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Challenging status quo: How Indonesia's vertical e-commerce in automotives breaks old habits

Ardy Alam
Ardy Alam

Chief executive officer of Garasi.id

Jakarta  /  Thu, August 22, 2019  /  09:22 am
Challenging status quo: How Indonesia's vertical e-commerce in automotives breaks old habits

The customer's journey in car purchasing is a complex process, especially within the Indonesian market. (Pexels/Pixabay)

Rapid technology changes have affected the automotive industry over the last few decades. Media influences and major innovative developments have significantly changed the customer's journey in purchasing a car. Consumers now spend more time researching online before deciding what car is ideal for them and going to a car dealership to make the purchase.

The customer's journey in car purchasing is a complex process, especially within the Indonesian market. The growing internet penetration and the large numbers of mobile phone users have turned Indonesia into an area with a growing potential for rapid digitalization, as well as a major investment destination, both from local and international companies. Those factors have transformed the market tendencies and the overall journey, but certain limitations do exist. Compared with the more developed and mature markets, the process of buying cars is different in Indonesia, especially in the case of pre-owned cars.

Let’s compare the customer experience in the United States and Indonesia. In the US, consumers are equipped with many available tools and reports to support their decision-making processes. Much crucial data is available, such as maintenance history, accident records, document validation, car condition reports and even market price guides for specific models and colors. With this information, consumers could examine the real value of the cars they are interested in. Some online platforms even provide guarantees and deliver the car to the customer's home, making the process similar to online sales of fast-moving goods.

Even with the effort and development within the Indonesian automotive industry, our customer characteristics are still different than that of the US. Indonesian consumers tend to be more hands-on and prefer to personally visit physical dealers before making any important purchase decisions. Doubts often arise from the limited information provided by the sellers, which in turn affects the trust factor and validation of the car's real value. Within the used car market, Indonesian consumers also prefer to negotiate off the table. It is our natural response to wish to get the best offer possible.

These characteristics have proven to be a challenge for many online platforms serving the current Indonesian market, especially if one is pursuing a complete online-only process. However, the growing challenges also come with a big market potential. Many businesses have begun to evolve in order to tackle the issues and offer a variety of alternatives to serve the market. They provide a transparent process that is supported by valid information to bridge the challenges and opportunities. As an example, the availability of pre-inspected cars and engine/powertrain warranty post-sales could offer a new option for buyers seeking quality used cars.

The new approach is shown by Garasi.id as one of the industry players, which provides pre-inspected, warranted quality used cars. With carefully curated low mileage units, the cars also include extended warranty assurance for engine/powertrain, transmission, suspension and electricals to ensure peace of mind after the purchase. The complete inspection record and trusted supply could exercise the market on gaining trust with the online platform and to fully utilize the potential of the digitalization of automotive purchasing.

One way to ensure a continuity of interactions with used car buyers is to offer them something beyond just “selected used cars”. To accomplish this, an ecosystem of trust needs to be established and that means offering the consumer products and services that are relevant to their needs. For instance, routine maintenance from reputable authorized service centers, car care services, tires and wheels, as well as loan calculators and tools to assess affordability and financing options. Adding relevant articles as well as tips and tricks are also ways to keep online customers engaged. At the end of the day, the ecosystem model provides a one-stop solution for all automotive needs. (dev/wng)

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The writer is the chief executive officer of Garasi.id, an automotive vertical-marketplace startup focusing on used cars. He is an automotive enthusiast with a mission to create a simple and transparent ecosystem-based platform for used cars sales and services in Indonesia. He is an alumnus of Kelley School of Business, Indiana University, Bloomington, US.

Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.