Episode Two

Appsolutely App-obsessed Indonesia: Conversation with Junde Yu of App Annie

29 May 2020


ALAN 0:13

Welcome back everyone to the second episode of Indo Tekno. The Indo Tekno podcast is devoted to everything that is Indonesia and technology-related. The podcast is hosted in English, with an accompanying transcript in Bahasa Indonesia. Kami akan memberikan transkrip podcast Bahasa Indonesia di situs web kami.

My name is Alan Hellawell. I am the host of IndoTekno. I am also the Founder of Gizmo Advisors and serve as Venture Partner at Alpha JWC Ventures.

For those of you who tuned in to our first episode, we examined the current state of e-commerce and logistics in Indonesia with the help of Arne Jeroschewski of Parcel Perform. As an aside, I wanted to thank all of you who shared with me your very thoughtful feedback after having listened to the episode. We’re hopeful that our podcasts continue to evolve to your liking going forward.

Today, we explore the world of mobile apps in Indonesia. If we think of catalysts to the growth of internet adoption and the spread of digital behaviors, we believe that the mobile app has been hands-down the most powerful driver of Indonesia’s leap-frog into the digital age. Indonesians are amongst the most active users of smartphones in the world, having averaged 5.5 hours per day in March this year. That is nearly twice as much as the average American smartphone owner.

I know of no other company so singularly devoted to understanding mobile app usage and behavior than App Annie.

I’m very pleased to have as my guest Junde Yu, VP Sales and Support at App Annie. I have known Junde for nearly ten years. Junde joined AppAnnie in 2011 and has held leadership positions in the mobile space for more than 15 years. Great to have you join us today Junde.

JUNDE  1:58  

Pleased to join you today, Alan, I can't believe it's been almost 10 years since we first met. It feels like almost a different world we live in now.

ALAN  2:05

Could you give us a brief introduction about what AppAnnie does?

JUNDE  2:10  

We're very happy to share more of App Annie's data perspective on such an exciting market today. App Annie is the global leader in mobile apps market data and analytics. We are headquartered in San Francisco with 12 offices worldwide. We provide first party analytics and competitive insights to help companies succeed in the mobile space. Our authoritative data is often cited by top global companies like Apple, Google, Tencent, and so on.

ALAN  2:34

Junde, one of the most dominant buzzwords in the Southeast Asian internet vocabulary over the past couple of years has been the “SuperApp”. Are you seeing solid evidence of the region’s leading mobile apps evolving into super-app status, judging by user time spent and other metrics? 

JUNDE  2:51  

Yes, definitely. So the super app concept is something like WeChat, where you can use multiple services in one single app. Right now, we see that the two ride hailing giants in Southeast Asia, Gojek and Grab, they're leading this charge, but shopping apps are also starting to actively expand their offerings for more user engagement. So like you mentioned, time spent in app is a metric that we use to often measure these super apps. When Grab and Gojek first started out in the Indonesian market, the average time per user per month for these two apps was around 15 minutes. Now, just before the pandemic, it went up to around one hour and 10 minutes, because people were using the apps not just for ride hailing, but for various other O2O (online-to-offline) services like GoFood, GoMassage, and so on. In April, despite the huge drop in commute due to movement restrictions, the average time spent per user per month was still at around 46 minutes. And again, this is primarily because of the non ride hailing services within the apps. Major shopping apps such as Shopee and Lazada are also offering various entertainment features like live streaming shows and minigames to engage users more, and promote more use cases for their virtual currency. In addition, they've also ventured into the finance space with ShopeePay and also the Lazada credit card to provide an even more seamless online shopping experience.

ALAN 4:07

In what major area are you seeing a consolidation of usage? 

JUNDE  4:12  

From a category perspective, in terms of the time spent, we don't really see a consolidation of usage in the top categories over the last two years in Indonesia. In fact, we see that the top two categories, being communications and social, they're actually losing percentage points in terms of time spent. What this means is that while these categories are still growing, they're accounting for a smaller share of all time spent across all the app categories. So on the other hand, some of the other big gainers of categories are the entertainment, shopping, games and finance categories. As for the travel and local category, where Grab and Gojeck apps reside, the category timespan has also grown by 75% in the past two years.

ALAN  4:53

While elements such as the massive population of Indonesia and strong growth in mobile usage have been clear attractions, one common concern is whether mobile apps will monetise well in Indonesia. For example, will users still use ride share after subsidies subside, will e-commerce usage remain robust as the platforms pull back free shipping and other promotions. Will users pay for video, music and other subscriptions? 

JUNDE  5:20  

That's an interesting question. I'd like to take a look at what's happening in a more mobile mature country like China. I myself, I spent 10 years living in China in the thick of the smartphone revolution, so I'd like to say that we can actually see a lot of future business models in developing countries shape up just like how they did in China. Indonesia, like China, is a huge mobile first market and there is also a good supply of venture funding. So when Didi and Uber first had a price war in China, there was huge growth in the user base, as a lot of new users were incentivized to try and out the services. When Uber exited China and hence ended the price war the usage of Didi did not go down despite prices going back up. This is primarily because the users have gotten used to the convenience of a ride hailing app. So if we jump to the entertainment and music categories if we look at this these categories on the iOS store, it's also worthwhile to note that China is amongst the top three companies globally, for revenue in these two categories. The common factor here being people have time to kill and this is convenient entertainment, whether it's accessible on your TV, on your phone or on your tablet. Where China goes one step further in convenience is also in the payment for such services; being able to use Alipay to pay for the iOS app store, or being just able to scan the QR code on the TV screen to pay for on-demand content. And finally, convenience again, and also being able to get cost effective goods: these are huge factors in the adoption of e-commerce. This has driven a global shift where physical shops are now becoming branded online storefronts, as we've seen with the Alibaba and Xiaomi stores. The COVID situation has actually also expedited this transition for many brick and mortar retail companies. This is especially true for Indonesia, where the entire population of over 267 million is spread out over 70,000 islands. Not all these islands have access to the same kind of goods available in the big cities.

