What makes e-commerce thrive ft. DailySocial.id - Part 1

In this article, TFR talked to Dailysocial.id CEO Rama Mamuaya about the e-commerce industry from media perspective. Dailysocial.id is a media that covers tech industry news.

Illustrations by The Finery Report

As more e-commerce players emerge, the competition to win over market share is getting fiercer. Search engine optimisation (SEO) and promotion alone are not sufficient. Back-end operation has to support the system. The most obvious strategy is using data to understand consumer behaviour.

Data come in handy to drive sales. “I was invited to Alibaba office in China. They have technology that can predict what Indonesians will buy at year-end based on historical data that they stored. They can do that with machine learning,” said Dailysocial.id CEO Rama Mamuaya.

He used Hari Raya as prime example. During Hari Raya, Alibaba already knows that Indonesians will spend their money on mobile phones, clothes, shoes, and bags. They also know what kind of clothes, what type of mobile phones, and the price range Indonesians will go for. A month before Ramadan, they delivered the products to Halim Perdanakusuma airport in order to cut down the delivery time although it is stated that the products are delivered from China. This way, customers will be excited to get their products in two days.

The result? The products sold out.

“All e-commerce players have implemented similar strategy. Lazada is probably using the same technology because it is backed by Alibaba,” said Mamuaya.

Then, there’s customer service that companies have to take into consideration. An example Mamuaya mentioned is Salestock. Salestock is all about customer service. They use AI instead of hiring 200 people to answer every customer request. Indeed, Indonesians love to be serviced. Indonesians still ask ‘how much is this,’ ‘is there other colour,’ ‘is it available’ to customer service.

Only a dozen of people work in Salestock’s customer service department to handle problems that have escalated. Artificial intelligence is helpful to a certain extent, but human interaction is irreplaceable.

While data helps informing people about products they want to buy, e-commerce companies have to know that it’s not just about promotion or delivery time. Indonesians still prefer to touch products before purchasing. That is, in part, due to unregulated return and exchange policy.

In the US, merchants have to apply a 30-day return guarantee regardless of how big or small their business are. The rule applies to every store, including beauty. Indonesia, however, hasn’t made that mandatory.

“It’s not applied yet, probably because there are not many big cases like data breach where credit card information is stolen. Right now there is a common practice where e-commerce purchases insurance in a bulk. The products are insured so that consumers don’t have to pay twice if the products are lost during shipment,” said Mamuaya.

According to data from the Association of Indonesia Internet Services Provider (APJII), 143.26 million Indonesians are connected to the internet, but only 46 million (32.19%) are shopping online. Furthermore, Statistics Indonesia (BPS) revealed that online purchase makes up less than 1% of household. The number is extremely low compared to 99% in England.

If the government doesn’t put consumer protection on the frontier, growing online market share will be difficult. That means newcomers have to fight for the current pool of online shoppers, which consist of 46 million people. Or they can go offline.

“The entire cake of e-commerce share has been taken. In order for newcomers to grow, they can either grab a slice of the cake or they make the cake larger. If they choose the latter, they have to go offline. You can talk e-commerce all you want, but every time a brand like Crocs has sale, the queue in front of the store is circling. You can talk data all you want, but people are still queuing,” Mamuaya stated.

He continued, “It’s not about they want to go offline or not, but they have to. You can’t separate online and offline anymore. It’s a single entity, it’s a single operation; the only difference is interface. One is human-based interaction, while another one is computer to human. The trend is driven by Asian.”

In 2011, South Korean tested virtual grocery shopping via QR codes on subway station. When the beta concept achieved a huge success, other countries like Japan adopted the system. 6 years later in October 2018, Amazon Go opened its cashierless store, optimising artificial intelligence and image recognition software.

Indonesia followed suit with ‘warung pintar’ (smart store). It combines offline selling with online point of sale, inventory, and supply chains. That’s single operation. “Some things you have to do offline like recommendation. You do online shopping if you are at your desk and you need to do quick purchase. It’s seamless. On weekend though, when you are hanging out with friends and family, you wouldn’t use VR to ‘see and talk’ to your friends, would you?”

The funny thing is that even though many Indonesians are sceptical about online shopping, Blibli.com recorded 6 transactions of Toyota Avanza car sales. Mataharimall.com even sells cars. Tokopedia has merchants that sell gold.

“It’s crazy but it’s about branding because branding is trust. With some e-commerce, people shop small things but there are other brands that have won people’s trust with good before and after sales services. For those people, buying high price items is not a problem.”

In conclusion, if e-commerce wants to win people’s trust, they have to serve customers, from responding to customer’s request, providing several methods of payment, delivering products as fast as possible and, last but not least, making sure the products arrive on time and customers are satisfied with quality of the products. Nonetheless, offline experience plays a bigger role than online. Offline stores can drive sales to online store if customers want to purchase other products.

The silver lining is e-commerce can increase 10% of the price if the customer service is that good. “A good experience from e-commerce I’d like to share is from Bhinneka.com,” said Mamuaya. “The day after my products arrived, I received a call from their customer service. They asked if I had received my products and whether or not I was satisfied with it. This might seem like a small thing, but it makes you feel like you are valued as a buyer.” Granted, the majority of products sold on Bhinneka.com have higher price than on other e-commerce platforms. “I don’t mind the 10% to 15% difference because I’m serviced really well,” he added.

Data, artificial intelligence, and features help with operation, but at the end of the day, good customer service provides good shopping experience and good shopping experience brings loyal customers. As Mamuaya said, “People will talk if it’s good but they will talk louder if it’s bad.”