Local online stores still fight to win trust, orders

By Christiani Tumelap

JAKARTA (JP): The Internet has brought some amazing changes to the way many people live. There is the new concept of communication brought about by email, digging for information in virtual libraries, downloading music for free, medical advice from e-doctors and shopping at virtual stores.

In some countries, Internet users shop online as frequently and freely as they use email, online chat rooms and online news services. In Indonesia, however, online shopping is apparently less popular than the other virtual products and services.

"I'd love to buy stuff online, but certainly not from Indonesian websites. I don't trust them," said Aditya Rahman, a young businessman who used to buy books from Amazon.com when he studied in the U.S.

"I'm not sure how reliable the local sites are. Besides Internet connections here are unbearably slow, and I don't want to waste my time and money," he said.

A housewife and secretary, Fika, said she was disappointed with the services provided by one local online store. After learning about the store from a massive ad campaign, she signed up and ordered some items. She waited three days, but her order was not delivered.

Fika said she called the store just to find herself put on hold several times before finally being told her order was still on the waiting list. "I think this is the last time I buy my groceries online."

Since Internet fever hit Indonesia two years ago, dozens of companies have emerged offering various products and services online.

Virtual stores

For online shopping, there is SanurBook and Gramedia Cyberstore specializing in books; Lelang2000, Iklan Doea Lima and Cabe Rawit for auctions and classified adds; LippoShop, GetEkstra.com and RadioClick.com for various consumer products; Travoo.com and AstagaTours.com for travel bookings; Mobil88 for cars; and Global Teleshop for cellular phones and accessories.

GetEkstra.com sells products like televisions, stereos, personal computers and kitchen appliances.

LippoShop has two virtual stores -- a Hypermart which sells items from dry groceries and health and beauty supplies, to electronics and home appliances, and the Hyperoffice, which sells office equipment, supplies and furniture.

LippoShop made its first delivery in September, after taking over the business from another local company, DialMart, which used the telephone as the medium of order.

RadioClick.com, which utilizes the Internet and the radio, targets its services to radio listeners, radio advertisers and radio stations.

Company executive John Tumiwa said RadioClick would soon launch auction sites and a special online air-time booking for advertising agencies and direct advertisers.

Most of the online stores, including LippoShop and GetEkstra, require customers to register as members before making orders.

In order to attract customers, some online stores offer discounts or gifts for purchases of certain amounts.

Payment can be made by credit card, an automatic debit from the members' bank account, transfer through the ATM or cash on delivery. Most of the stores promise to deliver goods within 24 hours, but in reality it may take two days, three days or forever.

Most of the online stores operate in Jakarta and therefore concentrate their deliveries within Greater Jakarta.

What exactly are the chances these online stores will be able to attract customers? The answer is not very good, according to Internet expert Onno Purbo. "To be honest, it's very difficult to classify Indonesians as good online customers."

A lack of interest and demand for business-to-customer online shopping, he said, was clearly shown in a recent poll by MarkPlus and SWA, which found only 9.9 percent of about 1,000 Internet users were willing to make purchases online.

Ferii Limputra, an executive of Travoo.com, said his company received a positive response from potential customers, but the actual number of orders it received was far from satisfying.

"There are lots of lookers but that does not necessarily translate to bookers," he said. Travoo.com now has more than 50 corporate clients out of a huge number of visitors to its site.

Better numbers have been reported by LippoShop, which has at least 145,000 registered members, and GetEkstra.com, which claims it signed up 5,000 members in its first two weeks of operation.

Still, the figures are insignificant compared to the estimated number of domestic Internet users, which is between 1.5 million and two million.

No trust

The biggest factor behind the modest number of online shoppers is perhaps the fact that most people still prefer to buy things in "real" shops, where, unlike in the virtual stores, they can see, touch, compare and try on the items they are purchasing.

It will take time and a series of extensive campaigns to encourage the majority of Internet users to adopt online shopping as an alternative to the cramped malls, department stores and markets.

Another factor is that many, if not most, potential online shoppers do not feel secure making online transactions. A celebrity and icon in the radio business once admitted in public she did not trust Indonesian online shopping sites.

Even some people who work for online shops have never tried to make a purchase at a domestic online shopping site other than their own, because they are worried about the security offered by the sites' management.

Ferii said he had purchased books, CDs, magazines and computer software from American sites like Amazon.com, which he described as excellent. "But, I have never bought anything online in Indonesia. I'll wait for the JSX to get better first, I think."

Onno also said he had never tried online shopping. "To be honest, I've never gone online shopping myself .... "

The owners and operations of local online shops clearly must work much harder to make people feel safe buying and paying for things online using credit cards, said multimedia and Internet analyst Roy Suryo.

Some local online shops, like Global Teleshop, have anticipated this lack of trust in making online transactions and the low penetration of credit cards in Indonesia by allowing customers to pay for their goods with cash on delivery.

Another problem hampering the growth of online shopping is the expensive telephone charges of connecting to the Internet. People prefer to shop at real malls because they can wander around for five hours and buy nothing, but do not have to worry about receiving an outrageous phone bill at the end of the month.

Local virtual bookseller Gramedia Cyberstore, for example, saw its sales drop dramatically when the government recently raised telephone rates. Orders and sales went back up when people became used to the new rates.

Onno said the relative lack of interest in online shopping was also due to the fact that most of the current 1.5 million active Internet users in Indonesia were people between the ages of 20 and 30, who had limited budgets to spend online.

Optimistic

Onno said the number of Internet users in Indonesia was expected to jump from 1.5 million to about 20 million within two or three years.

He warned, however, that the chance for local business-to- customer sites to grab a significant share of this market was not so bright. He said business-to-business sites which offered better value and more regular orders made by groups of suppliers, producers, distributors and vendors would likely benefit more than the business-to-customers sites.

But LippoShop executive director Mia Lukmanto said she was upbeat her company would be able to expand its market by using the proper strategy to provide greater access to its services, like taking orders by phone and fax.

"This strategy is employed since we believe the nature of human communication is oral communication. Also considering the number of Internet users or subscribers here is relatively low, while on the other hand the number of telephone customers is very large and offers potential," Mia said, adding that LippoShop was targeting Rp 229 billion in sales in 2001.

Ferii of Travoo.com is also optimistic. "The interest is there .... The demand will be there when people know that they can make transaction online securely."

Local online shops believe if they can effectively improve their online and off-line customer services, they will be able to survive and attract more customers and orders.

LippoShop's Mia said her company was unable to deliver some orders on time during the first few weeks of operation because it had a limited staff, failing to foresee the huge response the site would receive from the public.

She said the company had solved this problem by hiring more people, adding more vehicles to its operation and improving the bandwidth capacity of its website.

Travoo.com also has received plenty of complaints about its services, including from westerners, who tend to be harsher in their comments. "Some ask why the prices are so high. Some state we are just no good and amateurish," Ferii said.

Tips

Here are some tips for online shopping:

- Plan your purchases before entering the virtual shop to avoid spending too much time online, which will help keep your telephone bill down.

- Visit a few different sites first to compare prices.

- Check if the shop is a secure site with Verisign or Thawte if you plan to use your credit card.

- Choose a trusted name in online shopping services.

- Check on the company that runs the site. There are lots of fake firms on the net.

- For Indonesian sites, email your request first and see how they respond.

- Read carefully all the terms and conditions for the refund policy, delivery, etc.

- Check your purchases carefully when you receive them. You should claim any damages or mistakes in your order during delivery.