DISSECTING INDONESIA MARKET AND IT’S E-COMMERCE OPPORTUNITIES IN 2016

A SPECIAL REPORT HANDBOOK : DISSECTING INDONESIA MARKET AND

IT’S E-COMMERCE OPPORTUNITIES IN 2016

TABLE OF CONTENT

Introduction

Dissecting Indonesia Market

Key Drivers and Main Obstacle to E-Commerce Growth

E-Commerce Logistics

and Delivery

E-Commerce Now

Conclusion

IntroductionWe all appreciate the future growth prospects of Indonesia ecommerce market and how this industry is becoming center of attraction for some global brand retailers to expand their market channel. As CLSA 2015 reported, Indonesia e-commerce sales in 2016; expected to have US$ 25 billion. Online retailing in Indonesia is poised for an e-liftoff. As has already happened in China, this major structural theme will have sizeable ramifications for offline retail. Online shopping in Indonesia will be huge, rising to almost 11% of total retail sales by 19CL.

Indonesia has the best online retail growth prospects among Asean countries. Key drivers will be a mix of its huge, young population; an extremely under penetrated offline sector; relatively high levels of mobile-internet penetration and large and accelerating levels of private and direct-equity investment into the sector. This handbook released by 8Commerce based on credible reports from CLSA, wearesocial, e-marketer, Nielsen, Kadence 2015 and Macquarie Research 2016.

Source:wearesocial.com

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A Special Report Handbook 2016 |


Facts and Findings •  Online retail spending/capita in the USA is 63x higher than Indonesia. •  Indonesia is the world’s fourth most populated country, 256 million.

Online retail sales to reach 10.7% by 2019. The Indonesian eCommerce Association expects the total online market to treble between 2014 and 2016, to Rp 283tn (US$24bn in 2016) and to reach US$130bn by 2020.

•  As survey by CLSA 2015, indicates that 83% of online shoppers in

Indonesia only made their first domestic online purchase in 2015, and predicted will re-purchase more in 2016 and next.

•  Globally, B2C online retail sales/capita has tended to take off when

mobile-internet penetration hits 35%.

•  Average mobile data speeds in Indonesia are only 1.7 mbps, while in China

is 4. mbps and South Korea is 8.8 mbps.

•  Only 2 of Indonesian adults have credit card, while figures for bank accounts are 36%.

•  In Indonesia, less than one-third of the top-30, best selling apparel brand across all channels are local. While in India and China, the share is two-thirds.

•  C2C currently dominates in Indonesia and Thailand but this should change over the next five years. Industry experts believe Indonesia’s B2C e-commerce market is the fastest growing in Southeast Asia, even though C2C classifieds players are the first-movers; even the top two local C2C marketplaces, Tokopedia and Bukalapak, are beginning to shift to the B2C model.




Social Media Well Connected

There are more Facebook users in a seen than in the USA. Jakarta is in second place with 7.4m users. Indonesia as a whole, is a relative laggard, but is still Facebook’s fourth largest market globally by users. (wearesocial, 2016)

Source:wearesocial.com

Growth of Online Retail

Indonesian are also becoming more familiar with online shopping. For instance, Zalora used to get an average of two phone calls/messages per order two years ago, but this has fallen to one per order (vs.. European fashion websites which get customer queries on only 5% of orders). Online retail is attractive for big city dwellers who prefer to avoid traffic jams and for those who live in areas far from shopping malls. The Indonesia E-commerce Association (idEA) believes that the number of shoppers will grow from 15mn to about 75mn by 2020 in Indonesia, which is about 30% of the entire population. (Macquarie, 2016)






More Favourable Environment for E-Commerce Growth Based on our discussions with the ICT Minister, as part of stimulus package #10, the government has removed e-commerce from the negative investment list, and now allows foreign investment for e-commerce marketplaces such as Tokopedia which are valued above Rp100bn. The government expects the new rule will provide wider funding opportunities for start-ups willing to expand their businesses. Several foreign investors have showed their eagerness to invest in e-commerce to grab a piece of Indonesia’s large market. (Macquarie, 2016)

The Indonesian government has finally completed the e-commerce roadmap draft, which will form the basis for future guidelines regulating the sector. The roadmap will cover critical aspects of the industry such as funding, taxation, communication infrastructure, conference that these are the seven points the government will work on in order to achieve an e-commerce transaction values of $130 bn by 2020. The finance ministry is currently drafting a tax mechanism for e-commerce companies and transactions




Faster network speed : The government’s initiative to reform 1800MHz spectrum to make spectrum assignments more efficient (contiguous blocks vs previously fragmented blocks) was completed as planned in Nov 2015 and incumbent operators followerd quickly with commercial LTE services. While coverage is limited to key city centres and LTE device penetration is still low, the improved user experience has spurred accelerating demand for LTE service, which has already led to telcos planning accelerated rollouts in key population centers.

