Discussion: E-Commerce in Indonesia – The Challenges Ahead
For the last panel of our two-day Startup Asia Jakarta conference, we've aggregated an expert panel discussing on the e-commerce landscape in Indonesia. The panel was moderated by Andi S. Boediman, director at Idesosource along with the panelists listed below:
William Tanuwijaya, Co-founder of Tokopedia
Tesong Kim, Director of PT. Rakuten-MNC
Remco Lupker, Co-founder at PT Tokobagus
Daniel Tumiwa, Country Manager at Multiply Indonesia
#16:30: Andi: Is e-commerce a hype in Indonesia? Daniel to introduce Multiply Indonesia Daniel: Currently we provide to payment and logistics, and protection for users who buy online, so we can build trust in the market. #16:32: Andi : How is tokopedia different from other marketplace? William: It is a C2C marketplace. We launched in 2009. I don't believe e-commerce is a hype. Since day one in Indonesia where we adopt e-mail and friendster to promote services. Then Facebook came along, where they could tag people. It was a natural process to buy and sell things online. It is about the internet users becoming more educated, given that there are more choices, they can choose. #16:34: Andi: How is the user traction, and is it up to expectations? Tesong Kim: I am here already two years to expand to Indonesia. Business prospects is pretty good. It is much better than we expected. Combining expertise from Rakuten and MNC, we are close to being the number one in Indonesia. Andi: How big is your transaction on your site? Tesong Kim: Tough question. Compared to last year, the transaction has increased 20 folds, and for traffic growth, it grew 8 folds. #16:36: Remco: We're bringing buyers and sellers together. The market is pretty much premature yet. It is still difficult for people to click the button, and make that transaction. Andi: Are you making money from media or? Remco: No from the investors (Laughter from audience) Andi: How do you see yourself in three years? Remco: There is an outstanding gap between the first and second place finishers. You should not over-advertise your site. It is annoying to your users. Andi: Does the TV commercial translate to transactions? Remco: Definitely. #16:39: Andi: You had a very strong campaign previously. You offered free shipping. Tell us more. Daniel: We currently charge transaction fees, and track how each transactions. For consumers are all about trust. Once they get the notification that they are able to track the order process, they will come back again to shop with us. Once they find a trusted marketplace, and if the price is right, they will come back. They are more concerned on how the good arrives safely in their hands. Andi: The challenge is on the logistics fulfillment. Daniel: We're developing as the market develops. The eco-system is building nicely. The banks now have internal targets in place to meet for e-commerce. It's amazing to see the changes in the last three to four months. #16:34: We support and educate the merchants to do the order fulfillment. #16:37: As a C2C marketplace, it's about managing expectations. Only valid buyers can sell on our marketplace. If one seller has received a very bad review, it is impossible to generate another return. #16:45: The reason why we jumped into the business is to address this problem. After that we realized there is a lot of problems. For Tokopedia and Multiply, you need to invest in IT infrastructure. There is very limited courier services here in Indonesia. Here in Tokopedia, 10 to 15 percent of transactions are actually going to logistics. #16:46: Andi: I heard Rakuten has a different logistic solution. I heard you can pick up from convenience stores. Tesong Kim: Yes, the logistics here is pretty terrible. We have our cash-on-delivery driver, and last year we launched convenience stores collection. You can choose our select 24-hour convenience store and pick up your goods. #16:50: Daniel: IDEA (Indonesia E-Commerce Association) is up there to deal with common issues - payment, regulations, consumers - anything that is related to the industry. It is very tough because in Indonesia, the power is in the country's chaos. They find ways to sell something. The fastest way is to sell online. There are many issues here. There are security issues, fraud, money laundering issues. The government has to regulate such things and the government would need to discuss with communities. #16:54: Andi: How do you address imitations? William: As a user-generated content provider, it is difficult to discern. Only B2C platforms can address such issues. Since it is an individual to individual transaction, there is little that can be done. What we can do is to put in regulations to remove imitation sellers on the platform. Remco: We recently banned selling of counterfeit items. You can definitely detect counterfeit items, especially when there is a disparity of prices. With the removal of counterfeit items, it increases the value of the products on the website. #16:57: Tesong Kim: We secure real products, and eliminate counterfeit products. We want to keep our website secure and clean. I think there is two sides demand. There are always people who would want to buy the cheapest stuff. There are so many rich people here in Indonesia and they want to buy real stuff. #16:59: Andi: How do you guys differentiate yourselves from competition? How do you convince merchants to set up shop on your portal? Tesong Kim : Our concept is shopping is entertaining, and we make our content really sticky. Our content pages are really long, and our conversion rates are quite high. The biggest benefit for us to keep this stickiness is through point systems. With one single user ID, you can use the points accumulated on other services. William : We are very local. We try to solve the problems within the e-commerce scene. In 2009, there were skeptical comments about transacting online. We provided escrow services. When we convince traditional merchants to use Tokopedia to sell their products, we make it extremely easy to sell. All they need to do is to put a price tag on the product and they can immediately sell them. We always ask how we can help the merchants and enhance consumer experience. Remco : Focus on the quality content. Next, an enjoyable shopping experience - simple, easy-to-find products in your city, and follow-up. And marketing too. #17:05: Remco: In 3 - 5 years, we will become the biggest. Because the market is huge, competition can exist. I'm definitely positive about the e-commerce market here in Indonesia. Tesong Kim: (On vision) It is going to grow for e-commerce. People never stop buying, and mobile is coming up. It depends on infrastructure, and hope the banks will change the mindsets. William: In the next two years, it will be more advanced, people will be more educated. Daniel: If regulations are made to support, it will be a very different outcome. The future will be huge. Andi: In summary, we all believe in e-commerce, and it's time to invest now! This is a part of our coverage of Startup Asia Jakarta 2012, our startup event running on June 7 and 8. 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