E-retailers still need offline outlets<\/p>\n
JAKARTA (JP): Indonesian e-retailers still need to blend their
\nnew, modern virtual marketing system with the conventional
\noffline shopping approach to boost transactions, an analyst with
\na global consulting firm said here on Tuesday.<\/p>\n
Makoto Ozawa, a senior consultant with McKinsey & Company,
\nsaid it was not easy for Indonesian e-retailers to entice local
\ncustomers to buy and pay for goods on the internet.<\/p>\n
\"In Indonesia, physical presence, which is the essence of the
\nconventional way of shopping, is also important for e-customers,\"
\nhe said in a statement.<\/p>\n
He said local online retailers know that many Indonesians are
\nstill very much accustomed to conventional shopping practices.<\/p>\n
The low credit card penetration is also a reason why many
\nlocal e-retailers allow customers to pay for the goods purchased
\non the internet in cash at the time of delivery, Ozawa said.<\/p>\n
He said many local online shoppers still prefer to order goods
\nthrough the internet, but pay for and pick up the products at a
\ncertain location.<\/p>\n
He said that since online shopping is still new here, many
\npeople are more likely to trust a site that is supported by an
\nestablished retailer.<\/p>\n
Ozawa said a recent study by the company found that mixing
\ntraditional offline methods with modern online shopping is very
\nhelpful and effective for online retailers in Indonesia.<\/p>\n
\"The offline mechanism helps the e-retailers build brand
\nawareness, trust and support for product delivery,\" he said.<\/p>\n
He said Indonesian online retailers had learned a lot from the
\nbad experiences of many major American e-retailers and they will
\nlikely introduce some different marketing approaches.<\/p>\n
For example, he said, unlike many American on-line retailers,
\nIndonesian e-retailers will probably not offer big discounts in
\norder to attract customers to their web sites.<\/p>\n
He said local e-retailers had learned that cutting profit
\nmargins in the race to attract customers, like had been done by
\nmany American e-retailers, would only lead to financial
\ndestruction.<\/p>\n
He said many e-retailers in the U.S. were forced by fierce
\ncompetition to sell their products at a loss. On each order, many
\nAmerican e-retailers lost between US$2 and $12, excluding
\nmarketing, overheads and web site development costs, he added.<\/p>\n
Ozawa said the shakeout in online retailing in the U.S. would
\nprobably discourage many prospective entrants to online retailing
\nin Indonesia.<\/p>\n
\"Consequently, competition here will not be as intense and the
\npressure to cut prices will be lower,\" he said.<\/p>\n
Ozawa suggested local e-retailers pay attention more to
\nparticular product categories that have proven to be the most
\nlucrative in online retailing in the U.S.<\/p>\n
He said the product categories that produced the highest
\nyearly purchases per customer was groceries, followed by
\nprescription drugs, clothing, books and toys. (cst)<\/p>",
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