How successful is Internet business in Indonesia?

How successful is Internet business in Indonesia?

By Jon Minofri

Jakarta (JP): Internet implementation in the business world
has led to a new terminology: The New Economy. It is a pity that
not all companies call themselves the successful New Economy.
Maybe more dot-coms will end up in dot-com graveyard than those
that are successful. What is wrong with them?

Everyday, we hear about the birth of a new dot-com. The number
is ever increasing. There is much new terminology to go with it:
dot-com, e-business, B2B, etc. Some of them are in e-commerce,
others provide news, information, etc.

The players are also much the same. There are some newcomers,
which means that the dot-com business is really a new thing for
them, or older players who add their services to the Internet.
And then there are players operating in different fields before
expanding their business to include the Internet.

In every country, the symptoms are almost the same: The
Internet gives new ambitions to the business world. Dot-coms have
a dream to build up an Internet business because it is so easy,
fast and promises big profits. So Internet business becomes more
and more dressed up, like a fair.

But the number of deaths may be as high as the number of new
births. The Internet can be hell for those that are not
successful but heaven for those that are smart in taking
advantage of it.

Passing the first six years, since the Internet became
popular, many people have just realized that the Internet is not
an angel to do business with. It is just a way that if an
entrepreneur does not have a clear Internet map, he or she can
get "lost" in his or her own business.

It is also interesting to see which company goes to heaven and
which one goes to hell, especially in Indonesia. And what are
actually their mistakes? Do the mistakes belong to the Internet
or to the entrepreneur?

Abdul Rachman, Agracom and Detikcom owner, stated in a seminar
in Jakarta that he was not sure if all new Internet companies
will develop well. He is sure that success will fall to
conventional companies that use the Internet competitiveness for
their business.

Although, without mentioning any examples, maybe we can guess
which companies Abdul means. These could include the ones growing
from conventional business that expand to include the Internet,
companies that ran their business long before the Internet
existed, then moved to or used the Internet to further develop
their business.

LippoShop can be put in this group. Even though the name
LippoShop showed up in 2000, the business concept was started a
couple years ago, without the Internet. Back then it was known as
DialMart, and was owned by the business group Lippo. The concept
that was offered by DialMart was shopping by telephone.

DialMart prepared a printed catalog, and sent it to members by
courier. With this catalog, customers could place orders via
telephone. Payment is made by bank transfer. After that, the
order is sent by the courier to the customer's delivery address.
But, they found this was not running well. There were so many
obstacles in the implementation. For example, delivery were not
made on time, prices promised to be cheaper were actually more
expensive than in supermarkets.

Before DialMart closed its doors it was bought by Lippo, which
changed the name to LippoShop. Lippo did not make its LippoShop a
100 percent e-commerce business but combined it with conventional
services; orders by telephone are still accepted.

Courier service company DHL is doing the same thing as
LippoShop in a couple of ways. DHL uses the Internet to increase
its services, which it has run here for a couple of years. It
offers Internet facilities to its customer so they can know
whether their dispatches have arrived on time.

The Global Sources company is one of the best examples of a
successful conventional business running on the Internet (see box
article).

Companies like those mentioned above can be grouped in The New
Economy, that come from conventional businesses and change or
enrich their services with the Internet.

There are also some businesses that begin as brand new and
start directly on the Internet and implement e-commerce. There is
a lot of news being written about these companies not all
reaching success.

But some of these unsuccessful companies have strong reasons
to continue their business on the Internet. For example, they
want to get into the market early, so if the Internet is really
exposed in Indonesia, their business will be known by consumers.
By doing it this way, they can lead the market better than those
who are newcomers.

For example, Radioclick (www.radioclick.com), a company under
Maxima Group, has not reached an optimum number of transactions,
and implementation of e-commerce is being handled carefully to
avoid credit-card abuse. But John Tumiwa, business manager, is
really convince that someday, the Internet will get cheaper for
most Indonesian, and his business will be develop a lot better
than now, compared to the same businesses established later.

www.oto.co.id is, in couple of things, like Radioclick,
because at this time, Indonesians are not used to buying a car
through the Internet. The tradition of actually seeing and
touching the thing they want to buy makes e-commerce not as
successful as it could be in Indonesia.

But some day, after the crisis is truly over, that tradition
will change, and at that time www.oto.co.id will be more
competitive than its rivals.

It is completely different for Indo.com (www.indo.com), which
has become a success even though it started up first as a dot-
com, like Radioclick. Some of Indo.com's competitiveness comes
from the business being established since 1995, when the Internet
became popular.

Indo.com is really good in looking through the market and
picking up the product. What it sells is tours to Bali, and it
promotes them worldwide. One more thing that really supports this
dot-com, is that if an Internet user types Bali into the search
engine, the first website shown is Indo.com. So this website
really is popular worldwide.

In addition, right now, there are 15,000 websites around the
world that make a special link to indo.com -- including America
Online.

The similarity for the newcomer above is that it has picked a
business field that is actually conventional, like selling hotel
rooms, cars, CD-Audio, etc. The most important thing is that all
those companies are clever in looking for the right segment and
promoting their website to society.

These companies can be included in the new economy group,
which means a company that runs its business by using the
Internet technology.

For the unsuccessful Internet companies, maybe the way they
take it in is quite different. Like a news portal, nowadays and
in the years to come, there is no immediate profit. Because for
quite a while yet, news will still be grouped under the services
for Internet that are not a profitable commodity.

So, if you want to get into the Internet business, do not move
to far from conventional business just yet. The Internet can only
accelerate business running. It is no guarantee to success.

The writer is a Jakarta-based journalist.