commerce market is expected to grow almost 20 times its 2013 market size, we can expect the Indonesian logistic market and other sectors of the e-commerce industry to grow as well. 

"10 Things You Should Know Before Starting Your eCommerce Venture in Southeast Asia" by ecommercemilo.com

We believe that the reason why the theoretical potential for the Indonesian e-commerce market is so high is due to the large consumer population of Indonesia and their high consumptive culture. Based on the graph above, we can see that the Indonesia's population alone equals the population of Philippines, Vietnam and Thailand combined. When looking at the distribution of the population age of the ASEAN 6 countries, Indonesia has a relatively young population with around 65% of their population below the age of 34.

The rise in the technology industry can no doubt be attributed to the early adoption of the youth today. Same goes for the Indonesian technology industry. Due to the country's young population, we can see the shift from traditional business models to the transition towards the adoption of technology innovation. Young Indonesians are slowly getting to used to shopping online. As the following graph shows us, out of Indonesia's 248 million inhabitants and 39 million Internet users in 2013, there are 5 million individuals who are already using purchasing goods and services through the digital platform. This data was collected on 2013, so the numbers for these data have no doubt increased since then.

"The retail e-commerce market in ASEAN" by IMF, eMarketer, eCommerceMILO, DigitalFilipino, Frost&Sullivan, hybris, VECITA and A.T. Kearney Analysis.

"E-commerce Sales Through Mobile Commerce Strategy" by cmodigitalforum.com

Based on the image above, we can see that there are different sectors in the e-commerce industry outside the actual e-commerce service platform. In this article, we will talk about some of these industry that we believe Indonesian investors are looking to invest in. In addition, we will include the logistic industry as well in this article, because we believe that e-commerce and logistic startups go hand-in-hand.

E-commerce tools for Merchants

As we stated in our introduction, one of the popular startups Indonesian investors are looking to invest are e-commerce tools for merchants. With the Indonesian population starting to integrate with the online world, we find more merchants transitioning their commerce to the online platform. However, because Indonesia has just recently started the internet boom, the e-commerce and logistic industry still has its missing gaps. Our team believes that this missing gaps are the tools that merchants can download or use online in order to help them manage their inventory and listing for different e-commerce platforms.

Through the developing a dashboard, these startups can provide their users with features to help them manage their inventory and list their products in e-commerce sites.

"Automation Solution" by Arbitrize

Inventory Management Platform

"Inventory Management" by Magento Connect 

Inventory Management platform is used to help merchants in tracking inventory levels, orders, sales and deliveries. It can also be used to create work order, bill of materials and other production-related documents. When merchants use an inventory management platform, they would have to record their products to the platform as well as their orders, sales and delivery. Startups providing inventory management service is responsible in creating an easy-to-use dashboard that helps their clients in supporting their commerce and provide them analytic service on their dashboard activities.

In addition to managing the inventory of the products, inventory management platforms should also be able to help the merchant list and record details of their products. So that when they can easily place their products in e-marketplace sites or their personal e-commerce site.

"Why Big Data is a Must in E-Commerce?" by bigdatalandscape.com

The diagram above shows the different processes of different merchant tools in the e-commerce industry. When determining product pricing, we can use an algorithm or a dashboard to determine through plugging-in data of the product cost and price. We can determine the stock levels of the merchants' inventory through recording it using a dashboard. You can create an advertisement pricing and campaign through using a dashboard or other tools.

With the rise of the e-commerce industry in Indonesia, more merchants and consumers are starting to shift their transactions online. This would mean that manually checking, listing and managing the inventory will not be efficient anymore. E-commerce and merchants selling in e-marketplace would need to use come type of tools platform to help them manage their inventory, determine their effective pricing and conduct their marketing strategies. Hence with this high demand in such technology converts to high returns for investors.

For those who are currently working on this type of startup or thinking of creating this type of startup, here are some foreign startups that are already creating this type of startup model. Feel free to do your research and use these startups for case-studies.

"Choices Best E-Commerce Management Platform" by itdinteractive.com

Tools for Users: Price Comparison and Discount Aggregation

Second in our list for e-commerce and logistic industry, we believe that e-commerce tools for users such as e-commerce price comparison platforms and discount aggregation platforms can become big in Indonesia especially due to the money-saving culture of Indonesians. Now that there are plenty of e-commerce platforms available in the Indonesian market, Indonesian consumers are finding themselves with too many options to solve their online purchasing needs. Especially their tendency to become penny-saving cause them more confusion when shopping online. By creating an e-commerce price comparison site or a discount aggregation platform, this problem for the money-saving individuals will be solved.

Price Comparison Platform

A comparison shopping website, also known as price comparison platform, is a vertical search engine that allows online shoppers to filter and compare products based on prices, features and other criterias. Most price comparison platforms aggregate product listings from many different retailers or e-commerce/e-marketplace platforms but do not directly sell the products.

"Comparison Shopping" by Infibeam.com

Discount Aggregator Platform

Daily deal websites, also known as discount aggregator platforms, works by collecting and aggregating deals, discounts and coupons all of the Internet deals into one place. Or may collect individuals deals and coupons from your local area from individual merchants and partnerships.

