One of Indonesia's leading cellular services providers, XL Axiata, may sell part of its stake in online marketplace Elevenia to collect new funds for expansion of this e-commerce platform. However, there is also another option. XL Axiata could also decide to use funds from its internal cash reserves. Dian Siswarini, President Director of XL Axiata, said a decision will be taken within the next two months.
Elevenia is the third-largest e-commerce platform in Indonesia with an average of nearly 35 million visitors per month. This online platform is owned by XL Planet, which is a joint venture between XL Axiata (50 percent) and SK Planet Co. Ltd. (50 percent). Given its high ranking among the most popular e-commerce platforms in Indonesia, we assume there are plenty of investors interested to purchase a stake in Elevenia.
In 2013, XL Axiata (50 percent) and SK Planet Co. Ltd. invested USD $18.3 million, each, for the establishment of Elevenia. Meanwhile, over the past two years XL Axiata injected an additional USD $34.9 million of funds in Elevenia to finance the platform's progress.
Siswarini said XL Axiata's expansion to the e-commerce industry is one that brings opportunities but it also brings risks. Especially at the beginning of the project it requires plenty of funds and effort to turn it into a success. For XL Axiata the diversification of its business is important because it is losing the battle for market share in Indonesia's mobile phone market (to Telekomunikasi Indonesia and Indosat Ooredoo). The e-commerce industry can become a new source of profit for XL Axiata.
But despite Indonesia's rapidly growing e-commerce industry (supported by rapidly growing Internet and smartphone penetration), there are no certainties. For example, rival Indosat Ooredoo shut down its e-commerce platform cipika.co.id in June 2017 due to weak results.
Meanwhile, Telekomunikasi Indonesia (Telkom) remains focused on the development of its e-commerce platform blanja.com. This year it will inject IDR 500 billion (approx. USD $37.6 million) into this online marketplace for further development. Currently blanja.com is still relatively small with an average of 5 million visitors per month.
Most Popular E-Commerce Businesses in Indonesia:
¹ average monthly visitors in January-March 2017 period
Source: Bisnis Indonesia