Though smartphone penetration is still low at 35%, The smartphone market is grew The smartphone market grew 55% YoY in 1Q16 and accounts for more than half of the total handset shipments. The $50-$100 price range represents nearly half of the total smartphone sales. As LTE devices enter this price range we expect the 5% LTE device penetration to hit an inflexion point and drive a further change in user online habits including towards e-commerce.

Availability of cheaper mobile phones : The cheapest smartphone available today is a niche product from smartfren and costs Rp 499.000 (US$35). Entry level 4G LTE smartphones from Sony, Lenovo, Xiaomi are available in Indonesia and range between Rp 1 – 3mn (US$76 to Rp230). The locally made Bolt Powerphone is priced at about Rp 2mn (US$150), and local brand Polytron has been able to build a 4G LTE smartphone in a similiar price bracket that is compatible with several carriers.

(Macquarie, 2016)




(Macquarie, 2016)

Increased Fibre Broadband Availability

Incumbent fixed line operator PT Telkom has been aggressively rolling out its fibre network, and as at Dec 15 10mn homes were passed out of Indonesia’s 61mn households, with 1mn subscribers on fibre of copper / fibre hybrid (VDSL) connections. Despite the low GDP per capita levels (US$3,500/month) demand remains very strong with the key limitation currently, typical of early fibre rollouts in all countries, a lack of skilled technicians to handle fibre installations. From an e-commerce standpoint, improved fibre connectivity also introduces new channles for content owners to monetise their content.

Logistics Enablers:

Since the Go-jek motorcycle service app launched in January 2015, the company has gone from 1,000 registered drivers on its platform to 200,000 across five locations in Indonesia, including Jakarta and Bali. The Go-jek motorcycle services is an app, and delivers more efficient and cheaper last mile logistics. According to several news articles, Go-jek has seen a dramatic increase in users due to infrastructure issues in Jakarta, and we think that it still has significant growth potential. This has improved the logistics issues surrounding e-commerce. As this reporting on the making, there is an updated news that MatahariMall.com officially engages Grab to be one of their partner in last mile delivery.

Enabling Ease of E-Payment Still An Ongoing Process:

While the majority of electronic payments are still done through ATMs, we are seeing a higher proportion of mobile banking transactions, at 18% of total electronic transactions in 2015 (vs. 15% in 2014). However, the total transacted value remains flat. We think that the landscape remains fragmented, with around 20 official players, and expect consolidation in this space to help ease online payments.




“According to Kenneth Bishop, Managing Director of Facebook SEA : “Mobile News Feeds are the new storefront for retailers looking to reach Southeast Asia’s mobile first consumers. For Indonesians, mobile devices are where they discover products and make purchases. We know that on Facebook, 44% of Indonesian online shoppers search for product information, leading them to make purchases based on recommendations and feedback from their personal connections. Southeast Asia is home to some of the fastest growing countries for Facebook and Instagram. Indonesia is driving this growth with 82 million people on Facebook, and 94% of them connecting through mobile devices. We’re committed to building solutions and products to help ecommerce companies in Indonesia build and grow their business.

Indonesia already has the highest number of internet users in Southeast Asia at 75m and this should continue to grow over the next few years. Indonesia’s internet penetration is already the lowest at 30%, but we estimate this could double by 2020 to about the same level as Malaysia currently

Improving Internet and Smartphone Penetration At the heart of e-commerce and online growth is improving internet and smartphone penetration. According to tech minister Rudiantara, consumers will pay only Rp 400.000 for 4G smartphones. 4G technology is beginning to enter Indonesia on a large scale, and all three major operators are currently engaged in country-wide 4G infrastructure upgrades. While Indonesia has a mobile phone penetration of over 100%, as little as 33% are smartphones and only about 5% 4G capable devices.

Most of the growth in internet users will be coming fom mobile rather than fixed broadband. While efforts to expand fixed broadband coverage is progressing, its large geographical expanse and being and archipelago does mean that it will be a long time before all Indonesians will have access to wired high-speed broadband, and untill then mobile will be the primary conduit for most Indonesians to access the internet.




