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Multimillion-dollar future in RI e-commerce
Avid online shopper, Caroline, fills her virtual cart with more than just fashion items
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vid online shopper, Caroline, fills her virtual cart with more than just fashion items. The young mother of two stocks up on children's toys and medicines not available in bricks-and-mortar stores.
'I also buy beauty products and toiletries, like toothpaste, soap and creams, for the kids,' she said, adding that she keeps the bill below US$500.
Caroline is but one of the millions of Indonesians dropping by virtual stores, and spurring the triple-digit growth of various e-commerce sites.
According to Kusumo Martanto, the CEO of PT Global Digital Niaga (GDN), Indonesia's prodigious economic growth, averaging 6 percent annually, has given rise to a whole new league of shoppers: the middle class.
'The economy has catalyzed the expansion of the middle class, the lynchpin of the consumer sector, which encompasses e-commerce,' he said. He added that the extensive use of the Internet and Internet-enabled devices, including smartphones and tablets, would accelerate e-commerce growth even further.
There are 220 million mobile phone subscriptions in Indonesia, out of a population of 240 million people, and Internet penetration, currently around 20 percent, will augment as the government and private sector invest in broadband infrastructure.
'Hence, the market in Indonesia is ready for e-commerce,' Kusumo said.
Research firm Frost & Sullivan expects Indonesia's e-commerce transaction value to record a compound annual growth rate of 40.2 percent from 2010-2015, the year when transactions will hit $650 million.
A study by Visa shows that Indonesian 'millennials' ' those born between 1982-1992 ' already are the largest group of online shoppers in the Asia Pacific, Central Europe, Middle East (APCEMEA) regions.
Kusumo added that under these conditions online store Blibli.com saw visitor and transaction numbers increase 1,600 percent throughout 2012. GDN, a subsidiary of business conglomerate Djarum Group, operates Blibli.com, which was funded with $10 million starting capital.
'The number of our merchant partners has also leapt from the 50 we had when we went live in 2011 to more than 400 currently,' he said.
Blibli, the 'online lifestyle mall', is not the sole e-commerce outlet seeing growth. Tokobagus.com, a classified ads e-commerce site, has managed to grow by 150 percent on average annually.
'As of now, we are displaying 1.8 million ads,' Irfan Badruzaman, the marketing manager of PT Tokobagus, said. He added that aggressive marketing tactics helped capture growth. The company, he said, conducted roadshows to entice people to place ads ' a service currently free ' and also had, in turn, advertised itself heavily on traditional media to draw visitors to the site. 'Around 60 percent of our expenses go on marketing,' he said.
Tokobagus.com, one of the first e-commerce sites to enter the market, ranks as the 14th most visited site in Indonesia, according to statistics by web company, Alexa.
Another e-commerce model the market has welcomed is marketplace, whereby the site acts as a meeting space between merchants and buyers.
William Tanuwijaya, the CEO and founder of PT Tokopedia, said that the number of merchants at Tokopedia.com had risen by 219 percent year-on-year in 2012, with a 686 percent rise in transactions.
He added that the market needed an assortment of e-commerce models as each concept had its strengths.
'Classified ads suit merchants who want to offer services, property or second-hand goods, such as vehicles,' he said, adding that classified ads allowed these merchants to be contacted by prospective buyers to strike a deal. 'This is necessary if the merchant has a limited number of items for sale,' he said.
Marketplaces, on the other hand, suited merchants selling to mass consumers, he said. Such merchants, which include those producing fast-moving consumer goods, needed e-commerce systems that could automatically manage shipment fees, payments and delivery.
'The embedded system allows merchants to focus on their core business while developing their [online] business efficiently,' he said.
Jullian Gaffar, the general marketing manager of marketing and merchandising at PT Metraplasa, said that classified ads and marketplaces were apt for the Indonesian market, because users found the functioning of the sites easy to grasp.
Metraplasa is an e-commerce company formed by state-owned telecommunications company, PT Telekomunikasi Indonesia (TLKM) and US e-commerce giant, eBay.
'In contrast, daily deal sites have to spend a lot of time teaching people how the site works,' he said.
Certain e-commerce sites have languished depite the business model they chose. Multiply, a long-standing blogging platform turned e-commerce site, abruptly announced its closure in April.
Maximilian Bittner, the CEO of Lazada Southeast Asia, said that e-commerce players had to keep their business adaptive to change, adding that eventually only one or two e-commerce companies would dominate the market.
Currently, he noted, Lazada worked on the business-to-customer model whereby Lazada sold products directly to the market after buying the goods from suppliers to ensure product fulfillment.
'However, our model is only good when the market is young,' he said, adding that as suppliers honed their e-commerce expertise, Lazada would leave product fulfillment to suppliers. 'We can then expand into the marketplace model,' he said.
