Outlook: The opportunity is definitely there
The lack of security and law enforcement is one of the many things hampering the development of e-commerce in the country. Eka N. Ginting, CEO of locally based travel portal indo.com, answers The Jakarta Post's questions on the issue.
Question: How do you see the development of the country's e- commerce?
Answer: Very positive. E-commerce must be understood as a very strong consumer empowerment phenomenon -- with the Internet and the e-commerce that it enables, consumers now have far more access to information than they used to have, the convenience of searching and transacting beyond their wildest dreams, the ability to do price comparisons across the world, and the ability to demand and extract services that would really be tailored to each of them individually. Now, everywhere, customers, as soon as they discover all these benefits, do not want to go back to non e-commerce transactions.
What does that mean for businesses?
Well, if your customers were drawn by one particular set of minds (e.g. mobile lifestyle, credit card payment, etc.), it would be imperative for businesses to cater to the demands of their customers. Businesses must strategically integrate the Internet and e-commerce into their business process -- from using the Internet as a sales channel where their customers can buy their products/services to smartly deploying Internet technology internally to ensure cost competitiveness. Indonesia is no different.
So, the opportunity is definitely there. The entrepreneurs with ideas are there, and the manpower to execute them is also in place. What is lacking is serious financing support to make sure lots and lots of good ideas get funded, and the very best ones survive and become the anchor-Internet companies in Indonesia. indo.com certainly hopes to be one of these companies.
What are the main barriers of online shopping in Indonesia?
Very basic: things to shop for and how to do the shopping. What do I mean? In more advanced markets like the U.S., the first five things that get people's attention when it comes to online shopping are computer products, financial products, travel, books and auctions. Now, do we have these products in Indonesia? Yes, we have some computer products and probably more of travel.
But there is no financial products yet available on the net -- BCA was great with its existing services -- that was a breakthrough in the Indonesian market. Books and auctions have not developed strongly. For books, for example, it is quite interesting to see. My wife bought books from Amazon.com and last week went to the Fatmawati branch of the post office to pick up the package. She found out that a good portion of the pick-up area in Fatmawati is now occupied by Amazon.com's shipments -- so people in Indonesia are buying books online, from Amazon.
Asking how one goes about shopping online is a simple way of saying that a lot of the infrastructure is not properly in place; from as basic as Internet access (reasonable, but substantially more expensive than in markets like the U.S.), to payment gateway (it is difficult to do rupiah credit card transactions online -- not more than a handful of operators do so because it is prohibitively expensive) to brand establishment (making sure people feel comfortable buying from a trusted name) to fulfillment itself as well as customer service/complaints. If you think that this is a huge problem, it is. But this is not unique to the online world -- the Indonesian business environment is still hugely fragmented and inefficient -- ask Citibank or Telkomsel how hard it is for them to make sure that bills get to their customers on time. It is just that when you have the scalability power of the Internet, a lot of these problems suddenly get magnified and accelerated.
Do you think the lack of security and law are the major concerns of the industry?
Let me answer by giving an example. As far as I know, electronic documents are still not an acceptable contract in the Indonesian legal system. So if you withdraw money from an ATM, or you pay Telkom through an ATM, the printout is not a valid receipt. But does that stop people from using ATMs to withdraw money or to make payments? Recent numbers from klikbca transactions certainly confirm that people are comfortable doing financial transactions online. However, having the legal environment supporting all of these activities would certainly be welcome. My suggestion is, don't fret over it. We could adopt an existing one from, say, the United Nations, and modify it later on as we find out what needs to be changed.
How many transactions (in volume and value) can you book in a day?
For Indonesian hotels, through indo.com, we have the capacity to rent out over 500 rooms per day, with an average rate of $50. For overseas hotels -- Phuket, Singapore, Vietnam, etc. -- we have another set of 500 rooms per day that we can rent. What we have realized so far is a few dozen transactions per day, for about 100 rooms/night, for a total value of a few thousand dollars in one day.(hen)