Payment and Trust Issues

A study conducted by Kadence, part of Starcom Mediavest Group, indicated that the biggest concern customers have for online shopping is product quality, followed by payment security.

80%

60%

Nielsen reported that 80% of Indonesia shoppers read reviews on social media and do research online before they make their

purchases offline.

The same source also found that 60% of Indonesian shoppers are not

confident in providing their credit card information onlne.

The reasons for the lack of trust include: missmatch between listed products and actual purchases,lapses in last mile delivery, scams involving money transfer and phising websites.

Lack of customer trust was also encountered in the US in the early stages of ecommerce development and that did not stop the rapid growth in the sector. We think Indonesia will likely slowly overcome the barrier of lack of customer trust, slowly transitioning from COD payments once the trust is built and follow the same path as the US in the next few years

(Macquarie, 2016)




6%

8%

10%

10%

14%

17%

20%

51%

73%

Purchase price in foreign currency Tendency to overspend Efficiency of customer service Late in delivery Personal information being tracked and shared Lack of physical touch and feel of the item to buy Complicated return of goods policies Payment security Product quality (eg counterfeit)

Concerns about Online Shopping

319 400 473

565

770

1100 1064

271 514

833

1243

1233

1606 1996

2009 2010 2011 2012 2013 2014 2015

Electronic Transaction Volume Breakdown Internet transaction M-banking transaction ATM transaction




Customer Shopping Behaviour

The survey below, dated 2015, was conducted by Kadence, which is part of Starcom Mediavest Group, which attempts to assess Indonesian’s online shopping behaviour.

Women will be the main demographic driving ecommerce, they influence directly and indirectly 75% of the online purchases. Women spend more time online and buy more. Being able to offer them inspiration and the products they are looking for will be key to win the market. (Macquarie, 2016)

1%

13%

32% 33%

12% 9%

0%

10%

20%

30%

40%

15-19 20-24 25-29 30-34 35-39 40-45

Respondent Profile by Age Group

37%

31% 31%

28%

30%

32%

34%

36%

38%

Senior High School

Academy / College

Bachelor degree

Respondent Profile by Educating Level




22%

41% 37%

0%

10%

20%

30%

40%

50%

SES A SES B SES C1

Respondent Profile by Social Economic Status

20%

44%

24%

0%

10%

20%

30%

40%

50%

Upper1 Upper2 Middle

Respondent Profile by Social Economic Class

Macquarie, 2016

According to the survey, SES A has started to purchase online since this year, while future online shopping will be driven by consumers in older age groups, those from SES B and C1 (Macquarie, 2016).



51%

16%

2% 7% 5% 1% 5% 4% 4%

0% 10% 20% 30% 40% 50% 60%

Fashion Gadget Computer software or hardware

Beauty care Air ticket / tour Baggage and luggage

Healthcare Food and beverage

Household electronics and

furnishing

Most Often Purchase

Macquarie, 2016

Fashion

Top 3 Purchases

Gadget Beauty Care





Most Popular Payment Methods by Purchase Category

Beauty Healthcare Software/Hardware Gadget

Transfer

Internet Banking

Using debit card

Using credit card

Cash on delivery

Fashion Baggage & Luggage Air Ticket & Tour Booking

Transfer

Internet Banking

Using debit card

Using credit card

Cash on delivery

65%

16%

10%

4%

4%

22%

4%

6%

12%

56%

63%

26%

6%

1%

4%

21%

13%

5%

12%

50%

61%

2%

23%

9%

5%

75%

2%

14%

3%

6%

26%

43%

7%

18%

6% Macquarie, 2016




Macquarie, 2016

Easier to browse

No time to buy offline

Online price cheaper

Only available online

Flexible transaction

Membership benefits

42%

37%

30%

21%

7%

2%

60%

26%

26%

10%

20%

2%

77%

24%

72%

8%

6%

0%

64%

27%

74%

8%

16%

1%

Beauty Healthcare Software/Hardware Gadget

Easier to browse

No time to buy offline

Online price cheaper

Only available online

Flexible transaction

Membership benefits

54%

41%

30%

27%

18%

2%

46%

35%

64%

9%

7%

8%

55%

57%

35%

4%

42%

1%

Fashion Baggage & Luggage Air Ticket & Tour Booking

Most Common Reasons to Purchase Online



Key Drivers and Main Obstacle to E-Commerce Growth

Key Drivers to E-Commerce Growth

Indonesia is a Large Addressable Market.

