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Why JD.com Is Eyeing the Indonesia Market

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Feb. 1 2019, Updated 7:31 a.m. ET

JD tests drone delivery in Indonesia

JD.com (JD) recently completed what it described as the first government-approved drone delivery test in Indonesia. The company said the pilot lays the groundwork for future commercial drone delivery in Indonesia. JD has been using drones to speed up the delivery of packages to customers in China for more than two years, and it appears it wants to replicate that in Indonesia. JD’s goal is to ship 85% of orders to customers in Indonesia the same day or the next day.

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A $100 billion Internet economy

For e-commerce companies like JD, Indonesia presents an attractive growth opportunity. According to a report from Google and Temasek, Indonesia’s Internet economy will be worth $100 billion by 2025 from $27 billion in 2018. Thus, the e-commerce industry is forecast to grow to $53 billion by 2025 from $12.2 billion in 2018.

Companies that are pursuing the revenue opportunity in Indonesia’s Internet economy alongside JD include Alibaba (BABA) and Amazon (AMZN). Last September, Reuters reported that Amazon plans to invest about $950 million in the next ten years to grow its cloud business in Indonesia. Additionally, Alibaba recently announced doubling its cloud computing capacity in Indonesia.

JD’s revenue rose 21%

JD partnered with Google (GOOGL) last year to help it seize opportunities in international markets such as Indonesia. JD’s revenue rose 21% YoY to $15.3 billion in the third quarter of 2018. Alibaba and eBay (EBAY) grew their revenues by 54% and 6.0% YoY, respectively, in the third quarter.

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