E-commerce gold mine is not in Jakarta, but cities outside the metropolis: Alfacart

• Alfacart’s biggest market is in East Java, seeing rise in Sumatera
• Strengthening O2O strategy to bridge people to online shopping

DUBBED as Asia’s next biggest market for e-commerce, the number of e-commerce players in Indonesia keeps on increasing. Some may fail, some may succeed, depending on their ability to address the major pain points of the country’s e-commerce scene – consumer trust, says chief executive officer (CEO) of Alfacart, Catherine Hindra Sutjahjo said.

As a subsidiary of one of Indonesia’s leading retailers, PT Sumber Alfaria Trijaya (Alfamart Group), Alfacart has been navigating the e-commerce sector for seven months, and so far, Catherine finds the company’s strategy to be very effective.

“You need to understand that beyond the hard core hurdles such as logistics, payment, internet connection, one of the most important pain point in the country’s e-commerce market is the lack of consumer trust.

“If you go around and ask urban people maybe the number will not be significant, but when you go out to other cities, smaller towns, then you will find that this is the real issue on the ground,” she told local journalists in Jakarta last week.

She affirmed that this is the issue Alfacart has been wanting to solve from the very beginning, in order to help expand the market, so that e-commerce players “will no longer fight for the same urban consumers over and over again.”

Addressing the consumer trust issue also helps the e-commerce industry make a higher impact and contribution to the country’s economy.

“The problem now, even though the potential of the sector is huge, is that the sector is not growing as fast as everyone hoped for, and is not making enough impact to both the country’s economy and people’s welfare,” she continued.

When asked why, she stated that the consumer trust issue is bigger than it may seem on the surface. She believes that e-commerce players have the responsibility to educate the market, as well as innovate themselves and their processes in order to improve consumer trust.

“Again, besides other constrains in logistics, payments and network spaces, how do you expect more people to jump to e-commerce when all they can think about is whether they will receive the right goods or not, whether the goods they want are the ones they received, whether they are giving money to the ‘good’ players or not,” she explained.

For Catherine, the biggest opportunity for e-commerce players are in cities outside Jakarta. For the people who live in these cities, e-commerce gives them the same access to goods as those in Jakarta, as well as value for money so that they do not have to fly all the way to Jakarta to get the same goods.

“When you can attract more people from outside of Jakarta to experience e-commerce, and get them to like it, get them to trust it, then the market will grow, because e-commerce makes a lot of sense for people who live in the cities outside the capital,” she said.

Calling East Java, home

According to Alfacart’s chief operating officer (COO) and chief marketing officer (CMO) Haryo Suryo Putro, unlike any other e-commerce player, Alfacart’s biggest market is not Jakarta, but East Java, home to almost 40 million consumers.

42% of Alfacart’s consumer base is in East Java, followed by 33.7% in Jakarta and surrounding areas, 17.7% in Central Java, 2% in Sumatera, 1.9% in West Java, 1.7% in East of Indonesia, and 0.5% in Kalimantan area.

“We are seeing more cities outside Jakarta continue to grow, but this growth will only be in line with our inclusive efforts to attract them to online shopping,” he added.

Pay and pick up at store

For Alfacart, the game plan has always been to be as close as possible to its consumer, offering more payment options, and the freedom for customers to pick up their orders.

It is fairly easy for Alfacart to do so, thanks to the full support of Alfamart Group’s brick and mortar stores, Alfacart has now integrated more than 8,000 Alfamart stores as its pick-up points, or about 67% of the total of more than 12,000 Alfamart stores spread across the country.

“This is a continuous effort, we want to ensure that all Alfamart stores will be able to be a pick-up points for Alfacart consumers. We hope that by the end of next month this integration will be completed,” Catherine added.

The company also allowed a ‘Pay at Store’ options for Alfacart consumers, allowing 60% unbanked Indonesians to order their goods online, and pay at the nearest Alfamart brick and mortar stores. All 12,389 Alfamart stores have been integrated to accept this Pay at Store options.

Alfacart’s Haryo said that these options give consumers the assurance they need to shop online, in terms of money, they can pay at brick and mortar store, as well as picking up their orders in a store.

“All we need is to bridge these customers through an offline channel, that is why online to offline (O2O) is our core strength, slowly consumers will have more confident to have their whole shopping experience online,” he told Digital News Asia in the sidelines of the press event in Jakarta.

About 83% of Alfacart’s consumer pick up their goods at Alfamart’s stores compared with only 17% using Alfacart’s delivery service, and 76.61% of its consumers pay their goods at the store, compared with 11.8% consumers choosing cash on delivery, 8.33% choosing to pay with e-wallet and e-money, and only 1.9% paying with credit card.

Focus on groceries and daily needs

The other approach Alfacart took differently from fellow e-commerce players is the focus of its products. Being Alfamart’s subsidiary, Alfacart leverage the group’s image of providing groceries and daily needs.

That does not mean Alfacart only sells groceries and daily needs, it also has fashion products, gadgets, and all other e-commerce products category.

“Being Alfamart’s subsidiary, Alfacart can benefit from the brand and type of products the group carries, of course it is all about groceries and daily needs. This is our role too, to help the e-commerce industry mature and grew,” Catherine noted.

She added that for countries where the e-commerce sector is still a nascent industry, fashion products will always be the winner. However, as the industry matures, next level will be groceries and daily needs, and that is what Alfacart wants to focus on.

Since its inception in May 2017, Alfacart’s business has grown approximately 59.24% monthly from June to November, with the highest growth in the festive month of Ramadhan and Raya.

According to its chief and operating officer (CCO) Ernest Tjahjana, despite the impression that e-groceries is not doing well, the growth of groceries and daily needs are the most impressive amongst all categories.

Around 48.4% of Alfacart consumers are buying groceries, while 33% of consumers buy lifestyle products such as baby categories, home and living, music and books, health and beauty, followed by gadget and fashion with 11.6% and 6.8% respectively.

Related Stories:

Brick and mortar retailer Alfamart goes full throttle on e-commerce

What’s Next: Traditional retailers do have an edge

Indonesia’s e-commerce players eye big gains from annual online sales event

Indonesian e-grocers rise to the challenge

For more technology news and the latest updates, follow us on Twitter, LinkedIn or Like us on Facebook.