A woman uses the online shopping app from Hypermart, one of the country's largest retailer, in Jakarta on Sunday. (Investor Daily/Emral Firdiansyah)

Unlocking the Potential of Indonesia’s E-Commerce Industry

BY :SUROOR ANWAR

SEPTEMBER 28, 2020

The one good thing about the global pandemic is it forced humans to move away from their comfort zones, unlocked innovation, and accelerated the adoption of technologies that are now helping industries recover and shaping how businesses can successfully operate and continue serving customers in the future.

Covid-19 has opened the path for businesses and consumers to work and function in ways that we used to be perceived as ‘out of the ordinary.’ Offline corporations, like the wellness industry in Indonesia, have become online retailers and service providers, now offering online high-intensity interval training (HIIT) workout classes and specialized workshops. In contrast, other online retailers have improved their product availability, customer service, and supply chains.

More consumers now have the convenience of receiving products and services at their doorstep with a click of a finger. They will continue to expect the same level of ease and comfort of purchasing goods and receiving services beyond the pandemic.

E-commerce has become the social norm in Indonesia, where online shoppers have grown to 85 million compared to 75 million pre-Covid. Indonesia’s e-commerce gross merchandise value grew significantly during the second quarter of this year, which saw consumers switching to online platforms to purchase healthcare, fast-moving consumer goods, and electronics — among several other products and services.

Just as the ‘new normal’ had started, the sudden declaration by the governor on Indonesia’s second national lockdown had brought people back to when it all began – working from home, where they will continue to rely on and avail of e-commerce services.

Putting Customer Needs First

With sales expected to hit a $30 billion high at the end of 2020, the country’s burgeoning e-commerce industry is only just getting started. Manufacturers, authorities, and consumers are preparing to be part of this journey.

Research by global management consulting firm Mckinsey & Company has found that businesses have accomplished in 10 days what used to take them ten months. Businesses with robust digital capabilities and e-commerce platforms adapted faster, offering clients uninterrupted service through online transactions. As companies move past the fire-fighting and recovery phases, they will retain their digital learnings and new practices to future-proof their business.

An optimal digital presence and an appealing website layout will not be enough to foster customer loyalty. Business clients and customers are looking for a seamless experience when it comes to purchasing online. Besides being able to make purchases quickly, customers are also looking for value-added services such as sourcing and procurement solutions. For those with rather unique or complicated requirements, technical and after-sales support contribute to creating an easy purchasing experience.

Governments are also introducing measures to create a healthy ecosystem. In May 2020, the Trade Minister issued a regulation to clarify issues associated with doing business in Indonesia’s booming e-commerce sector.

Simultaneously, the government imposed new requirements on both foreign and domestic e-commerce companies selling goods and services in Indonesia through online platforms. The regulation comes through to develop and strengthen the e-commerce industry and ensure businesses provide top-notch services.

High Potential, Higher Expectations 

Indonesia’s e-commerce sector has doubled every year for the past three years and is projected to grow eight times by 2022. A tech-savvy population has contributed to this exponential growth. More than half of Indonesians have access to mobile phones and the internet and this figure is expected to grow to almost 100 percent in 2025.

Indonesians are looking at e-commerce from a new perspective with higher expectations in terms of ease of business and convenience. Apart from having a more extensive reach compared to traditional companies, e-commerce platforms have the advantage of providing consumers with a variety of payment methods, rewards and discounts, reduced shipping charges, and flexible delivery timings. The availability and presence of local staff serve as an added benefit when it comes to customer service needs, product inquiries, and technical concerns.

The pandemic was a global full stop for doing ‘business as usual.’ Still, it became a launching pad for businesses to thrive as virtual, digital-centric and agile companies - while maintaining the human touch in customer interactions. And the correct investment in tech, data, processes and people will enable them to make better decisions and faster course corrections allowing the businesses to adapt and respond quickly to ever-changing customer needs.

Suroor Anwar is the vice president of strategy and commercial affairs for the Asia Pacific region at RS Components, the world’s largest distributor of electronics and maintenance products.

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