E-commerce development hampered by cultural barriers<\/p>\n
By Teddy Setiawan Wijaya<\/p>\n
JAKARTA (JP): Online shopping is booming in developed
\ncountries. In the United States, sales tripled last Christmas and
\nmore new consumers came online than most cyber retailers
\nexpected. Comparing the situation in the U.S. with Indonesia is
\nlike comparing a tiger with a kitten. In fact, we are still far
\nbehind even when compared to Singapore and Malaysia, our
\ncountry's closest neighbors.<\/p>\n
Many people will say that security is a major problem in
\nelectronic trade, or e-commerce, but this doesn't explain why the
\nU.S., Singapore or Malaysia is relatively ahead of us in the
\ndevelopment of this industry.<\/p>\n
Our next excuse then might be the lack of phone line
\npenetration or infrastructure. This is not wrong. Indonesia's
\nphone line density (lines in services per 100 inhabitants) was
\n2.67 percent, according to data from PT Telkom in September 1998.<\/p>\n
But there are many other indicators of e-commerce growth. For
\nexample, the access to a personal computer, which is mostly
\navailable only to white collar workers and university students in
\nbig cities.<\/p>\n
People with computers and phone connections are also not
\nnecessarily online consumers. Usually, only people with high
\nincomes are attracted to buying things over the Internet. In
\n1998, U.S. households with annual incomes of more than US$50,000
\naccounted for 74 percent of online sales (Business Week, Jan. 18,
\n1999).<\/p>\n
Another problem limiting e-commerce in Indonesia is that
\npeople are just not accustomed to buying things through the net.
\nMost people need to see and touch things before they buy them.<\/p>\n
The e-commerce scenario -- where a customer visits a website,
\nviews pictures and information on products, and pays by credit
\ncard -- is unpopular here. Education plays an important role. The
\nhigher one's level of education, usually the easier it is for him
\nor her to accept new technology or new ways of doing things.
\nCulture and education thus represent a demographic barrier for
\nthe development of e-commerce.<\/p>\n
E-commerce can actually be divided into two major categories:
\nbusiness-to-consumer sales and business-to-business sales. The
\nweb-based company Amazon.com is an example of the first category,
\nand is the most successful Internet bookstore, selling books,
\nvideos, and music recordings directly to end-user consumers. In
\nthe business-to-business category, firms deal with other firms,
\ncoordinating their business programs. EDI (Electronic Data
\nInterchange) is one of the electronic services that people argue
\nwill be replaced by business-to-business e-commerce.<\/p>\n
In an international conference on e-commerce, hosted by Telkom
\nin October 1998, one participant put forward an interesting
\nargument. She said that companies in Indonesia are currently more
\nconcerned with survival than thoughts of e-commerce.<\/p>\n
Shinta Witoyo, cofounder of PT Bubu Kreasi Perdana, an
\ninnovative Internet content provider, said that "educating" her
\ncustomers (meaning firms) is one of the biggest problems in
\nmarketing her company services.<\/p>\n
"Most companies here simply do not find any compelling reasons
\nto embrace e-commerce. They ask 'What's so great about e-
\ncommerce? Can e-commerce save our company?'," she said.<\/p>\n
Until there is proof that companies here can run better
\nbusinesses using the Net, there is little chance that they will
\nmake the plunge into e-commerce. This is a classic catch-22
\nsituation. If no companies here get involved in e-Commerce, how
\nwill we get the proof?<\/p>\n
As a matter of fact, there are many benefits of e-commerce.
\nFrom a customer's point of view, e-commerce offers more choices
\nand more control. This control comes from the easy availability
\nof information. There are various network-based intermediaries on
\nthe Net that can help consumers find what they want. Examples of
\nthese intermediaries are: commercial directories (e.g. The All-
\nInternet Shopping Directory), search services (e.g. Lycos),
\nonline shopping centers (e.g. The Asian American Mall), and
\ninformation suppliers (e.g. Andersen Consulting's BargainFinder).
