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E-commerce promotes interregional trade: Study
When Laras Anggraini, 26, the owner of Smitten by Pattern, started her business in 2017, she was aware from the beginning that her clothing products filled a niche in the market, because they were unique with bright colors and artsy patterns
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span>When Laras Anggraini, 26, the owner of Smitten by Pattern, started her business in 2017, she was aware from the beginning that her clothing products filled a niche in the market, because they were unique with bright colors and artsy patterns.
“At first, we only used social media, because we thought we had a specific market. Previously, the buyers were also limited to young people in Greater Jakarta or other big cities of Java,” she said on Thursday.
However, she was surprised after joining an e-commerce platform, Tokopedia, in 2018, which gave her access to a new type of market that she had not found on social media before. She got buyers not only from Greater Jakarta but from as far afield as Papua, Makassar [South Sulawesi], Pontianak [West Kalimantan] and West Nusa Tenggara.
With a wider customer reach, she can sell more than 150 pieces a month today, two to three times the sales she had in the past.
According to research conducted by the Institute for Economic and Social Research at the University of Indonesia’s Economics and Business School (LPEM FEB UI), 90 million active users access Tokopedia every month. The number of sellers on Tokopedia has reached 6.4 million, up from around 5 million in 2018. According to the survey, almost half of the sellers said the platform had helped them reach a wider market.
The study also shows that Tokopedia has propelled domestic trade both within and between regions of Indonesia.
LPEM FEB UI vice director Kiki Verico said on Thursday that almost 90 percent of the transactions that took place in the eastern part of Indonesia were made by buyers from the western region (56 percent) and central region (33 percent).
Meanwhile, transactions that occurred in central Indonesia involved many buyers from western regions (54 percent) and still a sizeable share from eastern regions (11 percent). That explains that online trading promotes trade among regions across Indonesia.
“If we look at the details, the eastern part of Indonesia also contributes 11 percent of goods delivered from other region to the central part of Indonesia. At the same time, Eastern Indonesia also has a 10 percent contribution to goods delivered to the Western part of Indonesia," he said.
The study shows that intraregional trade transactions accounted for 53 percent of all transactions in the western region, 35 percent in the central region and 10 percent in the eastern region.
The LPEM FEB UI study also revealed that e-commerce helps small and medium enterprises in the regions buy raw material for their production.
Three of 10 consumers were found to be shopping on e-commerce platforms for production purposes. Particularly outside of Java a large share of buyers used Tokopedia to acquire raw materials, such as in Bengkulu (54.5 percent), Gorontalo (46.15 percent), West Nusa Tenggara (46.15 percent) and Maluku (45.45 percent).
“Thus, Tokopedia has driven a consistent inclusiveness and creates opportunities and access for all people in the central and eastern parts of Indonesia to be producers,” he said.
Tokopedia chief executive officer and cofounder William Tanuwijaya said that, as the platform enters its 10th-year anniversary this year, Tokopedia has reached another milestone by recording a transaction value above Rp 14 trillion (US$990.13 million) every month since May this year.
“If everything goes according to our target, we will book Rp 222 trillion worth of transactions by the end of 2019. And since Indonesia is a $1 trillion economy, that means that this year Tokopedia can contribute up to 1.5 percent to the Indonesian economy,” he said.
William said Tokopedia was looking to increasing transaction volumes in the future with the e-commerce platform projected to contribute 5 percent to the Indonesian Economy in the next two decades. To reach that target, William is banking on Indonesia’s domestic market rather than markets outside Indonesia.
“If many other technology companies choose to go global, we take a different view, as for us going local is much more interesting than going global,”
“For us, Surakarta [as a market] is more important than Singapore, Boyolali is more important than Bangkok and Semarang is more important than Washington, DC,” said William.
