E-Commerce is Sexy, But Not Easy

“With nearly a third of its 250 million population able to access the Internet, 
7 in 10 of whom do so on their smartphones.” 

Ecommerce have the unique opportunity to focus on developing convenient platforms and support e-market growth. Similar to China’s online marketplace in the beginning, ecommerce industry in Indonesia has large pool of entrepreneurial sellers providing goods purchased based largely on social media recommendations.

In May 2016, the Association of Internet Service Providers in Indonesia (APJII) announced that Internet penetration in Indonesia has now reached 40% of the total population roughly 100 million internet users. Emarketer added that the number of smartphone users in Indonesia is estimated to rise from 55 million in 2015 to 92 million in 2019. -Indonesia-investment, sept 2016-

Also, with the most attractive emerging middle-classes in the world, Indonesia has a ready captive market for ecommerce industry. According to a Boston Consulting Group (BCG) survey, the number of middle-class is set to increase to 141 million people by 2020, up from 88 million on last 2014.





Is it sexy enough??

The 2016 Global Investment Trends Monitor report, issued by the UN Conference on Trade and Deveopment (UNCTAD), puts Indonesia in 9th position on its lits of top prospective host countries for foreign direct investment (FDI) from 2016 to 2018, up from the 14th position in last 2014 – The Jakarta Post, Oct 2016

Well, Indonesia is the home of a growing ecommerce sector. Over the past a year, we’ve seen many ecommerce born in this sector than ever before. That was a hot year! Business insider quote that by 2020, it is projected to reach US$130 million, which will make Indonesia become the third largest e-commerce market, behind China and India. The signs that can be positive booster for all player, and hope it can make Indonesian ecommerce into the mainstram conversation in Asia. Liputan6 quote that based on Badan Pusat Statistik (BPS), total ecommerce in Indonesia is around 26,2 million, increase 17% than previous year.

Good to see that online shopping reach 5% or more of the nation’s overall retail sector. Or when traditional on demand transportation, food and shopping services help the customer needs and make SME (small and medium-sized enterprises) go digital for better performance. Also when online marketplace like tokopedia, bukalapak, blibli, continue to dominate the industry.





But still, what’s going on with this industry?

Same with other market, Indonesian ecommerce has its own set of challenges for any player, founders and investors. After logistic problem, weak payment infrastructure, and fragmented market which not secret anymore, Indonesia has cultural challenges that need to be noticed.

Low penetration of online payments

Similar with early emarket in U.S. which was flooded with customers that wary to trust online payments. Cash on delivery still become the most favorite payment method for customers, eventhough it will bring risk for the ecommerce.

Payments are complicated and are often being declined by customers. Bank transfer and cash on delivery still become the queen for the payment in this sector. User friendly, safe and trusted online payment are dream for the further epayment development in ecommerce.

Slowly, but not easy, ecommerce, bank and telco company try to create trusted solution to utilize online payments could lead the huge growth. Beside debit and credit card, Indonesia market enlivened by the presence of Mobile wallet like Mandiri Ecash, Tcash, Indosat dompetku, XL tunai, IB Muamalat.

Cultural Challenges

Two cultural challenges that looks very interesting quoted by techinasia. First, Locals have a strong tendension to finding the best prices at all costs. Shoppers actively seek out promotions and hunt the deals. All players that plan to open here, needs to completely understand and rethink strategies about the lowest price they can offer while still being survive and getting closer to profit. Second, big-budget competitors will make the player need to find extra multiple ways to differentiate their own unique selling points (USP) from these existing big player.

How many players who will think that profit will follow when the company growth? Otherwise, how many of them will think to increase orders as many, no matter how much money will be spent? Some of players may think how to making profit. They reduce operational cost, marketing cost, learn more about the market, find the Unique selling points, trial error of product development, rebuild the strategy, and finally grow slowly. They think hard about the brand itself. Meanwhile, some of players think how to grow very fast, big budget with big impact, try to dominate the market and become the big player.





Which one do you prefer? Finally, you choose!

Maybe, some us forget to reanalyze and think hard about the DNA of the brand itself. Forget to define our brand architecture or brand uniqueness. Maybe, we ignore to getting closer with audience and find out what their need, what they want, or what make them convenient. Maybe, some of us too hastily to moving so fast with some fast way to increase the transaction with very short term marketing activities, without thinking how much money that we’ve burn.





Well, ecommerce is sexy but not easy...






*Article Tittle Inspiration: Dicky Haris Hidayat - PhD Student Norges Teknisk-Naturvitenskapelige universitet