\nBetter information will allow customers to get better quality and
\nbetter prices.<\/p>\n
Using online shopping is also more convenient for customers,
\nas travel time and geography are not constraints. Customers can
\nbrowse and buy products anytime, anywhere.<\/p>\n
From the company's point of view, e-commerce will facilitate a
\nbetter relationship with customers by providing a means for two-
\nway communication. They can see immediately the customers'
\npreferences, and can tailor products to suit their needs. A
\nbetter relationship will lead to better customer loyalty. E-
\ncommerce can also function as a more efficient sales and
\ndistribution channel, as firms can provide more product
\ninformation to a greater number of potential customers at a lower
\ncost.<\/p>\n
The savings come in two ways. First, with e-commerce, more of
\nthe responsibility for sales is transferred to customers, who
\nmust fill out order forms themselves. Customers find product
\ninformation, select the product they want fill in this
\ninformation in the order. This makes the online merchant less
\ndependent and can reduce sales people to a minimum. Second,
\nthrough electronic commerce, firms are able to save on customer
\nsupport expenses.<\/p>\n
In 1997, Cisco Systems, the largest supplier of routers for
\nInternet traffic, moved 70 percent of its customer support
\nonline, including everything from manuals to software. This has
\neliminated an estimated quarter million phone calls a month,
\nsaving over US$500 million.<\/p>\n
Bigger savings for firms exist in business-to-business e-
\ncommerce. With the proper process and technology, firms can
\nincrease forecast accuracy, decrease planning cycles and lead
\ntimes while at the same time better manage relationships with
\ntheir suppliers and retailers. Real-time sales information can be
\ngathered at the end of supply chain, enabling firms to compare
\ntheir information and modify their forecasts to be more accurate.
\nMore accurate and timely forecasts enables manufacturers to make
\nproducts only when they are needed, and allows retailers to cut
\ndown on back-up stocks because they know that the products will
\narrive in time. Stock shortages are also reduced considerably.<\/p>\n
Another benefit of business-to-business e-commerce is that the
\nvendor can manage an inventory in which the supplier controls the
\nflow of goods, relieving the downstream manufacturer from having
\nto check for raw material requirements and make panicked phone
\ncalls to place orders.<\/p>\n
The Internet can act as a low-cost communication backbone for
\nsuppliers to know their customers' inventory levels and analyze
\nusage patterns, and customers can also be aware of their order
\nstatus.<\/p>\n
Shell Chemical Co., based in Houston, Texas, markets itself as
\na "utility" company that supplies chemical products to customers
\nwithout interruption, and issues invoices once a month. Its
\ncustomers can use a web browser to reach Shell's SIMON (Supplier
\nInventory Management Order Network), and enter their daily
\ninventory levels. SIMON receive the data, forwards it to the SAP
\nR\/2 system, which calculates the dates when customers need their
\nnext shipment. After approval from an account manager,
\ninformation is returned to SIMON, which is programmed to notify
\nthe customer, by e-mail, as to when the products will be
\ndelivered.<\/p>\n
To a large extent, Internet has come to symbolize this
\npowerful yet uncertain world. Internet is not just a news service
\nor a new communications network, but it is a technology that
\nshapes a new kind of global economy -- the closest thing yet to a
\nunified "borderless" world market.<\/p>\n
Electronic trade, which can remove distances and frontiers,
\nalso provides an escape route from marginalization.<\/p>\n
The International Telecommunications Union has a special
\ndevelopment initiative called "The ITU Electronic Commerce for
\nDeveloping Countries (EC-DC) Project". This project, launched at
\nthe ITU World Telecommunication Development Conference 1998 in
\nValletta, Malta, aims at empowering developing countries as
\nglobal players to market their products and services in the
\nglobal marketplace and receive a fair return on their investment.<\/p>\n
Looking at the benefit and the increasing role of e-commerce
\nin the new global economy, we definitely have to continue with
\nits development.<\/p>\n
Developing e-commerce needs the cooperation of various
\nparties, including the government as the policy maker and
\npossibly an early trader. Universities and non profit
\norganizations can educate, conduct research, and provide
\nimportant investment in human resources. And finally it is the
\nprivate firms who will be the main participants, and reap the
\nmost rewards, in the global electronic marketplace.<\/p>\n
The writer is analyst, Process Competency Group, Andersen
\nConsulting, Jakarta.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/e-commerce-development-hampered-by-cultural-barriers-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}