Setting Up an Online Shop in Indonesia
Read on for our complete guide on what you need to know before creating an online shop in Indonesia, how to successfully promote it and create loyal customers for your online business. This guide will cover the following topics; but be sure to check back to our blog for regular updates.
- Why now is the time to set up your own online shop
- What can you sell in your online shop
- Creating inventory for your online shop
- Selecting an Online Marketplace
- Choosing a Delivery & Shipping Partner
Why now is the time to set up your own online shop
Now, more than ever, opening an online shop is a way to quickly start your own business and take advantage of the country’s ecommerce boom. No doubt you and your friends are increasingly doing your shopping online and you may know people who have already successfully set up their own online business. So, your interest may be piqued in setting up your own, but you may be asking yourself how to do it or not sure if this is the right time?
With less initial investment, opening an online shop is a much quicker and more cost effective way to start or expand an existing business when compared to bricks and mortar stores. Another crucial reason is that Indonesians are shifting to online shopping faster than ever before. Still not sure? Let the facts speak for themselves:
- Indonesia is more connected than ever with more than 50% of the population using an internet connection. Also, 4G LTE networks now cover around 40% of the country’s territory.
- A Kominfo survey in 2016 showed that 96.5% of Indonesians who buy online do so from domestic sellers, with fashion, electronics and cosmetics being the three best-selling product categories.
- In 2015, research from Deloitte revealed that online SMEs have 80% better revenue than offline SMEs.
- Setting up an online payment system is now easier than ever. In 2016, online purchases through online or mobile banking reached 20.7%, and that number rises annually.
- The Indonesian government is actively supporting new online businesses, such as through a tax incentive for digital SME startups, capping their income tax at a maximum of 1%.
- Arranging delivery for online shops is easier than ever with courier delivery companies offering competitive rates, up to the minute tracking information, cash on delivery as well as product return services.
With all of these improvements smoothing the way for online store business growth, now is definitely the right time for you to start your own online shop in Indonesia.
What can you sell in your online shop?
Now as you are thinking more seriously about opening your own online shop or have one open already, you be wondering what you should sell or what new products you can offer your customers. Essentially there are almost an unlimited number of diverse items you can sell in your online store. However, careful selection of your products and product categories through researching your target market is important to avoid buying stock that does not sell and getting your online shop to be profitable as soon as possible. Keep in mind:
- Think about market segments that are unfulfilled or untapped in Indonesia, and how you can serve this through your online store.
- However, do keep in mind that there are many niche areas yet to be explored such as handicrafts or traditional souvenirs for example. Indonesia’s up-and-coming creative industries showcase immense business potential for e-commerce as local arts and crafts become sought after commodities. Identifying your online store’s niche market will help you to identify your customer base and thus help your business to grow.
- You can also choose to sell more common or popular products such as fashion, cosmetics or electronics. These goods continue to experience growth in Indonesia’s e-commerce sector.
- Another opportunity you can consider is to become a sole distributor for a product or brand that is not yet present in Indonesia. Many innovative products from abroad are looking to penetrate the country’s affluent and lucrative consumer market.
- Personalising your products or providing accessories to existing ones will also help you to reach a wider consumer segment.
When thinking about what products to sell, remember:
- Research the competitiveness of your niche area before setting up your online store. Do you have competition? If not, why not? If yes, what is your competition doing right and what are they doing wrong that you can do better in your online store?
- Be sure to find more than one supplier for sourcing your products or product categories that you are looking to sell; if you are reliant on only one supplier it makes it harder to negotiate pricing.
- If you consider selling fragile or hard to ship products, make sure that all costs related to the products’ handling, storage and delivery are accounted for in the selling price. Selecting the right courier and delivery services can advise you and give you the most competitive delivery tariff.
By far the best route to a successful online shop is to turn your passion into a brand and a business. With your passion at the centre of your business, you can make your online store the one-stop solution that will allow you to develop a dedicated customer base and following to help your online shop grow.
Creating a stock inventory for your online shop
After deciding what products to sell in your online shop, the next thing you need to do is to prepare a stock inventory of all of your products. Housing sufficient stock inventory is crucial to enable you to respond to customer purchases quickly. As a start-up, a small storage area may suffice for your online business, but do take into account that as your business expands, you will need to prepare for a larger storage area as your volume of sales and number of product categories increases.
Selecting an Online Marketplace
Social media platforms such as Facebook and Instagram are a great way to get started with your online shop for free as you can tap into your existing friends and followers and make them into customers. Setting up an online store is easy, and it gives you complete flexibility to select which payment method is best for your customers and which delivery partner you can use.
Indonesia also has numerous ecommerce marketplaces for you to choose from which you can use in conjunction with your social media store. Some ecommerce marketplaces are more focused on specific product categories like gadgets or others that are more suited to B2B sales, so it is important to select which one or ones is right for you.
Some of the top ecommerce online marketplaces in Indonesia:
- Tokopedia – one of the “unicorns” of Indonesia’s online marketplace as well as one of the largest and most popular. Its wide range of features makes it easy to find various products.
- Bukalapak – a leading online marketplace offering various types of products. Bukalapak has a feature that lets buyers and sellers negotiate the product’s price.
- Shopee – an up and coming online Indonesian marketplace which has free delivery (“gratis ongkir”) as its main selling point.
- OLX – a long-time Indonesian online marketplace which absorbed TokoBagus and Berniaga, two of big online marketplace names in Indonesia.
- Blibli – an ecommerce marketplace offering a diverse range of products that is focused on offering coupons and discounts to customers.
Choosing a Delivery & Shipping Partner
Now that you have your online shop’s pages online, the next step is getting your orders delivered. You need to select a courier delivery partner that offers your customers competitive rates, online tracking facilities and easy integration with your online shop.
It is important to give your customers a complete choice of delivery options during the purchasing process, including:
- One-day delivery service, which can deliver products on the same day or the next day to customers. This has become a new favourite option for online shopping customers as they can receive their items quickly.
- Regular service, which can deliver products in 2-3 days to customers nationwide. This delivery option’s price and delivery speed should be comparable to courier companies’ regular delivery services.
- Cargo service, which can deliver products in 2-6 days to customers nationwide, offering more cost effective tariffs with a minimum delivery weight. This is useful for customers or resellers who buy products in bulk to send to inter-island destinations.
You should carefully consider which courier and delivery services to use for your online shop in terms of the delivery tariff, nationwide network, customer service, the capacity to deal with returns and most importantly an easy to use real time tracking system to quickly respond to delivery enquiries. Read our articles to help you select the right courier and delivery provider for your online shop:
Now your shop front is open, we need to start driving customers to it, building word of mouth and focus on growing your loyal base of customers in Indonesia and beyond!