Thu, 10 Mar 2011

By Shirley Christie

The allure of Indonesia’s burgeoning online market has hooked another big name, with Japan’s largest online retailer set to join the local marketplace in short order.

Rakuten, which has a presence throughout East Asia as well as the US and Europe, plans to launch its full service in two weeks.

“Rakuten offers e-commerce, online banking and an online travel service,” Ryota Inaba, president director and chief executive of Rakuten-MNC told the Jakarta Globe in an exclusive interview this week.

E-commerce is Rakuten’s core business, he said. It has operations in Taiwan, Thailand and China, though he said Indonesia will become a “force country” for the retailer.

It established its presence in Indonesia as Rakuten Belanja Online after partnering with Media Nusantara Citra, one of the country’s largest media companies. The agreement was signed last year, with Rakuten controlling 51 percent of the joint venture.

“We thought we couldn’t get into the Indonesia market on our own, because as a foreign company we don’t have experience in doing business in a Muslim country,” Inaba said.

“While the GDP is growing, the Internet penetration is low, but it is growing fast at 20 percent per year. Therefore, we see a lot of potential.”

After analyzing several candidates, Rakuten chose MNC for its strong offline media networks. Inaba said Rakuten observed that most Indonesians get their information from offline media, especially television.

Both companies paid in approximately $6 million in capital to get the venture off the ground, Inaba said.

Rakuten joins a growing number of companies trying to carve out a niche in the expanding Indonesian online market. Some 31 million of the country’s 237 million people use the Internet, a figure expected to increase to 94 million by 2015, according to a report released in September by the Boston Consulting Group.

A week after launching Rakuten’s beta version, Inaba said transaction numbers had already reached triple digits, though he admitted it was partly because of a Facebook fan page the retailer had created. About 10,000 people have become fans of Rakuten Belanja Online.

“We want to have a first-mover’ advantage,” Inaba said. “This is a new channel [for Indonesia], and the younger generation is serious about this channel.”

Rakuten is still in its early stages in Indonesia, he added, and it may take longer than in the US or Europe to see high returns. “Marketing and communication is the key to driving the offline user to online.”

The grand launch of Rakuten Belanja Online is scheduled for March 23. Inaba hinted that the company would announce a partnership with an influential celebrity at the launch but did not provide details.

“He or she would sell their products or services exclusively on Rakuten,” he said.

Rakuten plans to sell products from its sites in Japan, Taiwan and Thailand, as well as working with Indonesian merchants to sell their goods. Before it does that, though, it needs to finalize how people will pay for their purchases.

“In the past, Rakuten has received orders from Indonesia, and 70 percent of those were credit card frauds,” Inaba said. In order to fix the problem, it used an escrow system that was managed by NSIApay.