I

t is undeniable that the Internet has become an inherent part of people'€™s lives, especially those who live in big cities.

Growing from only 16 percent of the total world population in 2005, Internet penetration reached 39 percent of the world'€™s population in 2013.

In other words, almost 2.8 billion people are now connected through the Internet, according to the International Telecommunications Union (ITU). This has opened up many new opportunities for business players around the world.

Consequently, many firms have begun to dabble in the online world. The degree of firms'€™ activities on the Internet varies widely from one firm to another. For example, there are many global brands that have created their own social network profiles to increase their brand presence.

On the other hand, there are also some technology companies who existed way back and survived the dot-com bubble, which took place in 2000, and have now become the main players in their respective industries; namely, Amazon, Google and eBay. Furthermore, the Internet can also be a fruitful environment for many innovative start-up companies. Many players are establishing a presence in the digital environment and trying to monetize it.

This hype has spread around the world, including in Indonesia. Although the Internet penetration rate in Indonesia is lower than the world'€™s average, only 15.4 percent according to the ITU, the country'€™s market is still relatively large in absolute terms.

Around 38 million Indonesians are connected to the Internet, placing Indonesia 13th in terms of Internet user numbers. That being so, Indonesia is an attractive market for e-commerce.

E-commerce activity in Indonesia has been around for quite some time. Most of us are probably familiar with the term '€œgan'€, which is used by many sellers in Kaskus, an Internet discussion forum that has also been used for selling items online.

Not only that, some of us are probably used to being tagged by some random online shop on Facebook. The fact is that Indonesia'€™s digital landscape has evolved and has given birth to many innovative start-ups. For instance, start-up tech companies, such as Lolabox, VanityTrove and Beauty Treats, offer beauty boxes to its customers containing luxury cosmetic samples.

They try to further monetize their businesses by selling the products in their regular sizes.

Indonesia'€™s e-commerce industry has attracted not only local but also foreign players. Rocket Internet, one of the world'€™s largest Internet incubators, has launched several ventures in Indonesia, such as Zalora, Lazada and even Foodpanda, an online food delivery platform, which is uncommon in Indonesia.

Most of these foreign players come with vast funding resources and technical know-how shared among its ventures across countries. Needless to say, their presence here has heightened the competition.

Moreover, doing business on the Internet is different from doing it offline. While companies have greater power in the offline industry, the Internet has shifted this power toward the customers.

There are many options available to customers and due to the nature of information transparency on the Internet; customers can easily compare each offering to the others.

Customers'€™ attention is a scarce commodity in the realm of the Internet and companies have to fight for this. One important thing to note is that the battle is not won simply by acquiring new customers; companies still have to work harder to manage the relationships with their customers and take any measures to ensure successful customer retention.

In this emerging industry, one of the most important things for companies is gaining their customers'€™ trust. Many attempts have been taken and one of the most common is to engage with customers and build a community surrounding the company in question, in which customers are encouraged to post positive reviews of the company'€™s products on their own blogs or other social media platforms.

Studies show that nowadays customers trust their peers more than they trust advertisers. Hence, by getting positive reviews from their customers, companies can expect to attract many new customers.

Another obstacle in Indonesia'€™s digital industry is the low adoption of electronic payment mechanisms. Unlike in developed countries, PayPal is still rarely used by Indonesians. Some start-up companies do offer e-payment services in Indonesia, such as Doku, Veritrans and Coda payments. However, it is still unclear whether Indonesians will take to these types of payment.

Moreover, many Indonesians are still reluctant to give their credit card information in an online
transaction. Start-up companies have been trying to find a way to overcome this issue. Some offer
payment options through bank transfers and even cash on delivery.

It is irrefutable that the e-commerce industry will continue to dynamically transform in the future. Start-up companies will come up with innovative ideas to overcome the many obstacles that present themselves.

Also, it is very likely that more start-up companies will be founded, offering new products to cater to customers'€™ needs, even as yet unrealized ones.

How will this industry evolve? Will Indonesians come to prefer the comfort of shopping in their pajamas at home to roaming the shopping mall? Only time will tell.

The writer is studying international management at Bocconi University, Italy.