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Overview of Indonesia Ecommerce and Learn How to Think Strategic in #KopdarOlShop Event

Posted by & filed under Indonesia Ecommerce, News.

Last Saturday, 21 June 2014 to be exact, StartupBisnis on colaboration with eVoucher held the Kopdar Online Shop event sponsored by Rpx Express.

RPX Express is a goods delivery service for online stores which already work together with Indomaret in Jabodetabek, so all you’ve got todo is to come to the nearest Indomaret in order to send your package. Further information : i Paket Rpx Express

In this event, we invited Fung Fuk Lestario ( Executive Director of GEPI and former founder of Lazada) as the speaker carrying the theme of Ecommerce Overview in Indonesia. He shared the story and some useful tips in building online store based on his own experience in building Lazada and the experience ofrom other online store performers that ahave exchanged thought with him. Fung also explained how important service is to the improvement of a business.

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Types of Ecommerce Business

Ecommerce business is full of variety, Now we take Lazada as an example. Like what we already knew, Lazada’s business model is B2C (Business to Consumer). Which means, Lazada is just the same with opening a store in Glodok or Roxy, it’s just the medium for shopping is online. Just like any stores in genera, Lazada took goods from the supplier then sell it to customer with taking some goods from the supplier and then sell it to consumers to take advantage which is a number of amount from the goods sold. However, different from the offline store, the cash Lazada or other online store accept does not only come from the margins of products sold, but can also come from ads on Lazada’s web pages. These ads are various, there is those in a form of Google Adsense and also those who are the result of collaboration with the relevant partners.

The other types of ecommerce business is C2C (marketplace), like Tokopedia and Bukalapak. If were to analogized to offline, this business is like a market manager where they provides place/stall so that seller can sell their goods. Nowadays instagram has also used as a place to do online selling.

Then, how can we utilize all of these to advance our business? Before asking this question, first you have to know what business model and sales strategy you will do.

Be The Most Trusted Online Shop in Indonesia

Looking in the mirror from Lazada’s Business, Lazada walk on a clear business model, which is B2C. Their vision by the they established is to to become the most trusted online store in Indonesia. Why did they want to be the most trusted online store? Because in the early days of Lazada, they see that there are still many Indonesian people who do not believe in online shopping, according to them, this is an opportunity that must be taken. Lazada believe that if they want to become the biggest online store, they should be a trustworthy online store. But being trusted alone is not enough, Lazada should be able to be the most complete online store because at that time, some existing online stores still sell an unknown quality product.

Seeing that gap, Lazada also want to offer high quality and also complete product. People who came to Lazada shop not only electronic goods, but also fashion product, sport goods, etc. They believe that with doing this thing they could reach the customer’s heart to become the most trusted online store.

What step Lazada took to reach this big vision? They offer three strategy which could help to reach their vision on becoming the the most trusted online store, which are:

1. COD (Cash on Delivery)

Cash on Delivery is Lazada’s weapon to overcome the fraud problem that often occures in online world. Fung himself often find an online store or individual who tried to fraud their customers. Once goods are paid for, they never deliver the goods. That is why Lazada offer COD service to solve this problem. However, sometimes there are problems that arise, such as customers who does not bring enough money when doing COD. Lazada quickly resolve this problem by bringing the cashless payment machine through debit or credit when doing to remove the reason “did not bring the money” on the customer.

2. Money Back Guarantee

Not only COD, Lazada also offer a Money Back Guarantee where customers can get their money back if they does not like the goods or the goods are not fit for 30 days after the goods arrive. This is a bold step of Lazada at their early days, considering their competitors who at that time only offer Money Back Guarantee in just two days. Lazada can offer up to 15x as much.

3. Free Delivery

The purpose of Free Delivery to the rest of Indonesia is essentially for market research. Lazada want to see the level of interest of people shopping online in each city in Indonesia, so that they can focus only on the town that demonstrate a high interest of online shopping.

 

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“Anda harus berjualan dengan cara yang strategis”

For those of you who want to sell online and build an online stores, Fung said, “it’s not selling for granted, you have to sell in a strategic way, you should know what products you sell, how to sell it, and who your target marketis,” said Fung .

