Week in Review: IDC pours cold water on Indonesia’s e-commerce market daydreams

  • 2016 market projected at US$8 bil vs widely quoted US$18.2 bil
  • Legal issues can trip up startups but BurgieLaw.com has the solution

THE sizzling heat around Indonesia’s vaunted and much touted e-commerce potential has witnessed a welcome but all too rare cold shower this week thanks to the courage of International Data Corporation or IDC in calling a spade a spade.

According to country manager Sudev Bangah the numbers are “severely overestimated and this overestimate only helps e-commerce startups to boost valuation.”

Why are we not surprised! And, incoming investors into the sector, beware!

In terms of what the “severely overestimated” numbers are, while there are various projections, IDC has picked the US$18.2 billion that is being touted as the e-commerce market size for 2016 and it has ripped this apart with its own projection of US$8 billion.

If you think that’s a big gap, chew (or choke) on this. While 2020 projections for Indonesia are for a US$130 billion e-commerce market, IDC weighs in with a more realistic US$21 billion market size.

What’s great about the IDC numbers are that is comes from an organization that earns its keep by providing tech industry research data that is trusted and credible. It has no vested interest in joining the hype party of the internet world.

I am sure its projections will be the fodder for much conversation and arguments over the coming weeks and will serve to train a much harsher light on what Indonesia’s 2016 numbers actually are when any party tries to drill down on the country’s e-commerce data for 2016.

I hope IDC next trains its research focus on Malaysia and Singapore, two markets in Southeast Asia (SEA) where the data should be much easier to collect and dissect. And I hope they look at other areas in the digital space as well, especially video where you have Netflix, iflix and Hooq battling it out in the region. And how far away is Amazon from joining the party as well with its Amazon Prime?

Meanwhile, e-commerce startups that were hoping to use the inflated Indonesian data to boost their funding drives, but now can’t, can at least have a fresh read of what Patrick Grove thinks they need to succeed. And the good news is that the SEA market is primed for startups to seize opportunities, says Grove.

To whatever takeaways you get from Grove’s article, don’t neglect the legal foundations of your business, warn the founders of BurgieLaw.com, a startup that aims to prevent legal issues from ensnaring their fellow startups in SEA. Think GrabGas. Do read that article if you haven’t already.

And do have a restful weekend and a productive week ahead.

Previous Instalments:

Week In Review: Indonesia’s Future Potential Still a Siren Call

Week in Review: E-commerce not the panacea for Indonesia’s economic upliftment

Week in Review: It’s not easy to be a digital winner

Week in Review: Convergence accelerates between Old and Digital Economy


Editors Picks:

Axiata's profit takes a sharp dive in Q3 2016

Witching Hour Studios moves from tabletop to the digital arena

Indonesia needs to rethink its e-commerce targets and definition: IDC

BurgieLaw, which aims to solve legal woes of other startups, raises US$200k seed round

Review: Asus Zenfone 3, not quite incredible

Patrick Grove's insights to building a successful startup

Embracing fintech, Bank Indonesia opens BI Fintech Office


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