Forbes Philippines|July 2016

Big Riady investment is a bet that Indonesian e-commerce finally is at hand.

For the better part of two decades e-commerce in Indonesia has been a story about potential, with success just over the horizon. The country’s richest families had irons in the fire, dating back to 1997 when the Salim family reportedly spent $20,000 to set up a string of Internet kiosks.

That effort died a year later as the country lurched violently toward democracy. And while life would change mostly for the better in the far-flung land, how it bought shoes or groceries changed little. Payment methods, delivery channels and Internet reach are perennial problems for Web merchants. In Jakarta, where congestion can turn a journey of a few miles into a half-day ordeal, neighborhood markets and malls remain the nexus of daily life.

That is about to change. In September the Riady family’s Lippo Group unveiled its second e-commerce venture, committing $500 million to Mataharimall.com. Its first attempt, Lipposhop, in 2000, failed within a year.

Lippo has drafted a heavyweight pair to help. Chairing the business is Emirsyah Satar, who turned around the country’s ailing airline, Garuda. The CEO is Hadi Wenas: a 36 year old wunderkind with a Stanford Master’s in Computer Sciences who helped launch the Zalora retail site after stints at Oracle and McKinsey. “The pie is growing fast,” Wenas says. “If we don’t do this, someone else will come and take the pie.”

A surge in ownership of smartphones is one reason why the company is so bullish this time around. The value of online sales was roughly 1% of all 2015 retail. Forecasts differ, but Indonesia’s communications minister, Rudiantara, who like many there goes by one name, reckons the value of online transactions may swell to about 5% of all sales, or $130 billion, before the end of the decade.

By betting big now, MatahariMall hopes to be the go-to shopping site for the nation’s 250 million people. It will accomplish that, Wenas says, by leveraging off Lippo’s brands, especially the group’s widely respected Matahari Department Store, the country’s biggest. Lippo’s main retail businesses are held through Matahari Putra Prima, which operates the Hypermart and Foodland (convenience) stores, and the department stores. Sales for each totaled $1.1 billion and $1.2 billion, respectively, last year. “If you come in too late, it’s a participation game, not a winner’s game,” Wenas says.

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