By Christ Tumelap
By Christ Tumelap
Few takers for online shopping
--------------------------------------------------------
Despite the high expectations on the country, which has been
praised by Internet analysts as a enormous potential market, the
growth of e-commerce in Indonesia has been slow.
---------------------------------------------------------
JAKARTA (JP): The number of people who use Internet might
double to four million this year, thanks to the mushrooming of
cheap Internet kiosks. But only a few actually make online
transactions with virtual or "brick and mortar" shops on the
Internet.
A recent survey of 1,500 people in 10 major cities across the
country who are familiar with the Internet showed that 88.4
percent of the respondents, who knew about Internet transactions,
only 16.3 percent had ever bought or paid for things online.
The survey, jointly conducted by the Association of Internet
Service Providers (APJII) and the Indonesian Internet Business
Community, found the rest of the respondents were unwilling to do
online transactions because they were afraid their credit cards
might be misused or that the paid goods would never arrive on
their doorsteps.
Arifudin, acting secretary-general of the Indonesian
Telecommunications Society (Mastel), conceded that the growth of
e-commerce in Indonesia was still unsatisfactory.
"Its not quite like we expected and its mainly due to the
absence of adequate infrastructure," he told The Jakarta Post.
"A bloody expensive stuff that does not work," that is perhaps
the most common expression you may hear from many computer owners
and Internet users here on the quality of Internet access in this
country.
They cannot be blamed for being sarcastic because the quality
of Internet connection here is indeed expensive and
unsatisfactory. Indonesia's Internet access fee is among the
highest in the world.
In APJII's survey, nearly three-quarters of users complained
about access difficulties, long browsing or downloading times,
and frequent line disconnection.
The poor Internet connection is due to the bad quality of
telephone lines in this country. Most telephone lines here are
still the old-fashioned copper cables, whose transmission speed
is limited to 144 kilobytes per second.
Only a few areas in Jakarta use fiber optic cables, which can
boost transmission speeds to 4.8 gigabytes per second.
Worse, with the copper cables, telephone users are charged
painful usage costs on top of the monthly subscription fee. In
the United States and many other countries, telephone users are
only charged the monthly subscription fee.
Although they are a basic infrastructure, there are not enough
telephone lines here. Indonesia only has two to three telephones
per 100 people, while Malaysia has over 20 telephones, Thailand
eight to nine telephones and the Philippines two to four
telephones per 100 people.
While not many people in Indonesia have access to or can
afford telephones, there are even fewer who can afford computers
or Internet access. PC penetration in the country today still
sits in a single digit. In big cities, there may be five PCs for
each 100 households, but in rural areas, it is doubtful whether
even one PC is available in each of the villages.
Faithless market
For most Internet users, the security of payments made over
the Internet is the most sensitive issue. Many still don't trust
the online security system nor the Secure Electronic Transaction
method which claims to guarantee the security online
transactions.
Although experts insist that credit card payments made via the
Internet is far safer than a direct credit caard transaction
where the sales person has direct access to the card, many people
are still not confident of conducting online payments.
There is no need to look further for examples of online crimes
as Indonesians are also notorious for credit card fraud.
American person-to-person auction payment service company
BidPay.com announced last year that it had uncovered a large
Indonesian group using stolen identities to defraud users of
online auction sites such as eBay.com , Yahoo.com, Amazon.com
and MSN.com.
"It is believed that the Indonesian fraud ring consists of
about 20 people who run the scam on a full-time basis. The group
is hiding behind phony domain registrations and is using stolen
credit cards to target various websites," BidPay said.
Local mobile telephone trader Global Teleshop last year
started selling their goods through the Internet but asked
customers to pay by cash on delivery. The company said it
preferred cash payment to avoid fake or overdue credit cards.
The immediate enactment of a cyber law will be the most
effective way to lessen customers' hesitancy to engage in online
transactions. Without any legal framework, e-commerce will move
slowly.
Internet players and experts want the government to apply a
somewhat "hands-off" policy in dealing with Internet use in order
to motivate the growth of online communities. But on the other
hand, they insist that a proper cyber law must be implemented to
provide the online community legal protection.
The House of Representatives (DPR) has been mulling over
several laws on e-commerce, such as the Computer Misuse Act,
Electronic Protection Act, and Electronic Payment and
Certification Authority.
However, the government has been taking a laid back attitude,
insisting that the current criminal laws are sufficient to handle
e-crimes.
The lack of a security system and the absence of adequate
legal protection have prompted many trade-related websites to
turn to the conventional method of payment to cater to demands.
Cash on delivery payment is the most commonly used, while for
big purchases, payments are made through bank transfers.
According to Joseph Widyanta SA, head of sales and marketing
department of GlodokShop, operating as a semivirtual shop may be
the best solution for local online traders to cope with the
payment problem.
"It is not only the customers who fear being cheated, traders
have the same problem," Joseph told the Post.
Currently, where the e-commerce market is still relatively
small, investing a lot of money in the security infrastructure is
not feasible.
President and CEO of Lipposhop Teddy Setiawan said recently
that most of the company's 200 individual customers and 5,000
corporate customers made their orders via telephone.
"Only 20 percent of our customers both make orders and pay for
them online," he said.
B2B
Corporate users have benefited more from e-commerce than
individuals because they are mentally and technologically ready.
Companies understand the importance of adopting Internet and
online payment to make their businesses more efficient.
According to e-commerce expert Onno W. Purbo, the small and
medium enterprises (SMEs) have been enjoying the most of e-
commerce's advantages.
"SMEs find e-commerce very helpful in cutting advertising and
communication costs, and at the same time, nailing more
customers," he said. "The way I see it, the B2C online
transactions undertaken by e-retailers will continue to see a
slow growth while the B2B e-trading done by SMEs will keep
increasing rapidly."
There is currently more business-to-customer (B2C) e-commerce
providers than business-to-business (B2B) players. B2C players
include Sanur.co.id, Gramedia CyberStore and Lelang2000.
The B2Bs include textile e-trading nexiaonline.com, pulp and
paper network epulpaper.com and Sinar Mas Group's
tradealliance.com.
Most of B2C and B2B providers are actually brick and mortar
companies, meaning they first started as physical companies and
later expanded their sales and distributions through the
Internet.
Given the slow response from the market, the revenue volume
from online transactions gained by e-traders is low.
Forrester Research said e-commerce transactions in Indonesia
last year amounted to only US$100 million, compared to global
transactions of $390 billion. The B2B transactions contributed to
most of the figure.
He believes that if the country can work harder to fix the
infrastructure problems, Indonesian e-commerce can stand at an
equal level with other emerging Asian e-markets in the next five
years.
Today, the most popular e-commerce used here is probably e-
banking. Several banks, including Bank Central Asia (BCA), Bank
Internasional Indonesia (BII), Bank Bali and Bank Mega, have
started e-banking as an alternative way of banking.
Their e-banking services, however, are still very limited and
can only be accessed by their own customers. BCA said nearly half
of its customers used e-banking facilities to check their account
balance and only fewer used it for payments or transactions.
Many experts predict e-banking will be boom within the next
two to three years as by then the public's confidence in e-
commerce would have grown. However, that can only come true if
more customers can overcome their fear of making transactions
online.