ALAN  7:15

There seems to be a pretty clear division between beneficiaries and victims of the CODID-19 pandemic. In the plus column, we seem to have Gaming, Ecommerce, Healthtech, Edutech and Food delivery. Any particularly interesting analysis that you can share with listeners about trends in these areas? 

JUNDE  7:37  

I'd like to start with my favorite topic: gaming. So I had one webinar recently with a Vietnamese company called Amanotes. They're one of the top companies in Southeast Asia. So one interesting quote from them was that in since the pandemic started in terms of the gameplay, data statistics, active users, it seemed like every day was like a weekend. So we also see a similar pattern in Indonesia; we saw huge increase in downloads and engagement for games. Some of the top games in Indonesia by active users are hardcore games like Mobile Legends Bang Bang, a game that I personally play myself. There's also Free Fire, PubG, as well as hyper casual titles like Worms.io, and BrainOut. In the e commerce category, we saw increase in downloads, active users and time spent. We're also seeing some activity from some apps that are adopting a new buy-now-pay-later offering which would appeal to a lot more consumers especially during this period. For the food and drink category downloads started to grow in January but started to stagnate in February. This may be because a majority of food delivery orders are going through Gojek and people already have this app, and also Gojek is listed in the separate "Travel and Local" category. The exception here is HappyFresh, which managed to double the active users during this COVID period and it continues to increase. In the education space. Google Classroom was the seventh most downloaded app in March. Other top apps in Indonesia include Zenius and Ruangguru. Amongst these three Zenius has the highest average time per user, which also suggests that this product has the highest usage stickiness. In the health and fitness category, we saw downloads growth in some self monitoring health apps, as well as some home fitness apps. In the medical category. We saw downloads growth in the government agency health apps, as well as contact tracing apps. And also startups like AloDokter and HaloDoc.

ALAN  9:28 

On the other side of the spectrum: 1) Ride hailing, 2) Travel and 3) Digital advertising seem to have been hit very hard. Any signs of recovery in these areas? 

JUNDE  9:39  

We're definitely hopeful. So firstly, for advertising, while we do not have direct advertising spend estimates, we can try to look at some other data factors. Firstly, we look at downloads because we see that downloads are still increasing and advertising has always been a big part of driving new consumer downloads. If we compare global total downloads in Q1 of this year, compared to Q1 of last year, they are still increasing; also continuing in April. And this trend is present worldwide as well as Indonesia. Another metric that we look at to look at the scale of advertising these days would be the number of installs of the advertising SDKs. We see that this number is still increasing every month for the past month. This just that more publishers are engaging with more advertising providers. In the travel space, we start to see increasing week-on-week downloads in the travel category in countries like China and South Korea as these countries have exited the lockdown phase. This has been especially so since we were approaching the Labor Day holidays, which was a period of domestic tourism. In general, other countries that are in lockdown have been down on travel downloads in February and have been stagnating. One exception is actually the US where travel downloads started growing since the third week of April, but I don't have any hypothesis for that. And finally for right who apps: yes, the active users are down, but they're just down by not more than 10% from the peak traffic prior to this COVID-19 period. The app sessions are down by half. But this is probably good considering that there is about 90% reduction in daily commute. We have started to see recovery of ride hailing apps usage in Korea and China, but people have also become more conscious of ride sharing and public transport because of hygiene reasons. So we also start to observe more usage on second hand car sales apps, as people look to alternatives for commute.

ALAN  11:31

What interesting predictions can you make around mobile app usage in Indonesia?

JUNDE  11:35  

Well, we see a lot of potential firstly in the FinTech space. If we look at China's top finance apps, they are used by 50 to 60% of the smartphone devices on a monthly basis. While in Indonesia, Ovo and Dana are at around 20% of this usage penetration. So there is definitely a lot of room for growth. Also in terms of the regulatory environment, the Financial Services Authority in Indonesia, the OJK, has also introduced friendly guidelines for startups. For instance, any P2P provider can enjoy a one year grace period of operation before they acquire OJK certification. This has allowed many businesses to enter the P2P loan markets and brought about more financial opportunities to people who can't get traditional financial services. So there have been at least 60 new finance apps launched in Indonesia on a monthly basis. And for some peak months, we've seen more than 100 apps launched. The other thing is, we see that app downloads have also spiked since the week of 15th of March, where COVID cases spiked and President Jokowi announced social distancing. Downloads have since tapered off slightly, but they are still up 15% compared to pre COVID-19 periods. So what this means is that people in Indonesia are trying and downloading a lot more apps for home based education for business meetings, health and fitness, and just for killing time, like watching videos or hyper casual games. This has increased a lot of exposure to apps as well as app based use cases. And this provides a very healthy outlook for the growth of the industry in Indonesia.

ALAN  13:05

Well, this concludes our second instalment of IndoTekno. Thanks so much for joining us today, Junde. We hope you, the listener, have enjoyed the episode and welcome any and all other feedback on the show. My email is Alan@gizmo-advisors.com.  Please do visit our website at Indo-Teko.com if you would like to be put on our mailing list for new episodes. If you enjoyed the podcast overall, we would also deeply appreciate any feedback you can furnish on Apple Podcasts. The podcast was translated from English to Bahasa Indonesia by Alpha JWC Ventures. Terima kasih untuk mendengarkan. Sampai jumpa lagi.