Through requiring users to sign up their contact details, they earn their revenue through collecting and selling your consumer behavior and information to companies. They may also earn their revenue through advertising related deals that you purchased or clicked. They can also earn revenue through commission from amount of leads that they earn in their platform.

"How Does Daily Deal Builder work?" by dailydealbuilder.com

"Groupon Business Model" by Christian Dahler 

The Indonesian consumers are very price-sensitive, they are also deal-hunters. With this consumer behavior in mind there is no doubt that aggregator platforms that would help them find deals and best-pricing for their purchase would be highly demanded. Knowing this information and that more than 5 million Indonesian does their shopping online, there is no doubt that investing in these types of startups will bring investors high return.

The following contains some foreign startups that provides e-commerce price comparison tools and discount aggregation tools for online consumers. If you are currently creating these type of startups or thinking of creating one, feel free to use these examples as case-study.

"Comparison Search Engines" by Searchenginejournal.com

"Food Tech and Media Industry 2013" by foodtechconnect.com

Social Commerce

Next in our list is Social commerce. What is social commerce? Social commerce is a new type of online retail model or marketing strategy that incorporates established social networks and/or peer-to-peer communication to drive sales. With Indonesia's population of 259.1 million individuals and 79 million individuals actively using social media and 66 million individuals actively using mobile social platforms, it would seem such a waste to not integrate it with e-commerce.

"Jan 2016 Digital in Indonesia" by WeAreSocialSG

Social commerce is a subset of electronic commerce that involves the social and online media that supports social interactions of users and user contributions to assist online commerce of products and services. Using the following diagram as an example. A consumer journey in social commerce starts with the user discovering the product through the use of social media. Through engagement and re-targeted advertising, the user can get more familiar to the brand or product. Lastly, through flash sales and deals, the merchant tries to get the users to purchase the product.

"Social Commerce Sales Funnel" by Shipstation.com

"Social Commerce in China" by yiduqiao.com

The Social Commerce industry in Indonesia is still infant, when looking at the success of the Chinese Social Commerce industry, we can see that there are still so much more growth that can happen in the Indonesian market. In terms of population and consumer behavior, Indonesians are very similar to Chinese consumers. With this information in mind, this would mean that social commerce is a risk that Indonesian investors should take.

Here are some foreign social commerce examples you can use as a case-study if you are currently creating this type of startup or thinking of creating one any time soon. We decided to use China's social commerce startups as example due to its similarity in social media and consuming behavior with the Indonesian market and because alot of their startups are doing exceptionally well in terms of creating a social commerce.

"Social Media Landscape @ China 2012" by CIC Corporate

Logistic Solution: For remote delivery

Similar to our previous article, the rural Indonesian economy is another challenge we can try tackle with the introduction of technology. Even if we have fixed the financial infrastructure of rural Indonesia, we would have to later improve the commerce. In terms of commerce, the problem arises when we have to deal with logistic infrastructure. This has been a problem with Indonesia for some time. By creating a startup that provides logistic solution for our problem in remote delivery to the rural Indonesia, the Indonesian economy can improve alot.

"Point-to-point Delivery Network" by Farmigo

Due to the challenge of creating this type of startup due to the lack of infrastructure in Indonesia, entrepreneurs in the logistic industry would have to think outside-the-box in order to provide remote delivery service. Whether it be to hire local individuals or companies to help in point-to-point delivery or to set up different branches throughout Indonesia, these logistic startups would have to find a way to conduct their business efficiently while maintaining the lowest cost of operation possible.

By investing and creating in a logistic startup that can efficiently provide remote delivery service, SMEs especially located in the rural areas of Indonesia will have the opportunity to grow. This growth can improve the living standards of million of Indonesians as Indonesians in the rural area can freely purchase goods and services from great distances and SMEs and merchants locating in rural areas can increase their customer size to include those living far away from them.

We understand that we would have to adjust quite a bit for the Indonesian business model of this type of startup. However for reference, we thought we can use India's hyperlocal startups as examples due to the similar structure the country has to Indonesia.

"Hyper-Local Delivery Startups" by Singhi Advisors

Find Out What’s the Third Trending Startup Category for Indonesian Investors!

In this article we talked about the current e-commerce and logistic industry in Indonesia. After we went focused in the five different startups that we believe will be huge in the Indonesian e-commerce and logistic industry, e-commerce tools for merchants and users, social commerce and logistic solution for remote deliveries. We went in detail to talk about the business models of the startups and how it work. We talked about why will it do well in Indonesia and why Indonesian investors are interested to invest in these startups. After we gave you some examples of foreign startups that you can use as case-study if you are or about to create one of these startups.

Now that you have some ideas about what startup models in the Indonesian e-commerce and logistic startup that we believe is in the Indonesian investors' funding radar, continue in building your startup if you had created it and if you haven't then now's the chance to create your unicorn startup. Next in our list, we will talk about the interesting startups in the Big Data industry that we believe will be very popular among Indonesian investors. Keep visiting us in our social media page in Facebook or our blog to read more about the happenings in our Kejora ecosystem. And keep a look out for the next part of our Kejora Series story 3.