Catalyst

Made in e-India?

Team Catalyst | Updated on January 17, 2018 Published on July 21, 2016

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India and Indonesia are creating a new e-commerce model that’s unique for their own markets. Global brands should take note, says a TNS study





What’s common to India and Indonesia? Apparently a lot, particularly, if you consider the developments in e-commerce in both these countries. A report by research major TNS, Playing the right cards for Asia’s next e-commerce opportunity: India and Indonesia highlights the common ground and interesting practices followed by e-commerce majors in these markets.

Immense linguistic diversity is another product of the vast geographical spread of these countries. India has over 120 major languages and over 1,500 languages in total, with 22 of these recognised in its constitution and no single national language.

Within the Indonesian archipelago, over 700 languages are spoken and the national language of Bahasa is the first language of less than half the population.

The report states that in such situations, ‘speaking the consumer’s language’ becomes a significant challenge for brands. “They don’t need one e-commerce strategy; they need a strategy for each significant language community,” says the study.

The other highlight of the study is the highly engaged consumer in these markets. The study cites that while the average European fashion website receives queries on only five per cent of its orders, the fashion website Zalora receives at least one query for every single order placed through its website in Indonesia.

That’s because consumers are in different stages of evolution across continents. At this point in the development of e-commerce in these Asian countries, even those consumers willing and able to try the experience of buying online need constant support throughout the process and this requires a major investment in customer service on the part of e-commerce platforms.

The study says that, “The interesting thing about the Zalora story is that this is exactly what the website is prepared to do. It cuts into its margins and takes away many of the efficiencies of e-commerce that established developed market players have come to see as fundamental to the whole exercise. And yet Zalora’s marketers know the value of investing in building trust at this stage in its market’s development. Its approach is an acknowledgement that, of all the potential barriers to e-commerce that exist in India and Indonesia, consumer trust is the only barrier that really matters.”

The only way to start building trust is to start building solutions that can deliver positive experiences despite the inefficiencies and costs that other barriers result in. Like Zalora, brands must go all in if they are going to make long-term gains. This is a game that rewards boldness – but only from those who know the right cards to play, and the right consumer buttons to push.

The other part of the online shopping experience is convenience. Convenience also includes flexibility – allowing the shopper to decide when they want to receive the product. Some brands such as Matahari Mall in Indonesia have tied up with traditional retailers to create pick-up points where buyers can collect their purchases at a convenient time. Although online portals allow shoppers to source and buy products, last-mile delivery remains a challenge. This lack of infrastructure also limits the speed of delivery that can be offered by online retailers. To overcome this, companies such as Amazon are working with traditional trade retailers to use their local warehouses as pick-up points. Businesses also need to consider the most effective payment solution once the product arrives. In many rural areas, bank accounts are a rarity. Delivering goods to shoppers who want to pay cash on delivery to a third party distributor requires very careful management if it is going to become profitable.

Finally, affluent shoppers in both rural and urban environments are looking to buy international brands that are currently out of reach because the business does not ship there yet. “There is huge potential for e-commerce companies that can enable these cross-border purchases and give enthusiastic online shoppers access to a far-greater range of products,” says the study.

Published on July 21, 2016
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