Some online shops make good progress

Some online shops make good progress

Hendarsyah Tarmizi, The Jakarta Post, Jakarta

Almost not a day passed without the launching of a new dotcom
company in early 1999 as local investors tried their luck in e-
commerce following the success of the online business in the
United States.

The boom, however, did not last long. Reports of the collapse
of many American dotcom companies in the following year dealt a
blow to nascent online companies.

Internal factors, such as poor Internet connectivity, costly
telephone charges and the low rate of personal computer (PC) use,
are other reasons why many online retailers had to shut up shop.

LippoShop, one of major local online stores and the first
company to introduce the online shopping concept to the country,
has been forced to quit its Business-to-Customers (B2C) service
due to the lack of response from customers.

Since August of this year, the online shopping company has
focused only on Business-to-Business (B2B) operations.

Executive director Mia Lukmanto said that low Internet
penetration remained a major handicap for the B2C online services
in the country.

Although the development of the online business is not so
encouraging, many online stores are still able to survive the
difficult conditions.

For those who are often too busy and have not enough time to
go to conventional stores, the surviving online stores still
offer a wide range of goods and products.

GlodokShop.com, which started operation in January of last
year has, for example, become more popular with electronics
lovers. It sells a wide range of electronics products ranging
from home appliances to a complete home theater set.

On the website, at least you can see the latest models of
electronics goods, or check out the prices before you go and buy
in a conventional electronics shops.

Joseph Widyanta SA, the head of the sales and marketing
department of GlodokShop.com, said that the customer response to
the electronics online shop was quite positive.

He said that the website, which last year booked 2,000
transactions, had received orders not only from Jakarta but also
from other cities.

"We hope that this year the number of transactions will
increase by 300 percent," he told The Jakarta Post in a recent
interview. More and more people have been entering the
electronics good portal, which at present has more than 200,000
page views per day.

"Although the profit margin is small, the income is sufficient
to cover operating costs," he said.

Other surviving companies include the Surabaya-based
Kakilima.com, which specializes in selling cakes, puddings,
cookies, flowers, fruit baskets, gifts and toys.

Weeny Ika Candra, a senior executive of Kakilima.com. said
that the website, which was established in 1997 with an initial
mission of helping Indonesians living overseas to find and send
gifts to their parents, relatives or friends back home, has
received a good response from the public, particularly after two
years of operation.

At present Kakilima.com has delivery areas covering most major
cities in the country, mostly in Java, with orders reaching 200
per day.

"Kakilima.com is the only online shop in Indonesia which has
delivery areas covering most of the country's cities," she told
the Post.

Like GlodokShop.com and Kakilima.com, Indomall.com has also
managed to survive thanks to its ability to provide a good
service to its customers.

The number of orders received by Indomall.com, which
specializes in selling flowers, cellular phones, children's toys,
sports equipment and apparel, keeps increasing, albeit not
exponentially, said Veronica, a sales executive of PT Indonesia
Inti Internet, the company which operates the website.

According to Veronica, competitive prices and on-time delivery
are important factors which have enabled the website to remain
afloat.

Although the market for online shops in Indonesia is still
confined to the well-off, the prospects for e-commerce in the
country remain bright.

"The online stores, which are relatively stagnant at present,
will see their businesses growing rapidly in the next three to
five years," Veronica said.

A lack of transaction security is another problem facing the
nascent e-commerce industry. The government's slow response in
providing practical guidelines and regulations has also been
blamed for the sector's slow growth.

Given the lack of legal protection, many trade-related
websites have turned to conventional methods of payment. Cash on
delivery payments are most commonly used, while for big
purchases, payments are settled through bank transfers.

Forrester Research said e-commerce transactions in Indonesia
last year amounted to only US$100 million, compared to global
transactions of $390 billion. B2B transactions contributed most
of this amount.