There are 256 million people, with 51% are young – below 31 years old. Indonesia in particular has an extremely large, potential addressable e-commerce market, which in turn is likely to attract more players, both domestic and foreign, and more capital than other ASEAN markets. Indonesia is a market that global and regional e-commerce leaders such as Amazon, Alibaba and Flipkart cannot ignore and we see a strong likelihood that some of these will become directly involved in the market over the next few years.

Larger addressable market = more players, more online SKUs and more capital. Too big for global and regional e-commerce majors to ignore. Indonesia population is nearly four times that of Thailand.

Currently Indonesia has large penetration on Customer to Customer (C2C) that still dominate in online player, and that is the basic reason why OLX and other same focus e-commerce platform are still popular among others. This condition also happened in Thailand, but most e-commerce experts believe it will change over the next 5 years.

CLSA, 2015



Interesting fact is within Indonesia, 66% of non-Java online shoppers spend more than US$20 on e-commerce per month versus 44% in Java, ex-Jakarta and only 37% in Jakarta itself. We think this reflects the relative lack of offline merchandise choice outside Java and especially outside Jakarta. (CLSA, 2015)



The Rise of The Young. A young population tends to hinder current e-commerce growth, but acts as a driver for future growth. Indonesia has a much younger population than the USA and China. Some 51% of Indonesia’s population is under the age of 30 (CLSA, 2015). Indonesia’s relatively young population may partly explain why per-capita online-shopping expenditure at an estimated US$15 is still low in both absolute terms and relative to the likes of Thailand (US$53). Young consumers tend to be more tech-savvy and internet literate than their older counterparts and as this former demographic moves into higher disposable income brackets, they should be an important driver of online retail growth.




E-commerce Extremely Nascent.

Another factor explaining the low per capita online shopping spend, but which also demonstrates the growth potential is that many online shoppers in Indonesia are new to e-commerce.

CLSA (2015) survey results of online shoppers show that 97% of online shoppers in Indonesia have only begun shopping online since 2014 and outside of java, this percentage rises to 99%. Indeed, 83% of Indonesian online shoppers have only begun doing so in 2015. This makes online retailing far more nascent than in the other large Asean markets, with only 37% of Thai and Malaysian and 51% of Philippine online shoppers having purchased online for the first time since 2014. Indonesia have only just started shopping online. 97% of Indonesian online shoppers have only started to do so in the past two years.



Although nascent, online-shopping frequency is relatively high


Although Indonesians are the newest to online shopping within the big-four Asean markets, they are already shopping online more frequently than their Malaysian and Philippines counterparts: 25% of our survey panel of Indonesia online shoppers are now shopping more than five times a year versus 28% for our Malaysian and 25% for our Philippines respondents. Only the relatively more mature Thai market has a higher level of online-shopping frequency with 48% of respondents shopping more than five times a year.

The Indonesian figures rise to 42% in Jakarta but logically fall away to 31% outside of Java.

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CLSA, 2015


Key Drivers to E-Commerce Growth High Share of Shopping Budget Allocated to Online Retail Already. What%ofyouroverallnon-food,shoppingbudgetwasspentonlineinthepastyear?

The population who spend non food shopping budget more than 10%

Java non Jakarta Jakarta Non Java


57%

57%ofIndonesiaonlineshoppersalreadyallocatemorethan5%oftheirtotal,non-food,shoppingbudgettoonlineshopping.Although nearly all Indonesian online shoppers are new to this form of shopping, they already allocate a higher share of their non-food, shopping budget to online purchases than their Asean counterparts. Within Indonesia, the allocation is interestingly higher outside o Jakarta which hints at stronger future online-shopping growth outside of the capital. CLSA, 2015


Indonesia’s 10 largest retail groups by revenue have a total of 18,987 stores, easliy the largest store count in Asean and even more than the top-10 chains in China (6,415) – although this reflects the much more fragmented composition of China’s offline retail industry. However, Indonesia’s top chains by revenue are dominated by small-scale supermarkets and convenience stores. If these two format are stripped out – and the main reason for doing this is that we do not see these formats as especially vulnerable to e-commerce – then the Indonesian store count drops to only 2,178 and the retail GFA falls from 7.51 m2 to 4.00 m2.

