E-retailers still need offline outlets
E-retailers still need offline outlets
JAKARTA (JP): Indonesian e-retailers still need to blend their
new, modern virtual marketing system with the conventional
offline shopping approach to boost transactions, an analyst with
a global consulting firm said here on Tuesday.
Makoto Ozawa, a senior consultant with McKinsey & Company,
said it was not easy for Indonesian e-retailers to entice local
customers to buy and pay for goods on the internet.
"In Indonesia, physical presence, which is the essence of the
conventional way of shopping, is also important for e-customers,"
he said in a statement.
He said local online retailers know that many Indonesians are
still very much accustomed to conventional shopping practices.
The low credit card penetration is also a reason why many
local e-retailers allow customers to pay for the goods purchased
on the internet in cash at the time of delivery, Ozawa said.
He said many local online shoppers still prefer to order goods
through the internet, but pay for and pick up the products at a
certain location.
He said that since online shopping is still new here, many
people are more likely to trust a site that is supported by an
established retailer.
Ozawa said a recent study by the company found that mixing
traditional offline methods with modern online shopping is very
helpful and effective for online retailers in Indonesia.
"The offline mechanism helps the e-retailers build brand
awareness, trust and support for product delivery," he said.
He said Indonesian online retailers had learned a lot from the
bad experiences of many major American e-retailers and they will
likely introduce some different marketing approaches.
For example, he said, unlike many American on-line retailers,
Indonesian e-retailers will probably not offer big discounts in
order to attract customers to their web sites.
He said local e-retailers had learned that cutting profit
margins in the race to attract customers, like had been done by
many American e-retailers, would only lead to financial
destruction.
He said many e-retailers in the U.S. were forced by fierce
competition to sell their products at a loss. On each order, many
American e-retailers lost between US$2 and $12, excluding
marketing, overheads and web site development costs, he added.
Ozawa said the shakeout in online retailing in the U.S. would
probably discourage many prospective entrants to online retailing
in Indonesia.
"Consequently, competition here will not be as intense and the
pressure to cut prices will be lower," he said.
Ozawa suggested local e-retailers pay attention more to
particular product categories that have proven to be the most
lucrative in online retailing in the U.S.
He said the product categories that produced the highest
yearly purchases per customer was groceries, followed by
prescription drugs, clothing, books and toys. (cst)