JAKARTA -- A joint venture between two major Asian family businesses, Salim Group of Indonesia and South Korea's Lotte, officially launched its e-commerce platform on Tuesday.
The new online website and app, called iLotte, will be operated by Indo Lotte Makmur, a 50-50 joint venture established by the two conglomerates last year. Indo Lotte will initially invest $100 million for the e-commerce business, which will primarily target women by offering items such as clothes, cosmetics and other lifestyle goods, as well exclusive South Korean cosmetic products. Shoppers will be able to accumulate points that can be used to receive discounts on future purchases.
Indo Lotte is a late entrant to Indonesia's burgeoning e-commerce industry. It is marketing iLotte as a trustworthy online mall that sells products directly from brands such as Shiseido and Nike, compared to most existing players in the country that operate a "marketplace" that connects third-party sellers with buyers. While Indo Lotte carries only a small amount of inventory on its own, the company has set up a warehouse to facilitate distribution.
The joint venture combines Salim's "in-depth understanding of the Indonesian market" and Lotte's "knowledge of international lifestyle," Phillip Lee, president of Indo Lotte, said at a press conference in Jakarta on Tuesday.
Dani Sumarsono, Indo Lotte's chief financial officer, said the company has a superior logistics network and will focus on marketing different product categories.
Salim Group, which controls Indofood Sukses Makmur, Indonesia's largest food company and the operator of 14,000 Indomaret convenience stores, has a strong distribution network across the archipelago. Lotte already operates one department store, 41 retail stores and 31 fast-food franchises in the country.
The joint venture will test whether local players will be able to compete against deep-pocketed rivals from China, who see Indonesia as a key market for international expansion. Alibaba Group Holding in particular has invested in some of Indonesia's top e-commerce players, including Lazada and Tokopedia.
While some smaller players have exited the market, Salim, which has positioned the new online business as its next pillar of growth, has remained committed. The group acquired a local bank in May to establish an online payments platform, and in August it bought online shopping site Elevenia.
Indo Lotte will compete directly with JD.com, one of China's largest e-commerce companies that has been aggressively expanding its business in Indonesia.