Daniel Tumiwa, Indonesia E-Commerce Association (idEA): "2015 will be the tipping point in the Indonesian ecommerce market"

Wednesday 23 April 2014 13:10 CET | Editor: Melisande Mual | Interview

Foreign players, who think big, will change the game in the coming years

Daniel Tumiwa is Chairman of Indonesia E-Commerce Association (idEA) and VP E-Commerce Garuda Indonesia.
Prior to serving as VP of E Commerce Garuda Indonesia, Daniel served as the Country Manager of Multiply Indonesia. He is also involved in the creation of MTV - Asia in Indonesia, and Soundbuzz.Com where he introduced Ringtones, Full Track Downloads and Digital Rights Management for industry and market. Daniel served as Director or Marketing and Sales at Universal Music Indonesia, where he introduced the concept of Ring Back Tones. Daniel will further address the opportunities in the Indonesian ecommerce market at the upcoming Global Payment Summit 11-12 June in Singapore. Readers of The Paypers can receive a 30% discount (code GPS30) on the delegate fee.

What is the outlook of ecommerce in Indonesia?

Daniel Tumiwa: The market is growing fast. It is difficult to have official statistics, but unofficial information tells us that a 2-3 times market growth year-on-year has been registered for the past few years. Also, we see that advertisement spent by online players has increased 4 times year-on-year during the same period.

Apart from price, which is definitely the main driver, shopping convenience is also becoming a key driver for further market growth. Entrance of Korean and Chinese players also fuel the market. In general ecommerce in Indonesia enables rural and small companies to grow their business.

2015 will be a big year with a further shift to mobile shopping and mobile payment, which will account for 35-40% of the market. We consider this as the ‘tipping point’.

How is idEA’s relation with the Indonesian government?

Daniel Tumiwa: The overall attitude from the government towards ecommerce is good, with idEA having an ongoing dialog with the government. The location of data servers will be settled in Indonesia, which could put pressure on the market development. However, we still have 4-5 years for compliance, which enables a ‘step-by-step’ approach by the industry.

A very positive game changer for Indonesian ecommerce is the introduction of the national ID card (e-KTP), which will also be used in ecommerce transactions. This will improve trust and security, will make online commerce blossom even more.

What is your message to the payments industry in advancing ecommerce in Indonesia?

Daniel Tumiwa: In Indonesia we have very different market structures, cities versus the rural areas. In cities the ‘Cash On Delivery’ is still very popular. In general banks have not been very fast in adopting new online payment methods, so most of the payments are done via bank transfers, which have a limited usability. But people work around that creatively. Currently, we see many payment companies starting up, but the risk of fragmentation is high. That is not good for the ecommerce sector, so we see room for 2-3 dominant payment players. The ones who start marketing their payment solution to the general public still have a fair chance of winning.

How is idEA accelerating ecommerce?

Daniel Tumiwa: idEA is set to be the main sparring partner for the government and the provider of actionable information for decision makers. We aim to educate the market by increasing awareness of ecommerce as a business sector. Furthermore, idEA encourages individual players, often from rural areas to get into business. We help them with a trustmark in which we verify the trustworthiness of the merchant. Payment methods which work well in rural areas have a great future.

In general we see that online entrepreneurs still do not think as big as offline business people. The potential of the internet is not being harvested enough by offering both wide and deep assortments online. Probably foreign players, who think bigger, will change the game in the coming years.

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Keywords: ecommerce, Indonesia, cross-border, payment methods, payment service providers
Countries: World