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.