Offline Retail Extremely Underpenetrated


When it comes to popular e-commerce merchandise, there is limited offline competition. The lack of offline penetration means that there is a huge potential void for the online channel to fill and once consumers get accustomed to online shopping, there tends to be no going back. It is rare that there is an abrupt change and consumers revert back to the offline retail channel. The lack of offline retail penetration will be especially pronounced outside Jakarta and it is no surprise that leading e-commerce companies now drive an average of 44% of their sales on average outside of Jakarta and amost one-fifth outside Java.


CLSA, 2015




With only 6% fixed line broadband penetration, the lowest among the big-four Asean markets, Indonesian consumers will be increasingly reliant on mobile devices for their online-shopping requirements. The good news is that mobile internet penetration is already decent and mobile tariffs low even though average mobile data speeds are still extremely slow.

The findings from e-commerce company interviews indicate that an average of

Online Shopping Driven by Mobile

of all online-shopping traffic is already on mobile devices 48% of transactions all online-shopping on mobile devices 17%

Although poor mobile internet connections and slow mobille data speeds are major hurdles, it is also noteworthy that a greater share of Indonesian online shoppers have high numbers of online-shopping apps on their mobile devices versus their counterparts in the large Asean markets :

of Indonesian online shoppers have more than three online-shopping apps on their phones.

45% CLSA, 2015




With no Indonesian e-commerce or internet companies of any size yet to be listed, the level and the pace of private-equity and direct industry funding into the sector are good barometers of how the sector is developing and, importantly, the growth potential that professional investors and industry attach to the sector.

Increased levels of funding allow both existing and new companies to expand in the crucial areas of SKU and staff count as well as marketing, logistics, IT and mobile-related spending. All of this helps propel industry growth.

Large Relative Private-Equity Funding Rising Rapidly

The two big deals have been the US$100m from Softbank and Sequoia and the US$500m investment into the establishment of MatahariMall, although private-equity deal with most of the funding coming from the controlling shareholder group (Lippo). These funds are only a commitment and have not been invested yet.

CLSA, 2015




CLSA, 2015

The growth in online retail spending is reflected in similar large online advertising growth. In the four years to 2014, online advertising grew at a Cagr of 323%, admittedly from a very low base Online Advertising now accounts for 4% of total advertising spending, up from almost 0% in 2010. Growth has been at the expense of print advertising spending , up from almost 0% in 2010.

Growth has been at the expense of print advertising. Given our expectations that online retail sales will reach almost 11% of total retail sales by 2019. It is likely that online advertising can reach at least a low-teen percentage by that year. While we expect most of the gains to continue to be at the expense of print media advertising, we also believe that beyond a three-year timeframe, that there is potentially some risk to TV advertising especially in the free-to-air segment.

Online Advertising Rising Sharply Off a Low Base

58.38%

1.38%

32.34%

0.03%

3.98% 3.89%

TV Radio

Print Cinema

Outdoor Online

Online Advertising Spending Breakdown 2014



CLSA, 2015

Few Strong Local Consumer Brands One of the obstacles in expanding merchandise assortment and the SKU count in Indonesia is that there are few local consumer brands, especially in the popular online categories.

If we look at the 30 best-selling apparel brands in Indonesia in all channels (offline and online), only around a quarter of these are local brands.

A lack of local brands hampers online SKU acceleratiion, makes it harder to offer low prices and may stiflele online seller margins

Roughly only one quarter of the top 30 best selling apparel brands across all channels are local ones in Indonesia and local apparel brands among the top 30 bestsellers, only have a combined market share of only 2%.

Main Obstacle to E-Commerce Growth



High Levels of Import Duties and Taxes

Although there has been an Asean-China free trade agreement in place for several years. and with the official schedule reducing import duties to zero on many consumer goods, several key consumer categories especially in apparel and footwear, still attract duties and these duties vary within the Asean markets. In addition, the various Asean markets have different levels of VAT and GST and these vary from product to product.

Indonesia has an additional “import income tax” for unregiestered importers which is calculated as 7% of the customs, freight and insurance value. However, since we have chosen to ignore freight and insurance charges, this tax is calculated off the product value at the port plus the import duty. In other names The Asean-China free trade agreement, appears to be in name only.

With the exception of some consumer electronics items such as mobile phones, there are stilll import duties on goods manufactured in China on almost all consumer goods imported from china. When the import income tax and VAT is added, Indonesia has consistently high mark-ups stemming from import duties and other taxes.

