By Wang Fengjuan, Liao Bowen

Just after midnight on December 12, 2018,an Indonesian girl named Lani bought a pair of high heel shoes from the JD.ID online shopping mall. By 9 a.m. that same morning, the shoes were on her doorstep.

In Indonesia, online shopping, e-payment and express delivery have become all the rage.

With implementation of the Belt and Road Initiative (BRI), Chinese internet giants such as Alibaba, JD and Tencent have successively ventured overseas and spread the Chinese internet economy to Indonesia and other Southeast Asian countries, which has given local people all the bene fits of the internet. As Bloomberg commented: “It seems that China’s internet is going to have a profound impact on the future global market, and its road to world tech domination begins in Southeast Asia.”

Online Shopping at JD.ID

Double 11 (November 11) and Double 12(December 12) are online shopping holidays contrived by e-commerce platforms. The most often cited buzzwords are “rush” and “discount.”Sales generated on those days have set global records every year.

A mobile phone is all you need to shop at the JD.ID X unmanned supermarket.

The delivery service of JD Logistics in Indonesia was fully upgraded by November 2018 to ensure stable express delivery during the surge of orders caused by sales promotions. Its “211 Timely Delivery Guarantee”—an order placed before 11:00 a.m. is delivered the same day, and an order placed before 11:00 p.m. is delivered the next day—has also been duplicated in Indonesia,with a ful fillment rate of 90 percent in Greater Jakarta. JD has promoted the localization of its operations in Indonesia. Since March 2016, JD.ID,its B2C (business-to-customer) e-commerce platform in the local language, has amassed more than 20 million users. Its popular promotion activities in China such as the shopping holidays have proven equally popular with enthusiasts in Southeast Asia.

While vigorously promoting high-quality online shopping, JD has attached more importance to logistical support to provide its customers with first-class logistics and post-sale services. According to a report from Shangbao Indonesia, JD has strengthened its own logistics network by adding 10 warehouses in six Indonesian cities—Jakarta, Surabaya, Medan,Makassar, Pontianak and Semarang—which has contributed signi ficantly to online retail sales outside of Java.

Jakarta residents shopping at the JD.ID X unmanned supermarket.

JD.ID CEO Zhang Li reported in an interview that by the end of 2018, his company had multiplied its warehouse space. As more warehouses are beginning operation, most of the goods sold by JD in Indonesia are being stored in its own warehouses. Its delivery services now cover seven major islands, 483 cities and 6,500 districts and counties. About 85 percent of orders can be delivered within one day. By the end of September 2017, JD had established a door-todoor service network for bulky goods delivery in Indonesia. Bulky goods would be delivered directly by an independent transport team,greatly improving user experience. With its “210 Timely Delivery Guarantee,” online shoppers can receive their commodities lightning fast. Pickup-in-store services offer more options for office workers and other customers who are unable to wait for delivery at home.

Meanwhile, JD’s X unmanned supermarket,the first of its kind in Southeast Asia, officially opened in August 2018. With its indigenous technology of arti ficial intelligence, the Internet of Things and biometric authentication, JD has brought unprecedented shopping experience to Indonesian consumers. Located in the main shopping mall of Jakarta, the 270-squaremeter automated supermarket is JD’s first and largest supermarket of its kind overseas. When customers enter the market, their identity and payment information are determined by facial recognition. When they have finished shopping,they can simply walk through the intelligent payment passage equipped with Radio Frequency Identi fication Technology (RFID) to complete payment.

Competition for E-Payments

If online shopping is the “war for e-money,”payment processing is a “war of e-wallets.” As the fourth most populous country in the world,Indonesia is a huge market that brings great opportunities and challenges for e-payments,which are still in their infancy. The “war of e-wallets” is kindling fierce competition not only between China’s e-payment giants Alipay and WeChat Pay but also with rising local e-payment players Go-Pay and Ovo.

36Kr, a famous Chinese science and technology blog, once divided Indonesia’s “war of e-wallets” into three stages.

Stage I: Each e-wallet platform is based on inapp services. If a customer pays with Ovo, the e-wallet of Grab, or Go-Pay, the e-wallet of Go-Jek,the credit points in his or her e-wallet can also be used to deduct ride-hailing or other services provided by Grab or Go-Jek, both leading ridehailing apps in Indonesia and Southeast Asia,similar to Uber in the West or Didi Chuxing in China. Both have expanded rapidly in the process of developing into a super app combining multiple functions such as food delivery, online grocery shopping and e-payments.

Stage II: E-wallets start to work in some offline payment settings. A customer can scan the QR code printed on a bill to complete payment with the balance in his e-wallet. He can do the same in a brick-and-mortar restaurant or mall with an e-wallet functioning as a “real” wallet, rather than simply an online wallet.

Stage III: The integration of e-wallet and e-commerce websites. For example, Indonesia’s e-commerce platform Tokopedia has con firmed its cooperation with Ovo. Now, customers of Tokopedia can seamlessly use Ovo credit points at any branch network that accepts Grab,Tokopedia or Ovo services. For Indonesia’s local e-wallet users, on the checkout screen for online shopping they see the e-wallet option in addition to options of credit and debit cards. E-wallets have integrated payments for ride-hailing, online shopping and offline consumption.

Unlike the e-payment companies that entered the Indonesian market in Stage I, Dana, a joint venture between Indonesia’s media giant Emtek and Alibaba’s Ant Financial, appeared in the local market at Stage III. According to data from the fourth quarter of 2018, Dana’s downloads exceeded all other financial apps on Google Play.It had also launched a massive promotional campaign.

It is interesting that soon after Go-Pay announced its cooperative relations with JD.ID and other small-scale e-commerce and digital service providers, Dana announced cooperation with Tokopedia’s rival Bukalapak to realize full integration of e-wallet and an e-commerce platform. The competition between the two major local e-payment companies has resembled competition between Taobao and JD in China.

Benefits for the People

Today, e-payments for ride-hailing, online shopping and offline consumption have been integrated in Indonesia. The Indonesian government has promoted the growth of the internet economy, especially e-payments, with hopes that its people can enjoy the convenience and bene fits of the internet economy. At the same time, it has begun to establish laws and regulations on such new products and fieldsto protect the legitimate rights and interests of users and enterprises.

JD.ID advertised as a new e-commerce platform in Indonesia.

In 2015, the Indonesian government introduced a three-hour investment registration service, which reduced business registration time from 21 days to three hours to attract more foreign companies to the Indonesian market.In 2016, presidential decree No. 44/2016 was issued, which imposed restrictions on foreign e-commerce. According to the decree, foreign e-commerce companies with investment over US$7.4 million would be allowed to own 100 percent of shares, and those below that value would be allowed to own up to 49 percent of shares at most.

Indonesia’s finance minister has also indicated that Indonesia is preparing new tax code for e-commerce. The new code will provide comprehensive guidance for international and local e-commerce enterprises across corporate income taxes and value-added taxes throughout the entire e-commerce industry chain. In 2018,the Indonesian government introduced the National Payment Gateway (NPG) to encourage its populace to adopt a cashless society.

Although some risks and challenges have emerged in the e-commerce and e-payment markets in Indonesia, the rapid development of the local economy and accompanying improvements in residents’ incomes are making the future of the Indonesian market appear bright. Meanwhile, building the e-commerce ecosystem and improving infrastructure will empower platforms to provide higher-quality customer service and a better user experience to achieve user growth more effectively.