For example if you want to build a marketplace like Tokopedia and Bukalapak. As Fung explained, “marketplace (C2C) is the same as market owner, you can not control the level of trust because it all depends from the merchants who join in your marketplace, this is different from the B2C businesses like Lazada because everything can be arranged and you have full power, ranging from the stock of goods, customer satisfaction, and the quality of the goods. As for how to increase sales and also trust in the marketplace, is the acquisition of a merchant, to ask the good and qulified to get into your marketplace,” explained by Fung. More and more qualified merchants, the higher the credibility of the marketplace and the merchant itself. You can make a rating system in the marketplace so that people could believe that the merchant in question is safe and can be trusted. Not only affecting the trust, it can also increase sales occurring in your business.

To bring these merchants, you can offer the uniqueness in your marketplace or you can facilitate their entrance into your marketplace with helping them to post  their product’s photo.

The most important thing in running an online store

When Lazada was estabnlished, they know that they will focus on electronic products. This is proved by the results of the initial sales Lazada in which about 95 percent comes from electronic products. Each product has different values​​, some are high and some are low, as well as electronics. Lazada’s sales of electronic was dominated by smartphones with an amount of about 70-80 percent. Blackberry became a primadona in the smartphone section because Blackberry dominated the smarphone sales in Lazada up to about 70 percent or more.

Aware of the high demand for the Blackberry in the early days of Lazada, Lazada then try to make the Blackberry as the center of attention by continuing to offer attractive discounts so that people would want to visit and shop in Lazada. This promotion efforts require Lazada to reduce their margins on these products to 3 percent.

This is the art of doing business, you have to know which one should be a priority in business. Do it with strategic and full of attention. If you have an online store, try to find out the most favored products of yours, so you can explore more deeply on that product. Again, priority is important in business. It is not recommended to serve prospective customers that asked but they purchase nothing at the end. It would be nice if you to give better service to customers who already did frequent shopping at your online store to retain them to continue shopping at your store and not moving to your competitor.

Chain Supply and Marketing

Chain Supply and Marketing is the main pillar in Lazada that determine the growth of their business. Two of these elements can make Lazada grew up big until now. When talking about technology, as what Fung said, “technology in Lazada is not relly innovative, in a meaning that the technology is not complicated and can be replicated many people. However, whether the technology is the most important part in Lazada? No, the answer is the Chain Supply Chain and Marketing, “said Fung. As mentioned previously, all things must have their own distinct priorities. Everything can not be run at once. As a CEO, you can not do everything, there must be a critical element which became your priority. Lazada know that they have to focus on these two elements.

Sales and Customer Satisfaction

Increasing sales and customer satisfaction is a different matter. Lots of online stores performers only focus on increasing sales rather than to increase customer satisfaction. Although usually what is being seen by investors is the amount of sales, according to Fung customer satisfaction remains the more important thing than the amount of sales. Sales only bring money to your business, but in order to become a sustainable business, customer satisfaction is the key. When your business is already running and shows the amount of sales that attract investors, they no longer focusing on your sales, but they will see the retention rate (the percentage of customers who return to buy your product). Retention rate is very dependent on the satisfaction.

Fung admitted that Lazada retention rate was very low at first. “To save money, we do not set up a stock of goods in the warehouse, but at the supplier. It is our fault because when a customer ordered goods, we have to first contact the supplier to ensure the availability of goods. This is where the problem occurs. Sometimes goods at supplier runs out, if there is any, the goods came late into our warehouse. Surely this will hurt the customer and let them down. “If we can not use the consignment system, sometimes Lazada became reckless and buy certain goods in a certain amount so that the item can be ready in the warehouse. Lazada aware that if the goods are not ready stock it could reduce customer satisfaction and the retention rates. Of course this is not the path to a sustainable business.

Fung suggested that online store performer pay more attention to customer satisfaction. Rather than continue to spend money on marketing costs, you should probably improve the quality of products and services. However, customer satisfaction is not only dependending on the services alone, you also need to pay attention to the look at the website’s front pages and other pages in the process of purchasing goods. “I’ve seen a lot of online stores that have good and unique products, but his website look bad and very unappealing, the navigation was also chaotic,” said Fung. To provide an exciting shopping experience, you must pay attention to the front page of your website so that people will feel interested to track it down. Lazada itself has an attractive appearance with a highlights menu being featured so people know which products are on trend in Lazada.

 

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Conclusion

So the core in building an online store business t can be sustainable is that you have to make strategic sales, it means you know what you are selling, how to sell, and who your target market is. In addition you must also consider the priority. Determine your priorities and just focus there first until you can really master it. And the last is customer satisfaction. It is a key element in building a sustainable business that can last up to years.