Duties and taxes lead to a 35% mark-up in Indonesia on cotton dress imports from China but for mobile phone imports from China attract no duties across Asean . CLSA, 2015





Slow Mobile Data Speeds and Poor Internet Connections

Although Indonesia has decent levels of mobile internet penetration and mobile e-commerce usage, higher levels of adoption are being hampered by slow data speeds and general poor internet connectivity,

average mobile data speeds are 2.7 times faster in China than Indonesia. In Indonesia average mobile data connection speeds are at 1.7Mbps, 32% slower than in Thailand.

Online shoppers view poor internet connections as a greater problem Jakarta Non Java Java non Jakarta

45% 52% 36%

We heard many complaints that customers regularly experience internet disconnections during the shopping and payment process, especially on mobile devices.



Low Fixed Broadband Penetration and Connection Speeds It will always be easier to get someone to shop on mobile devices if they have already had online retail experience on a PC, where the screen and keyboard size is much bigger and connectivity speeds tend to be higher. Fixed-line broadband penetration/household is just 6% in Indonesia, easliy the lowest among large Asean markets.

CLSA, 2015

Average fixed-line broadband connection speeds in Indonesia

Thai speeds faster than Indonesia. 3.4

Mbps


2.2 Mbps

At almost every meeting that we had in Indonesia with online retailers, management spoke about shortages of staff talent, especially for hadrware and software engineers and for digital marketing talent.

Talent Shortages




Salaries in these areas are being bid up aggresively and staff poaching is common with targeted staff often offered 5—100% increases in remuneration packages to leave.

CLSA, 2015

E-Commerce Logistics & Delivery

Infrastructure is important for the success of e-commerce companies, especially those with no bricks and mortar presence, and particulary with issues such as free delivery, order rescheduling, cancellation, returns and cash-on-delivery. Minimizing turn around times is also key, as this often leads to word-of-mouth publicity, feedback and customer retention for the online retailer.

Lazada for example, will deliver goods in 1-3 days for Jakarta and the Greater Jakarta are and 4-9 days outside Jakarta. It still takes more than double the time to ship goods outside of Jakarta, which is a big growth impediment, given the demand for online products is typically from second or third tier cities.

Logistics players in Indonesia are evolving rapidly, while some retailers are adapting to the logistical challenges thorugh ‘online to offline’ offerings, as customers can pick up in store, while mataharimall.com for example, is setting up pick up location points at post offices to eease delivery and customer collection.

32

Logistics / Delivery Issues


CLSA, 2015

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33



© 8Commerce.com All Rights Reserved. 2016 | A scalable end to end e-commerce enabler and fulfillment for Indonesia coverage and market |

Indonesia marketplace players mostly have logistics infrastructure of its own but still most of the players use a third party for last mile delivery (see our table for more details). As a famous choice of package deliveries JNE has developed their own e-commerce IT that is integrated with e-commerce operational from one of their biggest client -Lazada, in order to run seamless order process connected with seamless last mile delivery.

Company Logistics Delivery

Berrybenka Owned Outsource

Bilna Owned Outsource

Blibli Owned Owned & External

Bobobo Owned Outsourced

Mataharimall Owned Outsourced

Zalora Owned Owned

Tokopedia Not used Outsourced

Indonesia Marketplace with Logistics and Delivery

CLSA, 2015

34




Indonesia average delivery time in Jakarta are the fastest of any of capital cities among the big four Asean markets

21 HOURS

2 DAYS However deliveries outside Jakarta is among the slowest which also reach most expensive cost than other Asean countries, especially in east Indonesia.

Here’s shipping simulation delivery cost around Indonesia comparison according to JNE.

Delivery Area Price

Jakarta IDR 9.000

Aceh IDR 51.000

Surabaya IDR 19.000

Medan IDR 30.000

Pontianak IDR 30.000

Makassar IDR 36.000

Sorong IDR 88.000

*weight 1kg, shipment from jakarta CLSA, 2015

35




DELIVERY LOGISTICS ORDER

e-Commerce Enabler Function on Logistics – Delivery Integration

INTEGRATION

BENEFITS Internal External

Boost operational efficiency Real time order status

Brings clearer operational views Best online shopping experience

As what happened in United States, e-Commerce market has been very common and turned into basic needs for most consumer there. Consumer convenience shopping experience both online and offline store is what most matters in USA, and most online players try to work best in presenting these two channels supporting each other to reach bigger sales. As what we defined it as integrated omni channel, we might assume that it would be the future e-commerce for the nearly upcoming year. This condition seems doesn’t happen yet in varies countries including Indonesia. Online retail has had some impact on traditional retail which present more of a threat, where traditional bricks and mortar retailers incorporate online strategies into their overall strategies.


E-Commerce Now

We assume that e-Commerce presents a threat to traditional retailers, as the convenience and affordability factor is appealing to customers.



E-Commerce Now

The potential price competition over FMCG items. Consumer tend to check the price in physical stores, and then go online to shop for the same item at a lower price. This has happened in consumer electronics, and it is highly possible that it will happen in the FMCG industry due to more and more e-commerce players emerging selling FMCG products.

There are 3 (three) matters that potentially described as a threat:

1

Sizeable product offering. Given unlimited visual shelf space, the e-grocery can offer many more product SKUs compared to bricks and mortar platforms.

2

Price parity. Being online for manufacturers, means opportunity cutting some supply chain cost, from production to end consumer. It also means consumer can get lower price of every single product that sold via online.

3


We believe that online to offline retailing is one of the ways that Indonesian retailers are positioning themselves ahead of the e-commerce race. Shoppers tend to browse company websites at home or in the office product information before visiting the stores to purchase. In Indonesia, consumer are also likely to connect with their social networks to exchange opinions and get recommendations on the merchandise under consideration.

Hence, online retailing may in fact be an advantage rather than a disadvantage to bricks and mortar retailers due to the access it provides for customers who live in regions that have few malls, resulting in additional sales.

Potential opportunity: offline to online/omni channel retailing


E-Commerce Now

What is Omni Channel Omni channel is defined as a customer oriented approach in term of advance multichannel sales utilizing by providing integrated seamless shopping experience. Through omni channel feature, customer can do shopping both online or offline which all inventory, stock, price, promotion, product information are integrated. Even though, there are difference meaning among omni channel user experience and a multi channel user experience. All omni channel experiences will use multiple channels, but not all multi channel experience are omni channel. Customers now and then only see The Brand as one brand. They don’t have enough mindset to deal with the brand in website is different from the brand in mall. You can have amazing mobile marketing, engaging social media campaigns, and well-designed website. But if they don’t work together, it’s not omni channel.


39


Conclusion

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Create one now. Try to focus on your e-commerce business as your ticket surviving your business in the near future. Being focus in e-commerce means you have well implemented of all end to end e-commerce operation, from having the e-commerce site which has user interface and user experience combined best into creating convenience online shopping experience; until when the order is received and get great feedback or review from customer

If you don’t have any e-Commerce, yet

There must be something wrong in setting your digital marketing strategies and activation. It’s used to be what most happened in company because of lack of talented digital people to optimize digital marketing that converts into sales. There are several inbound marketing and sales platforms, optimized e-commerce analytics and retargeting platforms. There are also organic, paid marketing and social media strategic to grow your visitors and followers. But, what you must know is, you know how to wisely spend the budget and choose what best digital strategy to implement. If you still not sure to run digital marketing by yourself, you can go to proven digital agency or e-commerce enabler that their KPI is sales conversion.

You have Online Store but don’t Sell

Every company must develop its own unique omni-channel infrastructure, and work closely with several departments to develop this strong strategy. While building your own program, engage person in charge in IT, Marketing, Customer Service and sales agent or representative that involved in the experience. Set the goal and initiative together. After that, make sure your ecommerce is scalable using omni channel platform. It’s really important to collaborate with ecommerce enabler that understand this multi channel and omni channel needs. Once you get the wrong one, you will have to pay more expense, time, and complexities. And we know it’s not good for your business.

You have Offline and Online Channels – Consider to Set Omni Channel Initiatives to Make Bigger Sales

We are and end-to-end eCommerce enabler and e fulfillment services; specializing in ecommerce development, warehouse and last mile fulfillment, store operations, multichannel management, and performance marketing. We emphasize omni-channel capabilities which unite a digital commerce strategy with traditional retailer and manufacturer to create reliable branded shopping experience. With our competitive price, experienced professionals, and experienced in supply chain, we aim to be your strategic partner for global and rising brands aiming to win eCommerce market in Indonesia.

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Data & Analytics

DISSECTING INDONESIA MARKET AND IT’S E-COMMERCE OPPORTUNITIES IN 2016